2026 will bring several changes that directly affect your money from how much tax you pay and how easily you file returns, to how your investments, loans and inheritance are treated.
Tax rebates, simpler ITR forms, lower mutual fund costs, salary revisions under the 8th Pay Commission, easier asset transfers and new RBI rules on loans and credit reporting are all set to kick in.
Whether you are a salaried employee, investor, borrower or card user, these changes will shape your financial decisions in the year ahead.
ITR 2026: Tax rebate on Rs 12 lakh income
The tax rebate on income up to Rs 12 lakh will be applicable while filing ITR 2026, effectively making it tax-free under the new regime. This means individuals with an annual income of up to Rs 12 lakh won't have to pay any income tax because of the increased rebate of Rs 60,000 under Section 87A.
Salaried employees get an added benefit of a standard deduction of Rs 75,000, making their tax-free income limit Rs 12.75 lakh. This change aims to provide relief to middle-class taxpayers and simplify the tax structure.
New Income Tax Act from April 2026
The New Income Tax Act will be effective from 2026 replacing the previous Income Tax Act of 1961. It has reduced sections from 819 to 536 and chapters from 47 to 23, making tax laws more concise.
The CBDT will also notify new income tax return forms by January 2026, under the simplified Income Tax Act, 2025, effective April 1, 2026. The new forms aim to simplify tax filing, reduce disputes, and enhance compliance.
Key changes include increased thresholds for asset and liability disclosure, detailed deduction reporting, and expanded eligibility for simplified returns.
The 8th Pay Commission kicks in
The Centre typically reviews central government employees' pay scales, allowances, pensions, and benefits every 10 years. The 8th Central Pay Commission (CPC) is set to kick in from January 1, 2026, wrapping up the 7th CPC term on December 31, 2025.
When a new Pay Commission kicks in, your accumulated dearness allowance (DA) gets merged into your basic pay, and DA resets to zero. Your revised salary is then calculated by applying a fitment factor to your old basic pay, which already accounts for the DA merger.
The immediate concern is how DA will be treated. DA was last hiked from 55 percent to 58 percent on July 1, 2025, and is due for another revision on January 1, 2026. Typically, DA is revised every six months until the new pay commission's fitment factor kicks in. Once implemented, the accumulated DA merges with basic pay, resets to zero, and starts building up again.
SEBI lowers expense ratio
SEBI's latest changes aim to make mutual fund investing more transparent and cost-effective. The total expense ratio (TER) will now exclude statutory levies such as GST, stamp duty, and securities transaction tax, and will be divided into separate components.
This change will help investors understand what they're paying for and reduce hidden charges. Asset managers lowered expense ratio caps across categories, reducing index funds and ETFs from 1 percent to 0.9 percent. These changes should benefit investors and make mutual fund investing more transparent. SEBI will implement the revised expense ratio from April 2026.
SEBI's New TLH Code: Simplifying tax-exempt inheritances
From January 2026, a new Transmission to Legal Heirs (TLH) reporting code will automatically identify transfers of securities from nominees to legal heirs as tax-exempt inheritances. This move by Securities and Exchange Board of India (SEBI) aims to simplify the process and prevent wrongful capital gains tax assessments.
The TLH code will be used by reporting entities, including RTAs, listed companies, depositories, and depository participants, when reporting these transactions to the CBDT. This change aligns with Section 47(iii) of the Income Tax Act, 1961, which exempts such transmissions from capital gains tax. The TLH code ensures accurate reporting, reduces compliance burden, and prevents disputes with tax authorities.
India streamlines asset inheritance with mandatory probate scrapped
Effective from January 1, the Indian government has taken a significant step towards simplifying the process of inheriting assets by scrapping the mandatory probate of wills in Mumbai, Chennai, and Kolkata. The Repealing and Amending Act, 2025, which omits Section 213 of the Indian Succession Act, 1925, aims to create uniformity and eradicate discrimination in the process of succession.
Scrapping mandatory probate is likely to streamline asset inheritance and bring consistency to India's legal framework.
Borrow against silver from April 2026
The RBI has introduced a new option for borrowers, allowing them to pledge silver jewellery or coins to secure loans from banks and non-banking finance companies (NBFCs), in addition to gold. This move aims to improve oversight, uniformity, and transparency in the precious metal loan market.
The RBI's guidelines, outlined in the Reserve Bank of India (Gold and Silver (Loans) Directions, 2025), will take effect on April 1, 2026. Loans against silver can be extended by Commercial Banks (including Small Finance and Regional Rural Banks), Urban and Rural Co-operative Banks, and NBFCs and Housing Finance Companies.
RBI mandates weekly credit reporting
The RBI proposes key changes to credit bureaus from July 1, 2026. Lenders will submit borrower data to credit bureaus on a weekly basis, i.e. 7th, 14th, 21st, 28th, and last day of every month. The lenders will submit a complete snapshot of all active and closed accounts by the 5th of the following month. These changes aim to improve credit transparency and reduce errors, benefiting both lenders and borrowers.
RBI scraps pre-payment charges on floating-rate loans for individuals, MSEs
The RBI has instructed banks and lenders to scrap pre-payment charges on floating-rate loans, including business loans, for individuals and micro and small enterprises (MSEs), effective for loans sanctioned or renewed from January 1, 2026.
Currently, pre-payment penalties are already banned for floating-rate term loans to individual borrowers for non-business purposes.
Banks slash rewards, hike fees on cards
Several banks, including IDFC First Bank, HDFC Bank, and ICICI Bank, are revising their credit and debit card benefits and charges from January 2026. For instance, IDFC First Bank is reducing international transaction rewards on its Ashva and Mayura cards from 10x to 5x, with a condition to spend Rs 20,000 monthly to unlock higher rates. Lifetime-free cards will see a 25 percent cut in basic reward rates.
Then, ICICI Bank is introducing a 1 percent charge on high-value transportation transactions, capping reward points on transportation spends, and increasing Dynamic Currency Conversion (DCC) fees.
HDFC Bank is tightening debit card lounge perks, requiring customers to claim vouchers via SMS or email.
These changes aim to simplify how you manage money. Knowing what lies ahead can help you step into 2026 better prepared.
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