With every financial year, taxpayers must review the latest Income Tax rules, forms, and compliance requirements. For FY 2025-26 (AY 2026-27), several updates in income tax return (ITR) filing procedures, tax regimes, and compliance reporting have made it important for individuals, professionals, and businesses to understand which option suits them best. In this blog, we compare the Old Tax Regime vs New Tax Regime (2026) and explain the latest updates in income tax forms and rules.
Understanding the Two Tax Regimes
Currently, taxpayers can choose between:
Old Tax Regime – Allows various deductions and exemptions.
New Tax Regime – Offers lower tax rates but fewer deductions.
The New Tax Regime continues to be the default option, but taxpayers can opt for the Old Regime if it is more beneficial.
Income Tax Slab Comparison for 2026
🔹 New Tax Regime (FY 2025-26)
Up to ₹3,00,000 – Nil
₹3,00,001 to ₹6,00,000 – 5%
₹6,00,001 to ₹9,00,000 – 10%
₹9,00,001 to ₹12,00,000 – 15%
₹12,00,001 to ₹15,00,000 – 20%
Above ₹15,00,000 – 30%
Rebate under Section 87A continues (subject to income limits as notified).
🔹 Old Tax Regime
Up to ₹2,50,000 – Nil
₹2,50,001 to ₹5,00,000 – 5%
₹5,00,001 to ₹10,00,000 – 20%
Above ₹10,00,000 – 30%
However, under the Old Regime, you can claim deductions like:
Section 80C (Investments)
Section 80D (Medical Insurance)
HRA
Home Loan Interest
LTA
Standard Deduction
Key Changes in Income Tax Rules 2026
1. Simplified ITR Forms
Income Tax Return forms have been streamlined with improved reporting structure and better disclosure requirements for capital gains, crypto transactions, and foreign income.
2. Enhanced AIS & Pre-Filled Data
Annual Information Statement (AIS) now captures detailed financial transactions including interest, dividends, securities trading, and high-value transactions. Pre-filled returns reduce manual errors.
3. TDS & TCS Reporting Strengthened
Stricter reconciliation between Form 26AS, AIS, and TDS returns. Mismatch alerts are now system-driven.
4. Updated Compliance for Professionals & Businesses
Freelancers, consultants, and SMEs must carefully review turnover limits, presumptive taxation rules, and audit applicability.
5. Faster Processing & Refunds
Automation and AI-based verification have improved refund timelines (subject to proper filing and verification).
Which Tax Regime Should You Choose in 2026?
Choose the New Regime If:
You do not claim many deductions
You prefer simplified tax filing
Your income falls in mid-level slabs
Choose the Old Regime If:
You invest heavily under 80C
You pay home loan interest
You claim HRA and other exemptions
You have significant deductions
A comparative tax calculation is recommended before choosing.
Income Tax Return (ITR) Forms 2026
Different taxpayers must file different ITR forms:
ITR-1 (Sahaj) – Salaried individuals (basic income sources)
ITR-2 – Individuals with capital gains or multiple properties
ITR-3 – Business or professional income
ITR-4 (Sugam) – Presumptive income scheme
ITR-5/6/7 – Firms, LLPs, Companies, Trusts
Selecting the correct ITR form is essential to avoid defective return notices.
Important Compliance Points for 2026
Verify ITR within prescribed timeline
Reconcile AIS, Form 26AS, and TDS certificates
Maintain proper books of accounts (if applicable)
Check audit applicability
Pay advance tax on time to avoid interest
Non-compliance may attract penalties and notices.
Why Professional Guidance Matters
Choosing the wrong tax regime or filing an incorrect ITR form can result in:
Higher tax liability
Loss of eligible deductions
Delayed refunds
Notices from Income Tax Department
Professional assistance ensures accurate calculation, correct form selection, and timely filing.
Conclusion
Income Tax Rules 2026 continue to focus on digitization, transparency, and simplified filing. However, the choice between Old and New Tax Regime depends entirely on your income structure and eligible deductions. Before filing your return, compare both regimes carefully and ensure full compliance with updated rules. Contact BusinessRights to get expert support for Income Tax Return filing, tax planning, and compliance services for individuals, professionals, and businesses across India.