Understanding Changes in ITR Filing: New Tax Act 2025 Details Revealed
Starting July 2026, India transitions to its new Income Tax Act (Act 2025) but retains old act for this year's ITR filings. Salaries benefits, HRA exemptions, and form changes are impacting taxpayers.
Highlights
- •Government introduces new Income Tax Act 2025 from July 2026
- •Current ITR filings under the old act until March 31, 2026
- •Child education allowance increased to Rs. 3,000 per month for salaried individuals
- •Residents of Bengaluru, Pune, Hyderabad, and Ahmedabad get HRA exemption
Big News for Taxpayers in 2026: Transitioning to the New Income Tax Act 2025 In what may be a significant change for taxpayers, India's government is set to introduce a new Income Tax Act (Act 2025) this year. Starting July 2026, this new law will govern your returns filed after April 1, 2026. However, the old act of 1961 still pertains for filings from April 1, 2025, to March 31, 2026.
What This Means for Your ITR Filing Experts predict an annual transition between the old and new acts. Taxpayers need not worry as the old act remains in effect this year. You'll continue to enjoy familiar exemptions and benefits under the 1961 act, while changes will slowly integrate into your tax forms next filing season.
Updates on Tax Forms and Terminology
The transition includes new terms in the revised legislation. Terms like 'financial year' will become simply 'tax year.' Additionally, classic forms such as Form 16 are set to be renamed to Form 130, and Form 26AS is evolving into Form 168. These updates aim to modernize the tax system for a more digital-friendly experience.
Impacts on Salaried Individuals
Key changes will particularly affect salaried workers. One of these is an increased child education allowance up to Rs. 3,000 per month. For those living in metro areas like Bengaluru, Pune, Hyderabad, and Ahmedabad, a major perk involves a 50% HRA exemption. However, note that stricter rules are on the horizon; individuals residing with relatives now require disclosure regarding rent payments.
