📘 Finance Bill 2026 — Chapter III (B)

New Income Tax Act 2025 — 2026 Amendments

The Income-tax Act, 2025 (Act 30 of 2025) replaced the old 1961 Act with a simplified structure. Finance Bill 2026 now amends several sections of this new Act — affecting definitions, TDS/TCS, deductions, and dispute resolution. Here’s what you need to know.

📖 Key Changes to Definitions — Section 2

Section 2 of the new IT Act 2025 defines core terms. The Finance Bill 2026 amendment refines several definitions to align with international standards and remove ambiguity:

• “Person” definition expanded to include virtual digital asset entities
• “Income” clarified to include deemed incomes from crypto and digital assets
• “Assessment Year” definition updated to align with new Act structure
• “Business Connection” broadened for digital economy participants

💳 TDS & TCS Amendments — Sections 195–232

Multiple TDS/TCS sections of the new IT Act 2025 are amended to update thresholds, rates, and procedures:

• s.202–204: TDS deduction thresholds revised upward for salary, rent, and professional fees
• s.206: TCS scope extended to overseas remittances under LRS above ₹7 lakh
• s.217–218 (new): Consolidated section for TDS/TCS credit claim and reconciliation mechanism
• s.227–228: Lower deduction certificate process made fully digital and time-bound (30 days)
• s.232: Mandatory filing of TDS returns through enhanced TRACES portal

🏷️ Deductions & Exemptions — Sections 58–99

Key deduction provisions of the new IT Act 2025 are updated for FY 2026-27:

• s.58 (80C equivalent): Investment deduction cap enhanced from ₹1.5L to ₹2.0L under the old regime
• s.66 (HRA): Metro city list updated — Pune, Hyderabad, Bengaluru now qualify for higher HRA exemption
• s.69 (NPS): Employer contribution deduction ceiling raised to 14% of basic salary
• s.93 (Startup deductions): Profit-linked deduction for eligible startups extended by 3 more years
• s.99 (charitable trusts): Stricter compliance conditions for 80G-equivalent deductions

🏛️ Appeals & Dispute Resolution — Sections 262–296

The appeals framework in the new IT Act is overhauled for faster resolution:

• s.262–263: CIT(A) must dispose of appeals within 12 months of filing (previously no fixed timeline)
• s.266–267: ITAT hearing via video conferencing now default for taxpayers outside metro cities
• s.279: Compounding of offences — updated fee schedule and simplified procedure
• s.295–296: Rule-making powers expanded for e-proceedings and AI-assisted processing

🆕 New Section 354A — Deemed Assessment

Section 354A is a new insertion enabling deemed assessment where the Assessing Officer fails to complete assessment within prescribed time limits. In such cases, the return filed by the taxpayer is treated as assessed — providing certainty and protection against delayed government action.