Effective April 1, 2026
A monument shift in India’s direct taxation system, designed to simplify compliance, enhance transparency, and stimulate economic growth.
₹4L New Basic Exemption
15.5% Safe Harbour Margin IT
0% Tax for Net Income up to ₹12L
Ease of Living
Simplified Compliance for the Modern Taxpayer
Unified Tax Year
Eliminating the confusion between “Assessment Year” and “Previous Year” with a single, clear timeline.
Rationalized TCS
Overseas tour packages now at a uniform 2%, down from up to 20%.
Unified TDS
Section 393 consolidates all provisions into one window for transparency.
New Threshold
₹12 Lakhs
Net taxable income required for 0% tax liability.
A Pragmatic Approach to Enforcement
Shift from aggressive litigation to incentivized compliance and decriminalization of minor defaults.
Integrated Proceedings
Assessment and penalty proceedings are now combined into a single, comprehensive common order.
Key Feature
Incentivized Updates
Updated returns with a nominal 10% additional tax offer immunity from misreporting penalties.
Economic Relief
Proportional Justice
Decriminalization of minor defaults and rationalization of prosecution terms to maximum 2 years.
Decriminalized
Boosting Industry & Cooperatives
Information Technology
Unified definition for Software, ITES, KPO, and R&D. Safe harbour thresholds raised significantly from ₹300Cr to ₹2,000Cr.
15.5% Margin
5-Year Continuity
Cooperative Societies
- 15% Tax Rate for new manufacturing cooperatives.
- Dividend income deductions expanded to cattle feed/cotton seed societies.
- Cooperative banks allowed carry-forward losses during reorganization.
AI Scanning Enabled
Global Connectivity
Modernizing India’s Trade Gateway
Transforming tax administration into a digital-first, faceless environment while streamlining physical trade through CIS and Auto-OOC systems.
Tax Holidays until 2047
For foreign companies providing cloud services via Indian data centers.
Customs Single Window
Cargo clearance from all agencies through one digital portal by April 2026.
Markets & Strategic Duty
Key adjustments to STT and targeted BCD exemptions for green energy and health.
Futures STT0.05%
Options STT0.15%
Personal Duty Rate10%
Green Energy & Aviation
BCD exemptions for lithium-ion cells, solar glass, and civilian aircraft components to fuel sustainable growth.
Healthcare Focus
Zero duty on 17 specific medicines and personal imports for 7 rare diseases, emphasizing Ease of Living.
Share Buybacks
Now taxed as capital gains for shareholders; promoters face additional buyback tax of up to 30%.
MAT Evolution
Transitioning to a final 14% tax. New credit accumulation ceases after April 1, 2026.
Global Trade & Travel
Evolving de minimis rules and baggage allowances are reshaping international commerce and passenger movement.
US De Minimis Alert
The $800 exemption for shipped goods is eliminated as of August 29, 2025. This impacts all cross-border e-commerce.
Courier Exports
India has removed the ₹10 lakh value cap per consignment, unlocking global markets for MSMEs.
Baggage Rule Revisions
Union Budget 2026-27 aims to enhance duty-free allowances and reduce general tariff rates for personal imports.
Embracing the Future
The Income Tax Act 2025 is not just a law; it’s a commitment to a predictable, transparent, and growth-oriented Bharat.
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