New Income Tax rules notified by CBDT

Kanwar Inder Singh/ royalpatiala.in News/ March 20,2026

Central Board of Direct Taxes (CBDT) on Friday notified the rules for Income-tax Act, 2025 which provided enhanced tax benefit for HRA to salary earner but makes disclosure of landlord-tenant relationship mandatory. The Income-tax Rules, 2026 will operationalise the simplified direct tax legislation that was approved by Parliament last year and will come into effect from April 1.

“These rules may be called the Income-tax Rules, 2026. They shall come into force on April 1, 2026,” the government said in a gazette notification.

Under the new rules, eight cities such as Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad, and Bengaluru will qualify for a higher exemption limit of 50 percent of salary, while all other locations will continue at 40 per cent. At present, salaried employees in Mumbai, Delhi, Kolkata, and Chennai are allowed to claim HRA exemption of up to 50 per cent of their salary, while those living in other locations are eligible for a lower limit of 40 per cent.

The government said that the new income tax rules have significantly raised transaction limits for quoting of PAN for cash deposits/withdrawal in banks, purchase of motor vehicles and property, and payment of hotel bills. According to new rules, quoting of PAN will be mandatory for making cash deposits or withdrawals aggregating to Rs 10 lakh or more in a financial year, in one or more accounts of a person. Presently, PAN is required for cash deposits exceeding Rs 50,000 during any one day with a banking company or a cooperative bank. In case of purchase of motor vehicles (including motorcycles), a buyer has to quote his/her PAN if the price exceeds Rs 5 lakh.

Notably, Budget 2026 extended the income tax returns (ITR) due date for ITR-3 and ITR-4 for non-audit taxpayers to 31 August from the end of the relevant tax year. However, there are no changes in the income tax slabs for FY26-27, and the existing slabs will continue.

Further, the deadline for ITR-1 and ITR-2 remains 31 July of the relevant tax year, and the due date for the tax audit also stays unchanged at 31 October.

Changes to I-T rules

The number of tax rules has been reduced from 399 to 190.
The number of tax forms has been reduced from 511 to 333.
The changes aim to make the taxation system easier for businesses and taxpayers to use.
Further, all the forms will look the same and feature text that is easier to read, with features like auto-filled data.