Noida, Mar 31 (APAC Media): India’s new income-tax law, along with key budgetary measures including a higher Securities Transaction Tax (STT) on futures and options (F&O) trades, will come into effect from 1 April 2026, marking the beginning of the 2026–27 financial year, officials said.
The Income Tax Act, 2025, which replaces the 1961 Act, seeks to simplify compliance and improve accessibility, a senior Income Tax Department official said, adding that “the new Act presents the same tax policy in a more logical and reader-friendly format, and e-filing portals will support compliance under both the old and new laws during the transition period.”
The distinction between the previous year and assessment year has been removed and replaced with a single “tax year” system. Advance tax payments for 2026‑27 will follow the new Act, while returns for AY 2026‑27 will be filed using forms under the old Act.
A key change relates to the Securities Transaction Tax (STT) on equity derivatives. STT on futures contracts will rise to 0.05 per cent from 0.02 per cent, while STT on options premiums and exercise will increase to 0.15 per cent from 0.10 per cent and 0.125 per cent, respectively.
“The higher STT aims to curb speculative trading and protect small investors, who faced net losses exceeding Rs 1.05 lakh crore in FY25.” the regulator added.
Participation in the F&O segment has declined from 1.06 crore individuals in FY25 to about 75.43 lakh in FY26 (up to December 2025).
Other measures include a 20-year tax holiday for foreign companies procuring data centre services in India, along with an increase in safe harbour thresholds for IT and ITeS firms from Rs 300 crore to Rs 2,000 crore, aimed at providing greater certainty and reducing litigation.
“These steps will provide greater certainty and help reduce litigation, benefiting both domestic and foreign IT businesses,” an industry representative said.
Tax collected at source (TCS) on overseas tour packages and Liberalised Remittance Scheme (LRS) remittances for medical and educational purposes has been reduced to 2 per cent, easing the burden on middle-class taxpayers.
The reforms reflect India’s push to modernise its tax system, streamline compliance, regulate speculative trading, and support IT and data centre growth.
