Money Rules For 2026: Changes That Will Affect Your Wallet From January 2026

A set of important financial norms and tax provisions comes into effect from January 1, 2026. These changes will affect how individuals report income, pay taxes, and undertake certain financial transactions.

1. PAN–Aadhaar Linkage Becomes Mandatory

Tax rules require that every Permanent Account Number (PAN) be linked with Aadhaar. From January 1, 2026, any PAN that remains unlinked will be designated inoperative. An inoperative PAN cannot be used for tax filings or most financial transactions.

Taxpayers who miss the deadline can still link PAN with Aadhaar by paying a late linkage fee. Until linkage is completed and the penalty paid, the PAN remains invalid for compliance purposes.

2. Penalty and Withholding Consequences for Invalid PAN

Individuals and entities without a valid PAN may face higher tax deduction at source (TDS) or tax collection at source (TCS) rates on payments such as salaries, interest, rent, and professional fees.

This rule applies when PAN is not operative or not provided where required. The intent is to ensure compliance with the Income Tax Act and reduce tax evasion.

Also read: ISMA Says GST Rationalisation on Flex-Fuel Vehicles

3. Updated Standard Deduction and Tax Regime Adjustments

Under the revised tax regime, the standard deduction available to salaried employees and pensioners has been updated for the tax year beginning April 1, 2026. This affects taxable income and ultimately the amount of tax payable.

Deductions available under certain sections of the income tax code, including those for investments and expenses, have been revised or rationalized to align with updated thresholds.

4. Revised TDS and TCS Thresholds

The government has adjusted threshold limits for TDS and TCS, affecting when tax should be withheld or collected on payments. These thresholds apply to categories such as:

• Salaries
• Rent
• Professional and technical fees
• Commission and brokerage
• Sale of goods (TCS)

Changes to these limits will impact when deductors must begin withholding tax or collecting tax on specified receipts.

5. Changes in Income Tax Filing Requirements

From January 1, 2026, the process and timelines for income tax return (ITR) filing have been updated. Taxpayers will need to ensure they use the correct forms as per revised categories, declare updated details of income, investments, and deductions, and verify that PAN–Aadhaar linkage status is compliant before e-filing.

What Remains Unchanged

Some longstanding financial rules and tax slabs remain in place. Core elements of personal income tax structure — such as primary tax slab rates and basic investment incentives — continue based on the budget provisions announced earlier.

Also read: List of Items Likely to Get Costlier Due to New Tax and Cess