The Finance Ministry on 20 March notified and published its draft Income-Tax Rules, 2026, in the e-Gazette.
This comes after the Central Board of Direct Taxes (CBDT) put out its Draft Income Tax Rules in January 2026 and sought feedback from stakeholders. These rules make it possible for the I-T Act of 2025 to come into effect, replacing the 1961 Act with effect from 1 April 2026.
Notably, Budget 2026 extended the income tax returns (ITR) due date for ITR-3 and ITR-4 for non-audit taxpayers to 31 August from the end of the relevant tax year. However, there are no changes in the income tax slabs for FY26-27, and the existing slabs will continue. Further, the deadline for ITR-1 and ITR-2 remains 31 July of the relevant tax year, and the due date for the tax audit also stays unchanged at 31 October.
- STT hike: The Centre has hiked Securities Transaction Tax (STT) for the equity derivatives segment in a move that is expected to hit futures and options (F&O) traders. STT on futures will be increased to 0.05% from 0.02%, and on options transactions will be raised to 0.15% from 0.1%, from 1 April. This tax is levied on every purchase and sale of securities, such as equity shares, futures and options on recognised stock exchanges.
- Buyback taxation: Any amount received from the buyback of shares will be taxed as capital gains from 1 April. Further, promoter shareholders will have to pay a “differential buyback tax” with an effective rate of 22% for corporate promoters and 30% for non-corporate promoters.
- Changes to TCS: The Budget rationalised Tax Collected at Source (TCS) to ease compliance, reduce refund delays, and address confusion among taxpayers, with effect from April. TCS rates on alcoholic drinks is increased from 1% to 2%; TCS rates on remittance under Liberalised Remittance Scheme (LRS) for overseas tour package have been reduced to a single flat rate of 2% without threshold from the existing dual rate of 5% and 20%; TCS rate for remittance under LRS for education and medical treatment has been reduced from 5% to 2%.
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