April 1 financial change Highlights: Income tax, salary, PAN card rule changes you should know about as FY27 nears

HRA exemption: Four new cities added to list of metros allowed to claim 50% House and Rental Allowance (HRA) exemption. Ahmedabad, Bengaluru, Hyderabad and Pune have been added to the list which includes Chennai, Delhi, Kolkata and Mumbai. This is under the Old Tax regime.

Children's education-related expenses: The exemption for the children's education allowance has increased from ₹100/month to ₹3,000/month, per child under Old Tax regime. Further, the hostel expenditure allowance under Old Tax regime has also been increased from ₹300/month to ₹9,000/month, per child.

• Corporate loans: Loans with no interest or interest rates below the market rate are to be taxed, based on the difference between the State Bank of India (SBI) lending rate and the actual rate charged, subject to certain exceptions. However, loans less than ₹2 lakh and those taken for medical emergencies remain tax-free.
• Corporate / company vehicle: For vehicles assigned by employer for work and personal use, tax of ₹8,000/month will be applicable on cars with engines up to 1.6 litre; and ₹10,000/month for bigger vehicles. This is under the Old and New Tax regimes.

• Meal cards: No taxes for corporate meal cards that cost ₹200 or less per meal, under the Old Tax regime only. This includes free food and non-alcoholic beverages for employees, and is an increase from the previous ₹50 per meal
• Coupons and gift cards: Corporate gift cards, gift certificates or coupons of up to ₹15,000 each year are tax-free under the Old Tax regime.

• The number of tax rules has been reduced from 399 to 190.
• The number of tax forms has been reduced from 511 to 333.
• The changes aim to make the taxation system easier for businesses and taxpayers to use.
• Further, all the forms will look the same and feature text that is easier to read, with features like auto-filled data.

The current income tax slabs under new tax regime are:

• Income up to ₹4 lakh: Tax rate 0%
• Income up to ₹8 lakh: Tax rate 5%
• Income up to ₹12 lakh: Tax rate 10%
• Income up to ₹16 lakh: Tax rate 15%
• Income up to ₹20 lakh: Tax rate 20%
• Income up to ₹24 lakh: Tax rate 25%
• Income above ₹24 lakh: Tax rate 30%

• Income up to ₹2.5 lakh: Tax rate 0%
• Income up to ₹5 lakh: Tax rate 5%
• Income up to ₹10 lakh: Tax rate 20%
• Income above ₹10 lakh: Tax rate 30%

From 1 April 2026, Form 130 will become the new standard for TDS reporting and submission for salaries and certain pension incomes. It aims to make tax filing easier and standardised. Here are key FAQs taxpayers should know.

• Tax filing will now become more structured, detailed and easier.
• Greater emphasis will now be put on system-generated data.
• The aim is to reduce mismatches between ITRs and employer filings.
• The form will aim to simplify the tax submission process.

Yes. If the original document is lost, a duplicate can be issued, clearly marked as such.

Yes. If you changed jobs during the year: Each organisation/ employer will issue you a separate Form 130 (Part A & B).

Part C may be issued by each employer or just the last employer.

No. You must keep this document for records and verification. Still, you are not required to submit it with your ITR return.

Yes, errors can be rectified. In case there is a mistake or omission:

• The employer must file a revised TDS statement.
• A corrected Form 130 can then be downloaded later and reissued.

Form 130 must be issued by 15 June of the financial year, following the year in which income was paid and tax deducted.

No. The employer must first file quarterly TDS statements (Form 138). Only after processing these statements can Form 130 be generated.

• Form 130 will be a system-generated document
• Must be downloaded from the TRACES portal
• Can be issued with either a digital or manual signature
• Cannot be created manually outside the system

• Employers will issue Form 130 to salaried individuals
• Specified banks will issue it to eligible senior citizens
• Issuance of this certificate is mandatory once TDS has been deducted and deposited.

Form 130 is divided into three parts:

• Part A: Details of the employer or bank and the employee/senior citizen
• Part B: Summary of income paid, TDS deducted and other key tax details
• Part C: Complete computation of taxable income for the financial year

Part C further includes:

• Annexure I: For salaried employees (salary, exemptions, deductions, tax, etc.)
• Annexure II: For specified senior citizens (pension and interest income details)

As per the updated Income-Tax Rules, 2026, Form 130 will officially replace Form 16. This means salaried taxpayers will receive Form 130 instead of Form 16 from FY 2026–27 onwards.

Form 130 is a Tax Deducted at Source (TDS) certificate issued annually by employers or specified banks. This document also applies to specified senior citizens who earn interest income and receive pensions. The main objectives of this document are:

• To establish proof that the tax has been deducted and deposited with the government.
• To provide a clear summary of salary details, deductions and tax liabilities, if any.
• To help individuals claim TDS credit while filing their income tax returns (ITR).