Your Salary, Tax and Final Settlement Rules Change From April 1 – Are You Prepared?

Starting April 1, 2026, significant changes are coming to India’s labor and tax laws. The new Code on Wages mandates that basic salary, Dearness Allowance (DA), and retaining allowance comprise at least 50% of an employee’s total cost to company, potentially increasing retirement savings but slightly reducing immediate take-home pay. Employees changing jobs will receive their full and final settlement within just two working days, a significant improvement from the previous 30-90 day timeframe.

A new Income Tax Act, 2025, will replace the existing 1961 Act, simplifying the law by reducing the number of sections and chapters, though tax rates and most deductions will remain largely unchanged. The distinction between “Previous Year” and “Assessment Year” will be replaced with a single “Tax Year.” Furthermore, Tax Collected at Source (TCS) on overseas travel and education remittances will be reduced to a flat 2%.

Changes also affect Sovereign Gold Bonds, with tax exemptions at maturity now applying only to those purchased directly from the RBI. Taxpayers will have 12 months to file revised returns, but a fee will apply after nine months. These reforms aim to streamline processes, improve employee benefits, and simplify the tax system, and individuals are advised to consult with HR and tax advisors to understand the specific impacts.

(Source：Times Now News)