What's changing from April 1? From new income tax rules and banking policy to PAN card and ATM regulations

The Income Tax Act, 2025, has come into effect from Wednesday (April 1, 2026), replacing the 1961 Act. The new law, among other things, simplifies tax compliance, removes assessment/previous year distinctions, and focuses on a single 'tax year' framework.

With the Income Tax Rules, 2026, coming into effect from Wednesday , the country is set to witness the implementation of several new financial and regulatory rules.

Changes in income tax return (ITR) filing norms and PAN regulations, revisions in salary structure, FASTag annual pass fee hike and several other regulatory changes across banking, infrastructure, and local levies will come into effect with the start of new financial year.

These changes are expected to impact the day-to-day lives of citizens.

Here is a look at some of the changes that will come into from Wednesday.

. Stricter house rent allowance (HRA) rules come into force. Employees must submit landlord’s PAN and rent payment proof to claim HRA.

Eight cities now qualify for 50% HRA exemption: Bengaluru, Hyderabad, Pune and Ahmedabad added to the metro list alongside Mumbai, Delhi, Kolkata, Chennai.

. The tax-exempt children's education allowance will see a massive increase from Rs 100 to Rs 3,000 a month per child, and the hostel allowance will rise from Rs 300 to Rs 9,000 a month per child.

. There will be a significant increase in the taxable perquisite values for company-provided cars used for both personal and business purposes

Cars with ≤1.6L engine: Rs 8,000 a month

Cars with >1.6L engine: Rs 10,000 a month

Driver benefit: Rs 3,000 a month

. The new tax rules will significantly enhance the tax relief available on employer-provided meals for salaried individuals. The exemption limit per meal has been increased to Rs 200, up from Rs 50 .

Employees who receive benefits such as meal coupons, prepaid cards or subsidised office canteen food can now exclude a much larger portion of these perks from their taxable income.

. UPI-based cardless ATM withdrawals to be counted within the monthly free transaction quota.

HDFC Bank, Bandhan Bank and Punjab National Bank (PNB) have revised the rules. Previously separate, these transactions will now incur charges of Rs 23 plus taxes once the free limit (typically five transactions) exceeds.

PNB has cut daily withdrawal limit to Rs 50,000 for select cards.

. Aadhaar-only PAN applications discontinued: The facility to apply for a new PAN card using only an Aadhaar card (e-KYC) has been discontinued . Applicants must now submit additional proof of date of birth (such as birth certificate, passport) and cannot rely on Aadhaar as a single-document solution for PAN applications.

Applicants will now have to use category-specific forms. Form 93 for individuals, Form 94 for companies, Form 95 for foreign individuals, and Form 96 for foreign entities.

PAN is mandatory if aggregate cash deposits or withdrawals in a financial year exceed Rs 10 lakh across one or more bank accounts. This replaces the old rule requiring PAN for cash deposits of more than Rs 50,000 in a single day.

PAN is mandatory for purchasing any motor vehicle, including two-wheelers/motorcycles, having a value exceeding Rs 5 lakh, and for the purchase, sale, gift, or joint development of immovable property valued over Rs 20 lakh. The previous limit was Rs 10 lakh.

. High-value card spends to be reported: Income Tax Department has tightened tracking of high-value credit card transactions, with banks mandated to report annual payments exceeding Rs 10 lakh.

Credit card statements to be accepted as address proof.

PAN is mandatory for all new applications.

. Full-year payers have been exempt from filing returns.

Karnataka has amended the 1976 Profession Tax Act — those who have paid full tax or are exempt need not furnish annual returns.

. The National Highways Authority of India increased the FASTag annual pass fare by Rs 75 starting Wednesday.

The annual plan, which was introduced last year, was priced at Rs 3,000 and will now cost Rs 3,075 . It covers up to one year of travel or 200 toll crossings across the nation, whichever comes first.

. Karnataka is introducing the alcohol-in-beverage (AIB) excise duty structure , where tax will be levied based on actual alcohol content rather than volume or price. With this, the prices of high-alcohol beverages may change in the State from Wednesday.

. The Railways will be implementing strict new ticket cancellation rules , offering zero refund on confirmed tickets cancelled within eight hours of a train's scheduled departure.