As financial year 2026-27 begins, here are major changes effective April 1

With a new financial year set to dawn on April 1, the government will introduce a slew of new rules, encompassing various areas – from income tax to digital transactions to road travel to others.

New income tax rules

The much-talked-about Income Tax Act of 2025 is set to take effect on April 1, superseding the Income Tax Act of 1961, and bringing in new rules (Income-tax Rules, 2026). Significant updates consist of: A restructured format featuring reorganised sections; the incorporation of clearer language throughout the provisions; revised definitions and classifications of income.

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This new framework will replace the current tax law, becoming applicable from the fiscal year 2026–27. The Centre has claimed that the revised legislation would clarify tax regulations and enhance comprehension, all while maintaining the current tax rates.

More safety for online transactions

Starting April 1, the Reserve Bank of India (RBI) will implement more stringent authentication protocols for online transactions, requiring two-factor authentication (2FA) in addition to the one-time password (OTP). This initiative, which is based on guidelines issued last September, is designed to combat the increasing incidence of digital fraud and to enhance the accountability of banks in the event of security breaches.

The authentication methods may include: passwords or passphrases; PIN (personal identification number); biometrics such as fingerprint or facial recognition; software tokens generated within banking applications; hardware tokens that produce unique security codes, besides the SMS-based OTP. While OTP-based verification has been widely used so far, fraudsters have increasingly found ways to breach it. The new safety mechanism will be applicable to UPIs, debit cards, credit cards, and online banking.

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The 2FA method will work either through: OTP (dynamic) combined with a PIN (static); real-time biometric verification along with device binding; or token-based authentication combined with a password.

Also, the RBI has made it clear that if a fraudulent practice occurs due to a bank’s failure to implement the new security measures, it will be held responsible.

In international transactions, while no OTP authentication is required at the moment, and it is a major loophole that fraudsters exploit, stricter rules are also set to be applied to international transactions from October 1, 2026.

FASTag Annual Pass revised

From April 1, the government will increase the FASTag Annual Pass fee from Rs 3,000 to Rs 3,075. The annual pass is a prepaid plan meant for those who make frequent road travel, allowing seamless convenience through a one-time payment valid for a year or up to 200 trips, whichever comes first. It is linked to an active FASTag for fast and easy activation.

Changes in PAN card application norms

Beginning April 1, those applying for a new PAN card or updating their existing one, will have to submit additional documents other than Aadhaar. It has been announced by Common Services Centres, a government body that works under the IT ministry.

The additional documents required to be produced are: birth certificate, voter ID, class 10 certificate, passport, driving licence, and affidavit (magistrate). Also, new application forms will come into effect from the same date.

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Alterations in Sovereign Gold Bond Taxation

Another significant modification effective from April 1 pertains to the taxation of Sovereign Gold Bonds (SGB). The tax-free maturity benefit is now exclusively available to the original subscribers. Investors who acquire SGBs from the secondary market are required to pay capital gains tax.

The requirement holds true even if the bonds are retained until maturity. Previously, tax exemption was granted irrespective of the method of bond acquisition.

Decrease in TCS for foreign education, medical costs

In a major relief to middle-class families, the government has lowered the Tax Collected at Source (TCS) on specific international expenses as per the Liberalised Remittance Scheme (LRS), something which was announced under the Union Budget this year and the new rule will come into force from April 1.

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It has been reduced from five to two per cent for both overseas education and medical treatment. These updated rates will be applicable to qualifying foreign remittances conducted under LRS starting from April 2026.

ITR filing deadlines revised

The deadlines for submitting specific I-T returns have also been revised. The deadline for ITR-3 and ITR-4 (non-audit cases) has been postponed to August 31. This change is effective from FY 2025–26 (AY 2026–27) onwards.

The deadline for ITR-1 and ITR-2 remains July 31 while that for filing ITR for tax audit continues to be October 31.

These timelines are determined by the taxpayer's category and audit obligations.