31st March Income Tax: Do's & Dont's in the light of Implementation of Income Tax Act 2025 (ITA'25) & Income Tax Rules 2026 (ITR'26)

31st March is the critical deadline for aligning tax positions, avoiding lapses, and preparing for regime changes starting 1st April 2026. Here's a quick synthesis of the key takeaways:

New Income Tax Act 2025:

• File TDS/TCS corrections till Q3 of FY 23-24 which get time barred from 1st April 2026.
• New Form 128 for low/NIL TDS certificates needs to be filed.
• TDS on manpower supply now included under 'work.' u/s 402 of ITA'25.
• Transitional provisions need implementation.

Business & Profession:

• Certain TDS/TCS thresholds and rates change from 1st April 2026, like TCS on Scrap increases to 2% from 1% from 1st April 2026.
• MAT rules require careful budgeting depending on regime choice.

For TY 26-27, consider changing to New Tax Regime, incase MAT Credit is available.

Incase Old Regime is continued with, then the 14% provision for tax should be made in the Budget for FY26-27.

Even incase New Regime is chosen - Budget for Tax should be prepared accordingly as only 25% of the Tax Liability will be set off and the balance would need to be paid.

• Payments to SMEs under Section 43B(h) must be timely. INCOME TAX ARTICLE
• Transitional changes for TDS/TCS changes under ITA'25 & ITR'26 need preparation.

Core Compliance Actions

Updated Returns (ITR-U): Last chance for AY 2021-22 by 31st March 2026.

Updated Returns (ITR-U): For AY 2024-25, AY 23-24 and AY 22-23, the ITR-U can befiled with lower additional taxes till 31st March 2026.

Hence, one needs to evaluate incase the same is required.

Advance Tax: Needs to be adjusted for interest income, capital gains, buy-back income (as deemed dividend till 31st March 2026), etc, to avoid penalties.

Capital Gains Tax to Consider on 31st March 2026:

• STCG can only be set off against STCL. See incase the whole year's gains or losses need to be squared off.
• LTCG can be set off against both LTCL and STCL. See incase the whole year's gains or losses need to be squared off.
• Consider booking gains to utilize carried-forward losses before they lapse.
• Use the Rs. 1.25 lakh LTCG exemption under Section 112A wisely.

Salaried Persons & NRIs:

• NRIs must file their ITRs in India if they have Indian income, capital gains, or transfers, TDS more than Rs.25,000/-, etc.
• HRA Deductions for salaried: Be careful of Rent Paid to 'Related Parties' and also the 'place of employment' vis-a -vis 'rent paid'. The New Income Tax Act 2025 lays stricter guidelines and disclosures for these and Department would.
• Choose between Old vs. New Regime carefully, this being the First Year of the New regime after the massive rationalization in taxes from 1st April 2025. Mind that even after declaration to your employer, you may change the OPTION while filing your ITR.
• Ensure you file your returns incase your income is above Rs.2.5 Lakhs (Old Regime) and Rs.4 Lakhs (New Regime). To take the benefit of Tax-Free exemption of Rs.12 Lakhs under the new scheme and corresponding amount under the old regime, one has to mandatorily file his return.
• Submit proofs for deductions under 80C, 24(b), insurance, ELSS, etc. The receipts should be dated on or before 31st March 2026.

House Property:

• Entire home loan interest is deductible for let-out property. Ensure Certificate is received.
• Vacant stock of property beyond 2 years risks deemed rent taxation.