All GST and Income Tax Changes from April 2026: A Complete Guide for Businesses

April 1, 2026 was not a routine start to a new financial year. It marked the most significant regulatory shift in Indian tax compliance in decades. A new Income Tax Act took effect, GST enforcement mechanisms were tightened, and compliance procedures were restructured.

This guide covers every change that affects businesses, organized into two parts: GST changes and income tax changes.

Part 1: GST Changes from April 2026

1. E-Invoice 30-Day Reporting Window

From April 1, 2026, e-invoices must be uploaded to the Invoice Registration Portal (IRP) within 30 days of the invoice date. Invoices uploaded after this window are considered invalid for ITC purposes.

What this means:

• Your buyers cannot claim input tax credit on invoices you upload late
• The 7-day upload recommendation is now enforced with system warnings
• Delayed invoicing will directly impact your business relationships

Action required: Set up automated e-invoice generation in your billing software. Ensure every invoice is uploaded on the date of issue.

2. Document Series Reset from April 1

All GST-related document series must be reset at the start of each financial year:

• Invoice numbers
• Credit note numbers
• Debit note numbers
• Delivery challan numbers
• Payment voucher numbers

The series should follow a sequential pattern starting from 1 or from a designated starting number for FY 2026-27. Using the old FY 2025-26 series numbers for new invoices will cause validation errors on the GST portal.

Action required: Update your billing software to start new series from April 1, 2026. Ensure the series prefix includes the financial year reference (e.g., INV/2627/0001).

3. LUT Filing for FY 2026-27

Exporters and suppliers to SEZ units who want to make zero-rated supplies without paying IGST must file a fresh Letter of Undertaking (LUT) for FY 2026-27.

Key points:

• LUT from FY 2025-26 expired on March 31, 2026
• File LUT in Form GST RFD-11 on the GST portal
• LUT must be filed before making the first zero-rated supply of the new year
• If you supply without a valid LUT, you must pay IGST and claim refund later

Action required: File LUT for FY 2026-27 immediately if you are an exporter or SEZ supplier.

4. Removal of Rs 1,000 Export Refund Floor

Previously, export refund claims below Rs 1,000 were not processed. This floor has been removed from April 1, 2026. Exporters can now claim refunds of any amount, regardless of how small.

Action required: If you previously skipped small refund claims, you can now file them for FY 2026-27 supplies.

5. IMS Now Mandatory

The Invoice Management System (IMS) on the GST portal is mandatory for all regular taxpayers. You must accept, reject, or mark invoices as pending before GSTR-2B is generated.

Action required: Review IMS monthly before the 14th. See our dedicated IMS guide for step-by-step instructions.

6. Zero Mismatch Policy

The GST portal now blocks GSTR-3B filing if ITC claimed exceeds GSTR-2B amounts. This hard block replaces the softer DRC-01C warning system for significant mismatches.

Action required: Reconcile GSTR-2B with your purchase register every month before filing GSTR-3B.

7. E-Invoice Threshold at Rs 5 Crore

The e-invoicing threshold dropped from Rs 10 crore to Rs 5 crore AATO. Businesses in the Rs 5 to 10 crore turnover band must now generate e-invoices for all B2B supplies.

Action required: If your AATO crossed Rs 5 crore in any year from FY 2017-18, register on IRP and start generating e-invoices immediately.

Part 2: Income Tax Changes from April 2026

1. New Income Tax Act 2025

The Income Tax Act 2025 replaced the Income Tax Act 1961. This is not an amendment but a complete replacement of the governing statute. All section numbers, form references, and procedural rules have changed.

Key structural changes:

• Fewer sections compared to the old Act
• Simplified language in many provisions
• New section numbering for all deductions, exemptions, and compliance requirements

2. Unified Tax Year Concept

The old Financial Year + Assessment Year system is replaced by a single Tax Year concept:

• Tax Year 2026-27 = April 1, 2026 to March 31, 2027
• No more separate AY reference for filing purposes
• For the transitional year (filing on FY 2025-26 income), both references appear on forms

3. Simplified ITR Forms

CBDT notified new ITR Forms 1 through 7 with restructured layouts:

• New Act section references throughout
• Merged and simplified schedules
• Better pre-filled data integration from AIS and TIS
• Tax Year field added alongside the transitional AY field

4. New Tax Forms

Several familiar forms have been renumbered:

• Form 130 replaces Form 16 (salary TDS certificate)
• Form 121 replaces Form 15G/15H (interest TDS declaration)
• New challan codes for tax payments
• Updated ITR-V verification form

5. Stricter HRA Documentation

Landlord PAN is now mandatory for annual rent exceeding Rs 1,00,000. Employers must verify HRA claims more strictly before allowing the deduction in Form 130.

6. Enhanced Digital Monitoring

CBDT has expanded the Annual Information Statement (AIS) to capture data from more sources: bank transactions, mutual fund activity, property deals, credit cards, foreign remittances, and cryptocurrency transactions. The Taxpayer Information Summary (TIS) provides pre-computed summaries.

Action required: Download and review AIS/TIS from the e-filing portal before filing your return.

7. Default New Tax Regime

The new tax regime (lower rates, fewer deductions) is now the default. If you want to opt for the old regime, you must explicitly choose it. For business income, the regime choice is locked once made.

Compliance Checklist for April 2026

GST Actions (Do Immediately)

• Reset all document series for FY 2026-27
• File LUT for FY 2026-27 (exporters)
• Register on IRP if AATO exceeds Rs 5 crore
• Start using IMS on the GST portal
• Set up automated e-invoice generation within 7 days of invoice date

Income Tax Actions (Before July/August 2026)

• Download and verify AIS and TIS
• Collect Form 130 from employer (by June 15)
• Calculate tax liability under both old and new regimes
• File ITR using the new forms (ITR-1/2 by July 31, ITR-3/5/6 by August 31)
• Complete e-verification within 30 days of filing

Ongoing Monthly Actions

• Review IMS before the 14th
• Reconcile GSTR-2B with purchase register
• File GSTR-3B with matched ITC figures
• Upload all e-invoices within 7 days

Let TaxGarden Keep You Compliant

The volume of changes effective April 2026 is unprecedented. Missing any single compliance step can trigger notices, penalties, or filing blocks. TaxGarden's compliance plans cover GST filing, income tax returns, e-invoicing, and ongoing regulatory monitoring.

Frequently Asked Questions

Is the new Income Tax Act 2025 already in effect?

Yes. The Income Tax Act 2025 took effect on April 1, 2026. All ITR filings for AY 2026-27 onwards use the new Act's provisions, section numbers, and form formats.

Do I need to reset my invoice series from April 1?

Yes. All GST document series (invoices, credit notes, debit notes, challans) must start fresh for FY 2026-27. Using old series numbers will cause validation errors on the GST portal.

What is the deadline for filing LUT for FY 2026-27?

There is no specific deadline, but LUT must be filed before making the first zero-rated supply of FY 2026-27. File it immediately if you are an exporter to avoid paying IGST upfront.

Can I still claim deductions under Section 80C?

The deductions previously available under Section 80C of the old Act are available under new section numbers in the Income Tax Act 2025. The benefits remain, but the section references have changed.

What happens if my supplier does not generate an e-invoice?

You may not be able to claim ITC on that invoice as it will not appear in your GSTR-2B through the proper channel. Follow up with the supplier to ensure e-invoice compliance.

Is the Rs 1,000 export refund floor removed for past years too?

No. The removal of the Rs 1,000 floor applies to refund claims for supplies made from April 1, 2026 onwards. Past claims below Rs 1,000 that were not processed remain ineligible.