Income Tax Overhaul In 2026: What Deloitte Says Is Coming

India’s income tax law is about to see the biggest rewrite in years, and a recent Deloitte booklet points out how wide the changes really are. The government’s pitch is simple enough: make the rules easier to understand and far less tiresome to follow.

At the centre of this lies the new Income Tax Act, 2025. It takes effect on 1 April 2026. Most of what people have grown used to, the scattered definitions, the old terms, and the somewhat confusing layout, has been taken apart and rebuilt. The aim is not a dramatic reinvention, but a law that reads straight, makes sense to ordinary taxpayers, and keeps pace with how money now moves.

One “Tax Year”, Fewer Headaches

The most visible change is also the most basic. Instead of juggling “Assessment Year” and “Previous Year”, everyone will now work with just one phrase: the Tax Year. It means the twelve months starting 1 April. That’s it. For years, people have tripped over the old two-term structure, so this alone trims plenty of friction.

A second shift lies in how the Act groups related rules. Earlier, taxpayers had to hop between sections that didn’t sit near each other. The new version pulls them together. And because digital assets are no longer limited to the usual cryptocurrencies, the definition has been widened to cover whatever holds value through cryptographic or digital systems. The law acknowledges the way money behaves today, instead of how it looked a decade ago.

TDS Fixes, Cross-Border Clarity, And Support For New Industries

One thing taxpayers repeatedly complain about is tax deducted at source (TDS). The rates run from 0.1 per cent to 35 per cent, and that range alone causes trouble. Too much is deducted at times, refunds drag, and many people end up with cash stuck for months. A tidier structure, fewer slabs, and clearer triggers could take away much of that pain.

Cross-border taxation is another story. The rules around Significant Economic Presence never fully spelled out what counts as a user, or how to judge “systematic interaction”. That leaves officers and companies interpreting things in different ways. Cleaner definitions would help everyone, from the global tech company to the small Indian subsidiary caught in the paperwork.

There is also the matter of incentives. India has deductions for research and start-up work, but sectors like artificial intelligence, renewable energy, and advanced tech expect more. Other countries offer generous tax breaks to pull in investment; Indian industry knows this and wants the government to close the gap.

What This Means For Taxpayers

When the new law arrives in 2026, taxpayers should find the system less tangled. Simpler language, consolidated rules, and a more digital-friendly view of assets all move in that direction. What remains to be seen is how the government handles the next round of expectations, especially around TDS, global income, and incentives for emerging industries. Those decisions will shape how smooth the transition truly is.