April 1 Financial Rule Change LIVE Updates: Income tax, salary, PAN, gratuity to undergo massive overhaul as FY27 starts

• Employers will issue Form 130 to salaried individuals
• Specified banks will issue it to eligible senior citizens
• Issuance of this certificate is mandatory once TDS has been deducted and deposited.

• To establish proof that the tax has been deducted and deposited with the government.
• To provide a clear summary of salary details, deductions and tax liabilities, if any.
• To help individuals claim TDS credit while filing their income tax returns (ITR)

Form 130 is a Tax Deducted at Source (TDS) certificate issued annually by employers or specified banks. As per the updated Income-Tax Rules, 2026, Form 130 will officially replace Form 16. This means salaried taxpayers will receive Form 130 instead of Form 16 from FY 2026–27 onwards.

Notably, the document also applies to specified senior citizens who earn interest income and receive pensions.

Budget 2026 relaxes compliance norms for taxpayers, noting that there will be no interest liability on the penalty amount during the appeal period before the first appellate authority, irrespective of the outcome.

Finance Minister Nirmala Sitharaman, during her Budget speech, proposed a tax exemption on awards given by the Motor Accident Claims Tribunal, with effect from 1 April.

“In order to alleviate the sufferings of victims of such an accident and their family, which may cause extreme hardship to the aggrieved person and family, it is proposed to amend the said Schedule to provide exemption to an individual or his legal heir, on any income in the nature of interest under the Motor Vehicles Act, 1988,” the Budget document reads.

Budget 2026 also reduced the TCS rate for pursuing education and for medical purposes under the Liberalised Remittance Scheme (LRS).

Under the new rule, the TCS rate for such purposes has been reduced from the current 5% to 2%. However, the ₹10 lakh threshold still remains.

For remittances under LRS for other purposes, including investments, overseas spending and more, the TCS rate remains 20% on amounts above ₹10 lakh.

The Budget has reduced the Tax Collected at Source (TCS) rate on the sale of overseas tour programme packages. The TCS rate on overseas tour packages has been reduced from the current 5% and 20% to 2%. The TCS rate cut has been done without any stipulation of the amount.

As a result, overseas travel through tour packages will reduce upfront costs and simplify travel for tourists.

Budget 2026 provides for taxpayers to file their revised ITRs beyond 31 December. Under Section 263(5) of the Income-tax Act, 2025, taxpayers can file revised returns to correct omissions or mistakes in the original ITRs.

This deadline was previously limited to 31 December of the relevant assessment year. From 1 April, taxpayers will be able to file their revised returns till 31 March. However, they will have to pay a nominal fee if they miss the 31 December deadline.

Starting April 1, 2026, applicants seeking a PAN card will be required to submit additional supporting documents along with their application. These include a birth certificate, voter ID, passport, driving license, matriculation certificate, an affidavit issued by a magistrate, among other government-issued documents.

New PAN application forms are expected to be introduced soon as part of the updated process, replacing the existing ones. From April 1, 2026, the current (old) PAN forms will no longer be accepted for fresh applications or updates.

Starting April 1, 2026, name on the card will be removed. PAN name will be as per Aadhaar only. Hence, applicants must ensure that their Aadhaar details are correct.

Until March 31, 2026, PAN applications could be made using only Aadhar. From April 1, 2026, applicants will need to submit extra documents, making this the last chance to apply through the simplified Aadhaar-based process.

Several changes related to Permanent Account Number (PAN) card applications are set to come into effect from April 1, 2026.

The updates were recently highlighted by CSC e-Governance Services India Limited in a post on X (formerly Twitter).

According to the post, the new rules will impact the way users apply for or process PAN cards. Applicants are advised to be aware of the revised guidelines so that they can act before the deadline.

Financial and regulatory changes in April 2026 include new tax rules, higher rebates, updated TDS forms, increased banking charges, changes in fuel prices and new travel refund rules. Here are 10 financial changes to look out for.

The following is the revised refund structure for train ticket cancellations:

• If cancelled between 8 and 24 hours before departure — 50% refund.
• If cancelled between 24 and 72 hours — 25% deduction.
• If cancelled more than 72 hours before departure, maximum cancellation charge applies, not a full refund.
• The refund in such cases depends on Indian Railways’ terms and conditions, which are subject to change.

The Indian Railways will now permit zero refund if tickets are cancelled within 8 hours of departure. Earlier, this timeline was 4 hours.

Punjab National Bank has decided to reduce the debit card withdrawal limit to ₹50,000 to 75,000 for select cards. Several cards that earlier had withdrawals of up to ₹100,000 will now have reduced limits.

Banks such as HDFC Bank will, from 1 April 2026, include UPI ATM withdrawals in the free limit. If you exceed five transactions, you will be charged ₹23 per transaction thereafter.

Similarly, Bandhan Bank will provide customers with three free transactions in metro cities and five in non-metro cities. ₹23 will be charged for additional transactions and ₹25 for any failed transactions due to insufficient balance.

Fuel costs, including PNG, CNG and aviation turbine fuel, will be revised, thus impacting airfares and day-to-day transportation within the nation. These price changes, if implemented, will affect citizens’ lives comprehensively.

Domestic LPG cylinder prices might be revised on 1 April. These charges might be revised to address the geopolitical challenges due to the ongoing US-Israel war with Iran.

The Income Tax Department will no longer permit Aadhaar alone as proof of date of birth for PAN card applications. Documents such as the Class X certificate and passport will now be mandatory.

From 1 April 2026, Form 16 and Form 16A will be replaced by Form 130 and Form 131, respectively. The issuance timelines will be amended to facilitate smoother compliance and provide clarity in tax filings.

Under the new tax regime, individuals earning up to ₹12 lakh annually will pay zero tax. This is due to an increased rebate under Section 87A.

The Income Tax Act 2025 will come into effect, replacing the Income Tax Act 1961.

The new act will simplify the terminology and replace the slightly confusing ‘Assessment Year’ (AY) and ‘Previous Year’ (PY) with a single ‘Tax Year’.

Along with this, there are a host of changes that will make the code more meaningful.

The Finance Ministry on 20 March notified and published its draft Income-Tax Rules, 2026, in the e-Gazette. Here’s what this means for taxpayers and how the changes impact you with effect from 1 April 2026.

The Budget rationalised Tax Collected at Source (TCS) to ease compliance, reduce refund delays, and address confusion among taxpayers, with effect from April.

• TCS rates on alcoholic drinks is increased from 1% to 2%;
• TCS rates on remittance under Liberalised Remittance Scheme (LRS) for overseas tour package have been reduced to a single flat rate of 2% without threshold from the existing dual rate of 5% and 20%;
• TCS rate for remittance under LRS for education and medical treatment has been reduced from 5% to 2%.

Any amount received from the buyback of shares will be taxed as capital gains from 1 April.

Further, promoter shareholders will have to pay a “differential buyback tax” with an effective rate of:

• 22% for corporate promoters and
• 30% for non-corporate promoters.

The Centre has hiked Securities Transaction Tax (STT) for the equity derivatives segment in a move that is expected to hit futures and options (F&O) traders.

STT on futures will be increased to 0.05% from 0.02%, and on options transactions will be raised to 0.15% from 0.1%, from 1 April.

This tax is levied on every purchase and sale of securities, such as equity shares, futures and options on recognised stock exchanges.

The exemption for the allowance granted to employees working in any transport system has been enhanced from ₹10,000/month or 70% of the allowance, whichever is lower, to ₹25,000/month or 70% of the allowance, whichever is lower.

The exemption for the children’s education allowance has increased from ₹100/month to ₹3,000/month, per child under Old Tax regime. Further, the hostel expenditure allowance under Old Tax regime has also been increased from ₹300/month to ₹9,000/month, per child.

Four new cities added to list of metros allowed to claim 50% House and Rental Allowance (HRA) exemption under the Old Tax regime.

Ahmedabad, Bengaluru, Hyderabad and Pune have been added to the list which includes Chennai, Delhi, Kolkata and Mumbai.

For vehicles assigned by employer for work and personal use, tax of ₹8,000/month will be applicable on cars with engines up to 1.6 litre; and ₹10,000/month for bigger vehicles. This is under the Old and New Tax regimes.

Loans with no interest or interest rates below the market rate are to be taxed, based on the difference between the State Bank of India (SBI) lending rate and the actual rate charged, subject to certain exceptions. However, loans less than ₹2 lakh and those taken for medical emergencies remain tax-free.

Besides the meal cards, for salaried individuals, corporate gift cards, gift certificates or coupons of up to ₹15,000 each year are now also tax-free under the old tax regime.

No taxes for corporate meal cards that cost ₹200 or less per meal, under the Old Tax regime only.

This includes free food and non-alcoholic beverages for employees, and is an increase from the previous ₹50 per meal.

Annual this could mean an increase over ₹1.05 lakh tax-free annual take-home (e.g. 200×2 daily meals = 400, multiplied by average 22 working days a month = 8,800, x12 months = 1,05,000).

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.

The Budget has reduced the Tax Collected at Source (TCS) rate on the sale of overseas tour programme packages. The TCS rate on overseas tour packages has been reduced from the current 5% and 20% to 2%. The TCS rate cut has been done without any stipulation of the amount.

As a result, overseas travel through tour packages will reduce upfront costs and simplify travel for tourists.

The Income Tax Department will no longer restrict Aadhaar as only eligible proof of date of birth for PAN card applications. From 1 April, documents such as the Class X certificate and passport will now be mandatory.

Punjab National Bank has decided to reduce the debit card withdrawal limit to ₹50,000 to 75,000 for select cards from 1 April. Several cards that earlier had withdrawals of up to ₹1,00,000 will now have reduced limits.

Previously the labour laws required to have worked for a minimum of 240 working days in a year to ask for leave. It has now been reduced to 180 working days. This may come into effect from 1 April

Bandhan Bank will provide customers with three free transactions in metro cities and five in non-metro cities. ₹23 will be charged for additional transactions and ₹25 for any failed transactions due to insufficient balance.

The take-home salary will go down under the new labour laws as the PF contributions of the employees and the employer will increase. Under the new codes, the provident fund contribution is required to be a proportion of 50% of gross pay.

The new labour laws, which are likely to be implemented by 1 April, will overhaul the gratuity system and provide added benefits to lakhs of employees. Workers will get higher gratuity benefits as a higher proportion of basic pay and DA in the wage base is set to be implemented.

The following is the revised refund structure for train ticket cancellations:

• If cancelled between 8 and 24 hours before departure, → 50% refund.
• If cancelled between 24 and 72 hours, → 25% deduction.
• If cancelled more than 72 hours before departure, → maximum cancellation charge applies, not a full refund.
• The refund in such cases depends on Indian Railways’ terms and conditions, which are subject to change.

Starting 1 April, 2026, the Indian Railways will make ticket cancelling rules tighter. There will be no refund if a confirmed ticket is cancelled less than eight hours before departure. Earlier, this timeline was four hours.

The government may revise LPG cylinder prices from 1 April amid the US-Iran war.

From April 1, several new tax forms will replace the old ones as new Income Tax Act, 2025, comes into effect.

Form 16 is now Form 130

Form 16A is now Form 131

Form 12BB is now Form 124

Form 26AS is now Form 168

From 1 April compliance norms for taxpayers will be relaxed, as that there will be no interest liability on the penalty amount during the appeal period before the first appellate authority, irrespective of the outcome.

NHAI is adjusting the applicable charge for the FASTag Annual Pass from the existing ₹3,000 to ₹3,075 for the Financial Year 2026–27. Commencing April 1, the modification in the price has been implemented in line with the stipulations of the National Highways Fee (Determination of Rates and Collection) Rules, 2008, NHAI stated.

Starting 1 April, 2026, taxpayers are about to get some relief as the government is extending the time to file revised ITR. The due date to file ITR-3 and ITR-4 for non-audit taxpayers has been extended to 31 August from the end of the relevant tax year. This due date is also applicable for FY 2025-26 (AY 2026-27). However, taxpayers will have to pay penalty.