The Morning Brief Explaining the new Income Tax Rules
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Feb 13, 2026 Aditi Goyal, tax partner at Trilegal who advises on income tax policy and litigation, breaks down India’s 2026 tax overhaul. She discusses the sharp cut in unexplained income tax rates, the shift to a unified tax year, expanded HRA and allowance changes, and the balance between automated scrutiny and trust-based filing.
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Major Reset With Familiar Core
- The new Income Tax Act is both continuity and a reset, keeping core principles while adding significant changes.
- Taxpayers must adapt to new rules, forms, and procedures after a 65-year-old framework is overhauled.
Unexplained Income Tax Sharply Cut
- The base rate on unexplained income fell from about 60% to 30%, cutting the effective rate from ~78% to ~39%.
- The government intends this lower rate to act as a permanent nudge toward voluntary disclosure and broaden the tax base.
Prefer Voluntary Disclosure To Avoid Harsher Penalties
- Consider voluntary disclosure because lower exit costs encourage coming forward to avoid harsher penalties later.
- If the department detects undisclosed income before you disclose, penalties and prosecution remain a strong deterrent.