Income Tax Rules Change: Earnings from share buybacks were previously treated as dividends, but from April 1, 2026, they will be considered capital gains and taxed accordingly.

Income Tax Rules Change from April 1st: The new financial year 2026-27 begins on April 1, 2026. The Income Tax Act, 2025 will also come into effect on the same day. Under this act, several rules related to income tax, investments, TDS/TCS, and companies will change. These changes will affect everyone from salaried individuals to investors, business owners, and companies.

New Tax Treatment for Share Buybacks

Until now, earnings from share buybacks have been considered dividend income and taxed according to the income tax brackets. From April 1, 2026, the benefit from buybacks will be treated as capital gains, meaning that the tax calculation will be based on the purchase price and holding period, similar to stock trading.

Increase in STT

The Securities Transaction Tax (STT) on futures contracts of securities has been increased. Under the new rules, the STT on futures trading has been increased from 0.02 percent to 0.05 percent. Options traders have also not been spared. In the budget, the government proposed increasing the STT on options premiums from 0.10 percent to 0.15 percent.

Income from Dividends and Mutual Funds

According to the new rules, there will be no deduction for interest expenses on income from dividends or mutual funds, even if the investment was made with borrowed money. Previously, a tax deduction was available for this. This new rule will also come into effect from April 1, 2026. New Rules for Sovereign Gold Bonds (SGBs)

Under the new rules, tax exemption on SGBs will now only apply to bonds purchased directly from the government. SGBs purchased from the secondary market will be subject to capital gains tax upon redemption. Investors will have to wait until maturity to avail of tax-free returns.

Relief from Repeated Declarations

Investors will now be able to submit a single declaration to avoid TDS instead of filling out multiple forms for different income sources. This means that separate forms will not need to be filled repeatedly to avoid tax deductions. Mutual funds, dividends, and bonds will all be covered under a single declaration. This will simplify paperwork and ease compliance.

Buying Property from NRIs Made Easier

Under the new rules, effective April 1, 2026, it will no longer be necessary to obtain a TAN for deducting TDS when purchasing property from Non-Resident Indians (NRIs). Buyers will now be able to deduct TDS using only their PAN. Overall, cross-border property transactions will become easier.

Reduction in TCS on Foreign Expenses

The TCS on foreign tour packages has been reduced to 2 percent. TCS on education and medical expenses abroad under the Liberalized Remittance Scheme (LRS) has been reduced from 5 percent to 2 percent. This will reduce the cost of travel, education, and medical treatment abroad.

Relief on PF and ESI Employer Contributions

Employers will continue to receive tax deductions on PF and ESI contributions until the ITR filing deadline. This will reduce financial penalties and compliance risks for employers.

Interest on Motor Accident Compensation is Tax-Free

The interest received on compensation awarded by the Motor Accident Claims Tribunal (MACT) will now be completely tax-free, and no TDS will be deducted. This means that accident victims will receive full compensation without any tax deductions. ITR Filing Deadline Extended

Businesses and trusts that do not require an audit can now file their Income Tax Returns (ITR) until August 31st instead of July 31st. The deadline for salaried individuals remains July 31st. The deadline for filing revised returns has been extended from December 31st to March 31st.

Disability Pension for Armed Forces Fully Tax-Free

All disability pensions received by members of the armed forces who were injured while serving the country will now be completely tax-free.

MAT Becomes Final Corporate Tax

The Minimum Alternate Tax (MAT) for companies will now be a final tax of 14 percent. No new MAT credits will be granted. However, existing MAT credits can be utilized until March 31, 2026.