Spiritual Picture | Image: Freepik
Some important financial rules and tax provisions are coming into effect from January 1, 2026. After these changes, people will have to pay attention to how they will report income, pay taxes, and conduct some financial transactions.
1. PAN-Aadhaar linking is necessary
As per tax rules, it is mandatory to link every Permanent Account Number (PAN) with Aadhaar. From January 1, 2026, any PAN which is not linked will be treated as inoperative. An inoperative PAN cannot be used for tax filing or most financial transactions.
Taxpayers who miss the deadline can also link PAN with Aadhaar by paying late linking fee. Until the linking is completed and the penalty is paid, the PAN will remain invalid for compliance purposes.
2. Consequences of penalty and withholding for invalid PAN
Individuals and companies who do not have a valid PAN may face higher tax deduction at source (TDS) or tax collection at source (TCS) rates on payments such as salaries, interest, rent and professional fees.
This rule applies when the PAN is not operative or is not given where required. Its objective is to ensure compliance with the Income Tax Act and reduce tax evasion.
3. Updated standard deduction and changes in tax regime
Under the changed tax regime, the standard deduction available to salaried employees and pensioners for tax years beginning April 1, 2026, has been updated. This will affect the taxable income and ultimately the amount of tax payable.
Deductions available under certain sections of the Income Tax Code, including those for investments and expenses, have been revised or rationalized to align with the updated limits.
4. Revised TDS and TCS limits
The government has adjusted the limits for TDS and TCS, which will decide when tax should be deducted or collected on payments. These limits apply to these categories:
- salary
- Rent
- Professional and technical fees
- Commission and Brokerage
- Sale of Goods (TCS)
Changes in these limits will affect when the deductor has to start deducting or collecting tax on specified receipts.
5. Changes in income tax filing requirements
From January 1, 2026, the process and timeline for Income Tax Return (ITR) filing has been updated. Taxpayers must ensure that they use the correct form as per the revised category, declare updated details of income, investments and deductions, and verify that the PAN-Aadhaar linking status is compliant before e-filing.
Some old financial rules and tax slabs remain the same. Key elements of the personal income tax structure such as the primary tax slab rate and basic investment incentives continue to be based on the previously announced Budget provisions.
Also read: Attempt to burn another Hindu alive in Bangladesh, this is how his life was saved
About the Author
