Now the ‘balle balle’ of the middle class, the math of Tax has changed, in April you will get more money even without salary increase, know how
- The math of tax has changed now the new law
- It will come in the form of actual tax savings
- How will the changes affect?
New Income Tax Act 2025 : If you look at your salary slip every month and wonder where exactly your money is disappearing, this change has a direct impact on your pocket. But now with effect from 1st April 2026, the 64 years old ‘Income Tax Act of 1961’ has been repealed. Instead ‘New Income Tax Act 2025’ has been implemented. This means that the taxation system has not only changed, but has also been restructured in a way that is more easily understood by the common man. This change will definitely be reflected in your salary. Earlier, education allowance for children was only ₹100. If seen, this amount was practically negligible. This amount has now been increased to ₹3,000 per month. Similarly, the hostel allowance has been increased from ₹300 to ₹9,000. Simply put: these allowances used to exist only on paper, but now they will come in the form of real savings in taxes. Which will bring more money directly into your pocket. See what will be changed and how it will be affected as follows
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There is no tax on income up to ₹12.75 lakh
Under Section 87A, the government has fixed the tax liability as ‘nil’ for income up to ₹12 lakh. Additionally, the Standard Deduction of ₹75,000 will also remain available as before. The meaning is clear: if your annual salary is within the limit of ₹12.75 lakh, you don’t need to pay any income tax. That means your entire income will be in your possession.
Why did the law change?
Earlier tax law had become too elaborate and complex; It included more than 800 clauses. Under the new law, this number has been adjusted. It has been reduced to roughly 536 clauses. The government aims to make tax rules understandable to the common man even without the help of experts; This will help in reducing unnecessary legal disputes and disputes. So it has been planned in that way.
Confusion between Financial Year (FY) and Assessment Year (AY) is over
Earlier, understanding the difference between ‘Financial Year’ (FY) and ‘Assessment Year’ (AY) was often a source of confusion for people. Now this ambiguity has been completely removed. Now you will refer your income and tax related liabilities only under one and combined name as “Tax Year 2026-27”. Also, you will also submit your Income Tax Return i.e. ITR in the same name. Which will make the whole process very simple, easy and free from any complications. HRA Concession: Going to be a boon for employees in major cities.
Bangalore, Hyderabad, Pune and Ahmedabad are now officially classified as ‘Metro Cities’. This means that employees residing in these cities will now be eligible for more concessions in HRA i.e. House Rent Allowance. Which will leave more money in your hand even after paying the house rent.
Strict rules regarding payment of house rent
If you are paying rent above Rs 1 lakh per annum, it is now mandatory to provide PAN details of your landlord. Additionally, you also need to clearly state whether your landlord is your relative or not; The purpose of this measure is to prevent tax evasion by submitting fake rent receipts.
Medical Loans: A relief in tough times
If your employer has given you a loan for medical treatment, the tax deduction limit which was earlier limited to Rs 20,000. It has now been increased to Rs 2 lakh. This means that this financial assistance received during the period of illness will now be largely tax free.
Concession on food expenses
The tax deduction limit for office-supplied meals or ‘meal vouchers’, which was earlier a meager Rs 50, has now been increased to Rs 200. As a result, if you take advantage of the office dining service on a daily basis, your expenditure up to around Rs 1 lakh per annum can now be fully tax-free. Thus, these small and cumulative savings give you a big financial relief.
Form-16 replaced by Form-130
Form-130 has now replaced the earlier Form-16. Along with this, many other tax related forms have also been amended. All information on your tax-related obligations will now be presented more clearly and in a ‘digital’ format; This will greatly reduce the possibility of any kind of mistakes or inconsistencies in the information.
Relief for senior citizens
The earlier requirement of submitting separate forms like Form 15G and Form 15H has been done away with. All these aspects are combined to form a single, coherent form; So that senior citizens can now complete their tax-related formalities with much less hassle and administrative burden.
Important Note:
It is very important to mention that the Income Tax Return (ITR) you are currently filing will be processed as per the prevailing tax laws. The new tax laws will apply only to income earned after 1 April 2026; So, there is no need to create any kind of unnecessary haste or confusion at this stage. The government has not increased taxes; Rather, it has changed the way tax-exemption is granted. Efforts have been made to benefit the salaried class by increasing various allowances and simplifying the rules.
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