India's New Income Tax Act Simplifies Filing and Expands Deductions

The Finance Act 2026 amended the Income‑tax Act 1961 and, together with the Income Tax Act 2025, introduced a single “Tax Year” concept that replaces the former dual Financial Year/Assessment Year system. Under the new law, taxpayers will file only one return per year; the e‑filing portal will support both the old and new return forms during the transition. The return for Tax Year 2026‑27 is due in July 2027 and there is no requirement to file two returns for the same period.

The amendments also broaden a suite of benefits for resident individuals and Indian companies for Assessment Year 2026‑27. They include presumptive taxation schemes (sections 44AD, 44ADA), deductions for preliminary expenses, amalgamation, mineral prospecting, infrastructure projects, startups, and specific exemptions such as sovereign gold bonds and health‑insurance deductions under Chapter VI‑A. These measures aim to simplify compliance while providing additional deductions and exemptions for eligible taxpayers.