New Income Tax Bill 2026 Direct Tax Code Overhaul: Simplified Standard Deduction Slabs, LTCG Indexation Relief, and Faceless Assessment 2.0

The Central Board of Direct Taxes (CBDT) replaces the six-decade-old Income Tax Act of 1961 with a streamlined, 50%-shorter Direct Tax Code featuring unified ‘Tax Year’ terminology and AI-validated instant refunds.

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New Income Tax Bill 2026 Direct Tax Code Overhaul: Simplified Standard Deduction Slabs, LTCG Indexation Relief, and Faceless Assessment 2.0
New Income Tax Bill 2026 Direct Tax Code Overhaul: Simplified Standard Deduction Slabs, LTCG Indexation Relief, and Faceless Assessment 2.0 | Desk: Taxation & Personal Finance | India Daily Rise
In Brief: Key Verified Takeaways
  • Elimination of Assessment Year Confusion: The new Direct Tax statute replaces the confusing dual concepts of "Previous Year" and "Assessment Year" with a single, intuitive "Tax Year".
  • 50% Reduction in Legal Text: Obsolete provisos, redundant explanations, and archaic cross-references from the 1961 Act have been replaced by tabular schedules and formulas.
  • Salaried Taxpayer Relief: Retains the enhanced ₹75,000 Standard Deduction and zero effective tax liability up to ₹12.75 lakh under the revised default regime.
  • Capital Gains Rationalisation: Harmonises holding periods across listed securities (12 months) and unlisted/real estate assets (24 months) with grandfathering protections for legacy property purchases.
  • Litigation De-Congestion: Raises monetary thresholds for departmental tax appeals before ITAT, High Courts, and the Supreme Court to clear over 5.4 lakh pending disputes.

NEW DELHI — Sixty-five years after the Income Tax Act of 1961 was enacted, India’s direct tax architecture has undergone its most sweeping structural modernisation. Drafted by the internal review committee of the Central Board of Direct Taxes (CBDT), the New Income Tax Act 2026 cuts the volume of statutory text by nearly half, eliminates hundreds of obsolete provisos, and introduces tabular computation schedules designed so individual taxpayers can file returns without complex legal interpretation.

Replacing “Previous Year” and “Assessment Year” with a Single “Tax Year”

For decades, first-time taxpayers and small business owners struggled with the statutory distinction between the Previous Year (the 12-month period in which income is earned) and the Assessment Year (the following 12-month period in which that income is assessed). The 2026 statute abolishes this dual terminology altogether, aligning India with international tax administration norms by adopting a single Tax Year running from April 1 to March 31.

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Explained: Key Questions & Context

Q: What is the biggest change in the New Income Tax Bill 2026 for ordinary taxpayers?

The new law abolishes the confusing distinction between "Financial Year / Previous Year" and "Assessment Year", replacing both with a single "Tax Year", and presents exemptions and deductions in clean, easy-to-read tables rather than dense legal provisos.

Q: How much income is tax-free under the revised default income tax regime in 2026?

With the rebate under Section 87A combined with the ₹75,000 standard deduction for salaried employees, individuals earning up to ₹12.75 lakh annually pay zero income tax under the default regime.

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