New income tax rules, costlier F&O, cheaper foreign travel: What it means for your money

Before you worry, this isn’t a complete overhaul of how much tax you pay. The government has reorganised the law to make it easier to read and follow, not to dramatically change tax rates.

One noticeable shift is terminology. The confusing “previous year” and “assessment year” concept is being replaced with a single “tax year.”

Filing your returns? Nothing changes immediately

If you’re filing returns in July 2026 for FY 2025–26, you’ll still use the old system.

The transition is gradual, old cases continue under the earlier law. New tax payments (like advance tax from June onward) follow the new framework

One genuinely useful tweak is that even if you file your return late, you can still claim your TDS refund without penalties. That’s a small but meaningful relief.

If you trade F&O, your costs are going up

This comes after data showed retail investors collectively lost over ₹1 lakh crore in a year in derivatives trading.

Foreign travel and education just got a little lighter on your pocket

• Overseas tour packages drops sharply from 20% to 2%

• Education and medical remittances fall from 5% to 2%

One of the less talked-about announcements is a 20-year tax holiday (till 2047) for foreign companies using data centre services in India.

You may not feel this directly, but it signals where things are headed, more investment in digital infrastructure, more global tech activity anchored in India.

IT companies get breathing room

The government has also raised the threshold for safe harbour rules for IT companies from ₹300 crore to ₹2,000 crore.

In simple terms, this reduces the chances of tax disputes and brings more predictability for large tech firms.

Most people won’t see a dramatic change in their tax outgo this year.