The Government of India is all set to introduce a number of changes in income tax rules from April 2026, aiming to simplify the system and improve compliance. Many of these changes are designed to make tax rules easier for common people to understand. One of the biggest changes is the introduction of the term “Tax Year”. This will replace the earlier terms “Previous Year” and “Assessment Year”, which often confused taxpayers. For example, income earned between 1 April 2026 and 31 March 2027 will now simply be called Tax Year 2026–27.
There are also important updates related to PAN (Permanent Account Number) requirements. From April 2026, PAN will be required for cash deposits or withdrawals if the total amount exceeds Rs 10 lakh in a year. For buying property, PAN will be needed if the value is above Rs 20 lakh. Similarly, PAN will be mandatory for purchasing motor vehicles costing more than Rs 6 lakh. In the case of hotels and travel, PAN will be required for cash payments above Rs 1 lakh.
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In a major relief for mutual fund investors, the Indian Government has removed the requirement for Asset Management Companies (AMCs) to report investments above Rs 10 lakh under the Statement of Financial Transactions (SFT). However, these investment details will still be visible to taxpayers in their Annual Information Statement (AIS).
The Indian Government has also made some changes to Tax Collected at Source (TCS). For foreign remittances under the Liberalised Remittance Scheme (LRS) for education or medical purposes above Rs 10 lakh, the TCS rate has been reduced to 2%. A flat 2% TCS will also apply on overseas tour packages.
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In terms of investments, share buybacks will now be taxed as capital gains in the hands of shareholders. Also, taxpayers will no longer be allowed to claim deduction on interest paid against dividend income. This income will now be taxed as per the normal slab rates. There is also a small increase in the Securities Transaction Tax (STT). It will now be 0.05% on futures and 0.15% on options.
Another clarification has been made regarding holding period for capital gains. In case of converted securities, such as when debentures are converted into shares, the total holding period will include the time for which the original instrument was held. For those buying property from Non-Resident Indians (NRIs), the process has been simplified. Buyers will no longer need a Tax Deduction Account Number (TAN). Instead, they can use their PAN to deduct and deposit TDS. Overall, these changes are aimed at simplifying tax rules, reducing confusion, and making compliance easier for taxpayers across the country.
