New Income Tax Act 2025: If you look at your salary slip every month and wonder where the money is being deducted, then this change is directly related to your pocket. From April 1, 2026, the 64 year old Income Tax Act 1961 has been removed and the new Income Tax Act 2025 has been implemented. This means that now the tax system has not only changed but has also been made more understandable for you and its effect will be visible on your take-home salary.
Earlier, the education allowance of children was only Rs 100, which was equal to the name. Now it has been increased to Rs 3,000 per month. Hostel allowance has also been increased from Rs 300 to Rs 9,000. Understand in simple language, earlier these allowances were only on paper, now by saving tax, you will actually get more money in your pocket.
No tax on earnings up to Rs 12.75 lakh
The government has kept tax zero under section 87A on income up to Rs 12 lakh. Apart from this, standard deduction of Rs 75,000 will also be available. This clearly means that if your salary is up to Rs 12.75 lakh, then you will not have to pay any tax, that is, your entire income will be useful to you.
Why was the law changed? understand in easy language
The old tax law had become very large and complex, containing more than 800 sections. In the new law these have been reduced to about 536. The aim of the government is that even the common man can understand the tax without any expert and unnecessary cases and disputes should be reduced.
The hassle of FY and AY is over, now tax in simple language
Earlier it was difficult for people to understand the difference between financial year and assessment year. Now this confusion has been eliminated. Now you will directly understand your earnings and tax in the name of “Tax Year 2026-27” and fill ITR in the same name easily, directly and without any complications.
Relief in HRA, benefit to those working in big cities
Now Bengaluru, Hyderabad, Pune and Ahmedabad have also been included in metro cities. This means that employees living in these cities will now get more HRA exemption, that is, more money will be left in your pocket even after rent.
Strictness on rent, efforts to stop fraud
If you pay more than Rs 1 lakh rent in a year, it will now be necessary to provide PAN of the landlord. You will also have to tell whether the landlord is your relative or not so that people cannot save tax by making fake receipts.
Medical loan, relief in difficult times
If your company gives a loan for treatment, then earlier tax exemption was available only up to Rs 20,000. Now it has been increased to Rs 2 lakh, that is, the help given at the time of illness will now be exempted from tax burden to a great extent.
relief on food expenses
Earlier, tax exemption of only Rs 50 was available on office food or meal vouchers, which was very less. Now it has been increased to Rs 200. This means that if you take food in the office every day, then you can spend up to Rs 1 lakh tax-free in a year. These small savings add up to a big relief.
Now Form-130 has come in place of Form-16. Along with this, other forms have also been changed. Now every information related to your tax will be available in a more clear and digital manner, which will reduce the scope for mistakes and errors.
Relief for senior citizens also
Now there will be no need for separate forms like 15G and 15H. By combining these, a new form has been made, which means that the elderly will now be able to get the work done with less hassle and less running around.
keep this in mind
The thing to keep in mind is that the ITR you will fill now will be as per the old law only. The new law will be applicable to the earnings after April 1, 2026, so there is no need for haste or confusion right now.
The government has not increased taxes but has changed the way of providing relief. An attempt has been made to benefit the salary class by increasing the allowances and simplifying the rules.
