On April 1, 2026, India’s Income Tax Act 1961 quietly stopped being the law of the land. After 64 years, the Act that has governed every salary slip, every home loan deduction, and every HRA claim filed in this country has been replaced by the Income Tax Act 2025. The new Act has Presidential assent. It has 536 sections instead of 819. The language is simpler. And for home loan borrowers, salaried professionals living in rented accommodation, and new homebuyers — particularly those in Bengaluru, Hyderabad, Pune, and Ahmedabad — the changes are not just cosmetic.

If you’re filing for FY 2025-26 in July, the old Act still applies. But for the financial year that just began on April 1, 2026, several specific changes are already in force that affect how much tax you’ll pay next year. Here’s what they are, in plain language.

The HRA change that benefits four cities the most

For more than six decades, the 50% House Rent Allowance exemption was reserved for four cities: Delhi, Mumbai, Chennai, and Kolkata. Every other city — including the country’s biggest tech hubs — was capped at 40%.

From April 1, 2026, that list expands to eight. Bengaluru, Hyderabad, Pune, and Ahmedabad now qualify for the 50% HRA exemption for the first time, formally acknowledging what most professionals have known for years: the rents in these cities long ago crossed any reasonable definition of "non-metro."

The practical impact is immediate for anyone renting in these four cities under the old tax regime. To put concrete numbers on it: for a professional in Bengaluru with a basic salary of ₹60,000 per month and rent of ₹35,000 per month, the HRA exemption under the old 40% rule worked out to ₹24,000 per month. Under the new 50% rule, that rises to ₹30,000 per month — an additional ₹72,000 of exempt income per year, which translates to roughly ₹15,000–₹22,000 in actual tax savings depending on your slab.

The HRA formula itself remains unchanged. You can still claim the lowest of: actual HRA received, 50% (or 40% for non-metros) of your basic salary, or rent paid minus 10% of basic salary.

Landlord PAN is now genuinely mandatory

This rule has technically existed for years, but enforcement was patchy. Under the new Act and the Income Tax Rules 2026, the PAN of your landlord is mandatory if your annual rent exceeds ₹1,00,000 — that’s just ₹8,333 per month. Below that threshold, in any major Indian city, is essentially nobody.

The new requirement adds something else: a relationship disclosure. You will now need to declare your relationship with the landlord, particularly important if you’re paying rent to your parents (which is permitted, but the parent must declare it as rental income on their own return).

If your landlord refuses to share their PAN, your HRA claim can be disallowed. This is not a soft warning. The Tax Department has made clear that fake-rent-receipt arrangements — once a quiet tradition for many salaried employees — are now genuinely high-risk.

What to do this week: get your landlord’s PAN in writing now, before the May rent receipt cycle, and make sure your rent agreement names the landlord correctly. If you’ve been paying rent to a relative without a formal agreement, this is the year to formalise it.

Home loan deductions: no headline change, but the regime choice now matters more

The rules for home loan interest under Section 24(b) remain materially unchanged in the new Act:

Self-occupied property under the old regime: deduction up to ₹2 lakh per year on home loan interest.

Let-out property: the full interest is deductible against rental income, with the loss-set-off cap of ₹2 lakh against other income heads continuing.

New tax regime: no Section 24(b) deduction available for self-occupied properties at all. For let-out properties, interest is deductible against rental income but excess loss cannot be carried forward.

What has changed is the architecture of the regime decision itself, and it’s something every home loan borrower needs to actively recalculate.

The Section 87A rebate now eliminates tax on income up to ₹12 lakh under the new regime (₹12.75 lakh for salaried, after standard deduction). For a substantial number of borrowers earning between ₹10–15 lakh, the new regime now wins even when you "give up" your home loan and HRA deductions, simply because the slab rates are gentler and the rebate is generous.

Above roughly ₹15–17 lakh in gross salary, the calculation flips — the old regime, with home loan interest plus HRA plus 80C investments stacked together, often comes out ahead. But "often" is doing a lot of work in that sentence. Run the numbers for your exact situation before April 30 and inform your employer of your regime preference for TDS through the new Form 124 (which has replaced the old Form 12BB from April 2026).

The single most expensive mistake home loan borrowers make is assuming the regime that was best for them last year is still best this year. The deduction architecture has shifted enough that this assumption needs to be retested annually.

ITR-1 now covers two house properties

Previously, ITR-1 (the simplest return form, used by most salaried taxpayers) was restricted to a single house property. Anyone with two properties — even a small inherited flat in their hometown alongside their primary residence — had to file ITR-2, a more complex form.

Under the new framework, ITR-1 now accommodates up to two house properties. This is a meaningful simplification for the millions of Indians who own a primary residence in their work city and a second property — often inherited, or held for parents in their hometown. The complexity threshold has shifted, and a substantial number of taxpayers who were previously forced into ITR-2 will now be eligible for the simpler form.

Remember: the rules around what’s "self-occupied" haven’t changed. Only one property can be treated as self-occupied; the second is treated as deemed let-out, with notional rental income added to your taxable income (after the 30% standard deduction on rental income).

Other changes worth noting

A few additional shifts under the Act 2025 that affect homebuyers and property holders:

The unified "Tax Year" concept replaces the separate Financial Year and Assessment Year terminology. The income earned from April 1, 2026 to March 31, 2027 will simply be called "Tax Year 2026-27." Same dates, simpler nomenclature, designed to reduce the confusion that has tripped up first-time filers for decades.

ITR-3 and ITR-4 filing deadlines have been extended from July 31 to August 31, applicable from FY 2025-26 onwards. ITR-1 and ITR-2 deadlines remain July 31. For tax audits, the October 31 deadline is unchanged.

NRI property transactions are simpler. Buyers purchasing immovable property from NRIs can now deduct TDS using their own PAN, without the previous requirement of obtaining a TAN — a meaningful reduction in friction for the rapidly growing NRI-property buyer market.

What to actually do this week

Five practical moves, in order of priority.

One: request your landlord’s PAN and a fresh rent agreement if your annual rent is over ₹1,00,000. This is non-negotiable from this year onwards.

Two: calculate both regimes for FY 2026-27 before submitting Form 124 to your employer. If you’re in Bengaluru, Hyderabad, Pune, or Ahmedabad and rent significantly, the old regime just got more attractive than it was — recheck before defaulting to last year’s choice.

Three: review your home loan interest certificate and check whether the property is correctly classified as self-occupied or let-out. Wrong classification is the most common reason for disallowed deductions.

Four: if you own two properties, you can now file ITR-1 — easier paperwork, faster processing. Make sure your tax preparer knows.

Five: document everything. The mandatory landlord-relationship disclosure, combined with stricter PAN enforcement, means the Tax Department is signalling much sharper scrutiny of HRA claims. Keep your rent receipts, agreement, bank transfer records, and landlord PAN copies organised before the next ITR season opens.

A practical next step

For homebuyers — particularly first-time buyers using the new HRA boost in Bengaluru, Hyderabad, Pune, or Ahmedabad to fund the EMI on a future purchase — the next twelve months are a uniquely favourable window. Your monthly tax outflow has shifted in your favour, and that reclaimed income can either accelerate your home loan prepayment or strengthen your down payment.

If you’re listing a property to fund an upgrade, or looking to rent out a second property to take advantage of the unlimited Section 24(b) deduction on let-out properties, listing on a free classifieds platform like LifeNavi puts you in front of buyers and tenants directly — without commission cuts or paid promotion. For NRI investors taking advantage of the simpler TDS process, the same applies in reverse: free listings give your local family or property manager a clean way to surface the property to interested buyers.

The Income Tax Act 2025 is the most significant structural change to Indian direct tax in over six decades. Most of the change is in language and architecture — your actual liability may not move dramatically. But where it does move, it tends to move in favour of the taxpayer who pays attention. This is the year to be that taxpayer.