A major change related to the tax system is going to be implemented in the country from April 1, where the new Income-tax Act, 2025 will come into effect in place of Income-tax Act, 1961. Although there has been no change in tax slabs and rates, the rules for ITR filing, use of PAN, HRA claims and income reporting will become more stringent and transparent than before. In such a situation, it is important for every taxpayer to understand these new rules in time, so that any kind of problem can be avoided in future.
new income tax law
Income Tax Act, 2025 is now going to be implemented in place of Income Tax Act, 1961. According to the government, this is not just a change in tax, but a rewrite of the entire law. The good thing is that there has been no change in the tax slabs and rates. This means you won’t have to pay more tax, but will now have to report income, deductions, salary, capital gains and disclosures more accurately.
Big benefit on meal card
Under the new rules, salaried employees will get more tax benefits on meal coupons, vouchers or cards (like Sodexo, Pluxee, Zaggle).
Now employees can avail tax-free meal benefits up to ₹1 lakh annually (if the company offers this facility).
HRA rules become strict and comprehensive
Changes have also been made in House Rent Allowance i.e. HRA:
50% HRA exemption is no longer limited to Mumbai, Delhi, Kolkata, Chennai only. Now Bengaluru, Hyderabad, Pune and Ahmedabad will also be included in it. The 40% rule will remain applicable for the remaining cities.
New rule:
Now, to claim HRA, it will be mandatory to provide information about the landlord in Form 124. This will prevent fake or inflated fares.
PAN rules become stricter
Now PAN will be required in more transactions, like buying/selling of a vehicle, big expenses etc. Additionally, there will be less reporting for smaller transactions. Tax refund will be received faster if correct information is given. Refunds will be delayed if errors occur.
Changes in ITR filing
Now you will not have to fill a separate form to choose new/old tax regime. You will be able to choose the option directly in ITR itself. Even if you have two houses, you will be able to use the simple form (with some conditions).
What hasn’t changed?
- tax slab
- tax rates
- no new taxes
- Old rights and obligations remain valid
Purpose of new law
The new law focuses on:
- faceless assessment
- digital compliance
- less human intervention
- less controversy
- Tax law as per global standards
Now digital mediums like email, cloud and smartphones have also been clearly included in the scope of investigation.
important timeline
Law comes into effect: April 1, 2026 (FY 2026-27)
First ITR: Will be filed in 2027
But the rules related to salary, TDS, PAN etc. will be implemented immediately.
Labor code also affected
The new tax rules along with the Labor Code (to be implemented from November 21, 2025) will also affect the salary structure.
Basic salary must be at least 50% of the total salary.
This may change take-home salary and tax planning.