India Overhauls Income Tax After 60 Years, Nris Set To Benefit From Simpler Rules

2026-04-01 02:32:26

(MENAFN- Khaleej Times) For the first time in more than 60 years, India has brought in dramatic changes in its Income Tax rules effective Wednesday. Nirmala Sitharaman, the finance minister, said the new rules would transform the 'maze', created by over 4,000 amendments over the past, lowering errors, disputes and compliance costs.

The minister said the new act is less ambiguous and gives a simpler framework. Every section of the act has been recast, words have been changed and the 819 sections and 47 chapters that were there have been slashed to 536 sections and 23 chapters. It also reflects the change in how officials interact with the public as the new law ensures a cleaner and leaner framework, and that it is administered with“empathy, fairness and efficiency.”

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Sitharaman pointed out that the taxpayer is not an adversary for officials, but a partner in nation building. She also hoped that the time will come when a taxpayer is comfortable interacting with officials and will“come and say, hello IT officer,” without any fear.

Income Tax Act 2026 replaces the 1961 Act, presenting the same tax policy in a logical, accessible and reader-friendly format.

Importantly for NRIs, the new rules clarify how income linked to India is assessed and taxed. The newly introduced rule 9 formalises how the IT department estimates the taxable income of non-residents.

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A major change in the new act is the renaming of 'assessment year - AY' and 'financial year – FY' to just tax year, simplifying things for the taxpayer and avoiding confusion.

The tax year is the simple 12-month period from April to March, for which earned income and taxes are filed. Redesigned Income Tax Returns (ITR) forms are also being introduced, making it accessible and easier for taxpayers.

In terms of digital payment transactions, the Reserve Bank of India has insisted that the two-factor authentication should remain. It relies on SMS-based one-time password as an additional verification layer.

Meanwhile, the Indian Ministry of Electronics and Information Technology has released the draft of new rules relating to news and current affairs content posted online even by individual users, comparable to the ones for publishers.

According to ministry officials, social media news is currently unregulated. Similarly, a large number of deep fakes are circulating on social media. A few weeks back, the ministry tightened the takedown timelines for such postings to three to two hours from the earlier 36 to 24 hours.