New Financial Rules From April 1: Income Tax Changes, GST Updates, UPI Payment Reforms & More

As March 2025 draws to a close, India prepares for the onset of a new financial year starting April 1. With the beginning of FY26, significant changes in income tax rules, credit card regulations, UPI transactions, and other personal finance areas are set to take effect. These reforms are designed to enhance transparency, and compliance, and safeguard the interests of investors and taxpayers alike. Here’s a preview of the key updates coming into force as we enter FY26.

Income Tax Changes

In her Budget 2025 speech, Finance Minister Nirmala Sitharaman introduced changes to the income tax structure, benefiting salaried individuals and middle-income earners. The key highlights include:

Higher Tax Exemption Limit: Individuals earning up to ₹12 lakh annually will now be exempt from paying income tax.
Standard Deduction Increase: Salaried individuals will get a standard deduction of ₹75,000, effectively making an annual salary of ₹12.75 lakh tax-free under the new regime.

Revised Tax Slabs: The new tax structure is as follows:
No tax on income up to Rs 4 lakh
5% tax on income from Rs 4 lakh to Rs 8 lakh
10% tax on income from Rs 8 lakh to Rs 12 lakh
15% tax on income from Rs12 lakh to Rs 16 lakh
20% tax on income from Rs 16 lakh to Rs 20 lakh
25% tax on income from Rs 20 lakh to Rs 24 lakh
30% tax on income above Rs 24 lakh

TDS Limit Increased for Senior Citizens
To provide relief to senior citizens, the government has increased the TDS (Tax Deducted at Source) limit on interest income to ₹1 lakh. This means senior citizens earning interest from fixed deposits and savings accounts will enjoy a higher exemption before TDS is deducted.

GST Rule Changes
From April 1, the Goods and Services Tax (GST) portal will introduce multi-factor authentication (MFA) for taxpayers, ensuring better security. This new requirement aims to curb fraud and unauthorized access to the GST filing system.

Additionally, new rules for E-Way Bills (EWB) state that these bills can now only be generated for base documents that are no older than 180 days, streamlining compliance and preventing misuse.

Unified Pension Scheme (UPS) to Replace Old Pension System
A major change in government pensions comes into effect as the Unified Pension Scheme (UPS) replaces the old pension system. This change will affect around 23 lakh central government employees, ensuring that those with at least 25 years of service receive a pension equivalent to 50% of their last 12 months’ average basic salary. The reform is expected to improve financial stability for retired government employees.

UPI Payment Security Reforms
The National Payments Corporation of India (NPCI) has announced key security updates for Unified Payments Interface (UPI) transactions. Starting April 1:
UPI transactions from inactive mobile numbers will be blocked.

Banks and third-party UPI providers (such as PhonePe, Google Pay, and Paytm ) will update their databases regularly, at least once a week, to phase out inactive numbers.
Users must ensure their registered mobile number is active to continue using UPI services.

Banking Sector Updates: Revised Minimum Balance Requirements
Several major banks, including State Bank of India ( SBI ), Punjab National Bank (PNB), and Canara Bank, are revising their minimum balance requirements from April 1. Customers who fail to maintain the new required balance in their savings accounts will face penalties as per the updated banking guidelines. Account holders are advised to check with their banks and ensure compliance to avoid extra charges.

Credit Card Rule Changes: Revised Reward Programs
Credit card users will see modifications in reward structures and benefits, impacting popular cards such as:
SBI SimplyCLICK and Air India SBI Platinum Credit Card: The reward point structure will be adjusted, affecting benefits on spending categories like online shopping and travel.
Axis Bank Vistara Credit Card: Following the merger of Vistara with Air India, Axis Bank is expected to revise the perks of this card, which may impact travel benefits for users.
Cardholders should review these changes to optimize their reward earnings and benefits.

Stay Informed and Prepare for Changes
With the financial year 2025-26 beginning, these policy changes will significantly impact taxpayers, pensioners, investors, and digital payment users. Ensuring compliance with new tax regulations, updating UPI-linked numbers, and adjusting to banking and credit card rule changes will be crucial for smooth financial planning. 

As these reforms take effect, individuals and businesses alike must stay informed to make the most of the new financial landscape.