New Delhi, 31 March (H.S.):

India's tax framework enters a transformative phase from April 1 as the Financial Year 2026-27 begins, with the Income Tax Act, 2025 replacing the six-decade-old 1961 Act effective Wednesday. The overhaul simplifies tax systems, procedures, and rules, introducing a unified 'Tax Year' in place of separate Financial Year (FY) and Assessment Year (AY) for streamlined filing.

The Income Tax Department confirmed that the new Act and select budget measures activate April 1, including higher Securities Transaction Tax (STT) on futures and options (F&O) trading, reduced TCS on foreign travel packages, and Liberalised Remittance Scheme (LRS) for medical/education remittances.

Additional incentives cover 20-year tax holidays until 2047 for foreign firms using Indian data centers and expanded 'safe harbor' limits for software services from ₹300 crore to ₹2,000 crore.

The new 536-section Act (down from 819) uses reader-friendly language without altering rates, deductions, or exemptions; e-filing portals support both old and new regimes during transition. Pending assessments and appeals continue under the 1961 Act until resolution, with ITRs for Tax Year 2026-27 (formerly AY 2026-27) filed in July using legacy forms. Advance tax payments start June.

Belated ITR filers can now claim TDS refunds without penalties.

Trading and Remittance Reforms

STT hikes curb F&O speculation: futures from 0.02% to 0.05%; options premium/exercise from 0.1%/0.125% to 0.15%, protecting retail investors after 1.05 lakh crore losses in FY 2024-25 (individual traders dropped from 1.06 crore to 75.43 lakh). TCS cuts: foreign packages from 20% to 2%; LRS medical/education above ₹10 lakh from 5% to 2%, easing middle-class burdens.

Data center tax exemptions ensure parity for global clients, leveraging India's 25.17% effective corporate rate to attract investments.

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Hindusthan Samachar / Jun Sarkar