Mint Explainer: What income tax changes will kick in from 1 April?

A simpler income tax law will come into force from 1 April, along with other changes announced in this year’s Budget including higher benefit of deductions for salaried tax payers and a new buyback taxation scheme.The new tax regime modifies the return filing timeline in certain cases and rationalises penalties while looking to reduce complexity and encourage voluntary compliance.Mint takes a closer look at the changes that will kick in on Wednesday.The changes proposed through Finance Act of 2026, signed off by President Droupadi Murmu on Monday, include the rationalisation of certain penalties, greater leeway to update tax returns and disclose previously unreported foreign assets and income below a limit, changes to the taxes deducted or collected at source (TDS and TCS) including on overseas tour packages and education, and a new tax regime for share buybacks. From 2026-27, businesses not subjected to a tax audit will be able to file their income tax returns up to the end of August.Starting in 2026-27, taxpayers can revise their returns even after the department initiates a tax case.

To do this, they must pay an extra 10% tax on top of the usual rates required for updating a return after the relevant tax year ends. These rates range from 25-70% from the first to the fourth year.

The goal is to reduce litigation and encourage voluntary compliance.Under the new scheme, small taxpayers such as students, young professionals, tech employees or relocated non-resident Indians can now report previously undisclosed income or assets to avoid prosecution. For an asset or income worth up to ₹1 crore, a 60% tax that includes a penalty component must be paid.