Every GST and Income Tax Change Taking Effect April 2026

Which year does this apply to? (September 9, 2026): Everything below takes effect from April 1, 2026, which is tax year 2026-27 under the Income-tax Act, 2025, with its return due in 2027. Your AY 2026-27 return (income of FY 2025-26) is still governed by the 1961 Act. Its non-audit due dates (July 31 and August 31, 2026) have passed, but a belated return under Section 139(4) is open until December 31, 2026 with the Section 234F fee of Rs 5,000 (Rs 1,000 if total income is up to Rs 5 lakh). Tax Garden files belated returns on a fixed fee.

April 1, 2026 was not a routine start to a new financial year. The Income-tax Act, 2025 and the Income-tax Rules, 2026 took effect, and the Finance Act, 2026 amended both the income tax and GST laws. At the same time, several GST rules that are often described as "new from April 2026" actually started earlier, so this guide labels the date each rule applies from.

This guide covers the changes that affect businesses, organized into two parts: GST and income tax.

Part 1: GST Changes and Rules in Force from April 2026

1. E-Invoice 30-Day Reporting Window (in force since April 2025)

Since April 1, 2025, taxpayers with aggregate annual turnover (AATO) of Rs 10 crore or more must report each e-invoice on the Invoice Registration Portal (IRP) within 30 days of the invoice date, as announced in the GSTN advisory of November 2024. The IRP does not accept the invoice after that window. We found no notified change to this limit from April 2026.

What this means:

• An invoice that is not reported in time cannot get an IRN, and your buyer's input tax credit depends on the invoice reaching their GSTR-2B
• Delayed invoicing directly affects your buyers and your business relationships

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

2. Invoice Numbering for FY 2026-27

Rule 46 of the CGST Rules requires every tax invoice to carry a consecutive serial number of up to 16 characters that is unique for the financial year. Restarting from 1 on April 1 is not mandatory, but the number must not repeat within FY 2026-27.

Action required: Most businesses start a fresh series with a year prefix (for example, INV/26-27/0001) for invoices, credit notes and debit notes, because it is the simplest way to keep every number unique for the year.

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. Rs 1,000 Refund Threshold Removed for Exports with Payment of Tax

Section 54(14) of the CGST Act bars refunds below Rs 1,000. The 56th GST Council recommended removing this threshold for refunds on exports made with payment of tax, which mainly helps small exporters shipping through courier or post. The Finance Act, 2026 amends Section 54(14) to remove the threshold for goods exported out of India with payment of tax. As per the Budget memorandum, GST amendments in the Finance Act, 2026 apply from the date the government notifies, so check the notified date before filing a small claim.

Action required: If you export goods on payment of IGST, track small refund amounts so you can claim them once the amendment is in force. The threshold still applies to other refund types.

5. IMS Is Optional, Not Mandatory

The Invoice Management System (IMS) has been live on the GST portal since October 2024, and using it is optional. You can accept, reject or keep invoices pending. Any invoice you take no action on is deemed accepted and flows into GSTR-2B, which is generated on the 14th. If you act on IMS after that, you can recompute GSTR-2B before filing GSTR-3B. From the October 2025 tax period, credit notes can be kept pending for only one tax period.

Action required: Review IMS each month before filing GSTR-3B, especially to reject wrong or duplicate invoices. See our dedicated IMS guide for step-by-step instructions.

6. GSTR-3B Locks Already in Place (no "Zero Mismatch" rule)

There is no notified "Zero Mismatch" rule and no April 2026 hard block that stops GSTR-3B when ITC exceeds GSTR-2B. What the portal actually enforces:

• Liability lock: from the July 2025 tax period, the tax liability in Table 3 of GSTR-3B is auto-filled from GSTR-1 and GSTR-1A and cannot be edited (GSTN Advisory No. 606, 7 June 2025). Table 3.2 became non-editable from the November 2025 tax period.
• Interest: from the January 2026 tax period, interest in Table 5.1 is computed by the system and can be increased but not reduced.
• Three-year bar: from the July 2025 tax period, returns cannot be filed more than three years after their due date.
• ITC mismatch: ITC claimed above GSTR-2B beyond the limit set on the portal triggers an intimation in Form DRC-01C (Rule 88D), which you must answer by paying the difference or explaining it.

Action required: Reconcile GSTR-2B with your purchase register every month before filing GSTR-3B, and correct GSTR-1 errors through GSTR-1A before GSTR-3B is filed.

7. E-Invoice Threshold at Rs 5 Crore (in force since August 2023)

E-invoicing has applied to businesses with AATO above Rs 5 crore since August 1, 2023. This is not an April 2026 change, but businesses whose turnover has grown past Rs 5 crore must 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 from April 1, 2026, and the Income-tax Rules, 2026 replaced the 1962 Rules. This is not an amendment but a complete replacement of the governing statute, with new section numbers and form numbers. It applies to income from Tax Year 2026-27 onwards. Income of FY 2025-26 and earlier years continues to be assessed under the 1961 Act.

For an individual taxpayer's view of the same transition, including the new tax year concept, refund rules and NRI compliance, see our guide to the new income tax rules from April 1, 2026; for the salaried-side changes in the new Rules, such as the education allowance, HRA for Hyderabad and meal vouchers, see our Income Tax Rules 2026 key changes guide.

Key structural changes:

• Fewer sections compared to the old Act
• Simplified language in many provisions
• New section numbering for 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 separate assessment year for income of Tax Year 2026-27 onwards
• For income of FY 2025-26, the old terms FY 2025-26 and AY 2026-27 continue to apply

3. ITR Forms: Old Act for AY 2026-27

The ITR forms used in 2026 for FY 2025-26 income (AY 2026-27) are issued under the Income-tax Act, 1961, so they still quote old section numbers such as 80C and 87A. Return forms under the 2025 Act apply to income of Tax Year 2026-27, which will be filed in 2027.

4. New Form Numbers

Under the Income-tax Rules, 2026, familiar forms have new numbers from Tax Year 2026-27:

• Form 130 replaces Form 16 (salary TDS certificate)
• Form 131 replaces Form 16A (non-salary TDS certificate)
• Form 138 replaces Form 24Q and Form 140 replaces Form 26Q (quarterly TDS returns)
• Form 141 replaces Form 26QB and Form 132 replaces Form 16B (TDS on property purchase)
• Form 121 replaces Form 15G/15H (declaration for no TDS on interest)
• New payment codes for TDS deposits

5. HRA Documentation

Employers ask for the landlord's PAN when the annual rent claimed for HRA exceeds Rs 1,00,000, and verify rent receipts before allowing the exemption in salary TDS. HRA exemption is available only under the old regime.

Hyderabad employees have an additional change to factor in, since the city has joined the 50% HRA metro list; our guide to income tax changes from April 2026 for Hyderabad salaried employees walks through every item that affects them.

6. AIS and TIS

The Annual Information Statement (AIS) captures data from many sources, including bank interest, securities and mutual fund transactions, property deals, foreign remittances, and TDS on virtual digital assets. 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) remains the default. If you want the old regime, you must choose it. Salaried taxpayers without business income can choose afresh each year in the return. If you have business or professional income, you opt out through Form 10-IEA before the ITR due date, and you can come back to the new regime only once.

Compliance Checklist for April 2026

GST Actions (Do Immediately)

• Start or confirm a unique invoice series for FY 2026-27
• File LUT for FY 2026-27 (exporters)
• Register on IRP if AATO exceeds Rs 5 crore
• Review IMS before filing GSTR-3B (optional but useful)
• Set up automated e-invoice reporting on the date of issue (30-day limit if AATO is Rs 10 crore or more)

Income Tax Actions (Before July/August 2026)

• Download and verify AIS and TIS
• Collect your salary TDS certificate for FY 2025-26 from your employer (due by June 15)
• Calculate tax liability under both old and new regimes
• File ITR for AY 2026-27 (ITR-1 and ITR-2 by July 31, non-audit ITR-3 and ITR-4 by August 31, audit cases and companies by October 31, extended by CBDT to November 21, 2026)
• Complete e-verification within 30 days of filing

Ongoing Monthly Actions

• Review IMS before filing GSTR-3B
• Reconcile GSTR-2B with purchase register
• File GSTR-3B with matched ITC figures
• Report e-invoices on the IRP on the date of issue

Let Tax Garden Keep You Compliant

Missing any single compliance step can trigger notices, penalties, or filing blocks. Tax Garden's compliance plans cover GST filing, income tax returns, e-invoicing, and ongoing regulatory monitoring.

Related reading

For the corresponding direct-tax withholding changes, see the complete TDS and TCS section-rate changes for FY 2026-27.

Frequently Asked Questions

Is it mandatory to restart invoice numbering from 1 every April?

No. Rule 46 of the CGST Rules only requires a consecutive serial number of up to 16 characters that is unique for the financial year. Most businesses start a fresh series with a year prefix, such as INV/26-27/0001, because it is the easiest way to guarantee uniqueness, but continuing an existing unique series is also allowed.

Which law applies to the ITR I file in 2026 for FY 2025-26?

Income earned in FY 2025-26 (AY 2026-27) is assessed under the Income-tax Act, 1961, even though the return is filed after 1 April 2026. The Income-tax Act, 2025 applies to income from Tax Year 2026-27 onwards, for which returns will be filed in 2027. That is why AY 2026-27 returns still quote old section numbers such as 80C and 87A.

What is the ITR due date for companies for AY 2026-27?

Companies file ITR-6 and must get their accounts audited, so the normal due date is 31 October 2026, which CBDT extended on 28 September 2026 to 21 November 2026, with the tax audit report due date extended from 30 September to 21 October 2026. Companies with international or specified domestic transactions requiring a transfer pricing report have until 30 November 2026. The 31 August 2026 date applies only to non-audit ITR-3 and ITR-4 filers.

Can a business owner switch between the old and new tax regimes every year?

No. An individual or HUF with business or professional income can opt out of the default new regime by filing Form 10-IEA before the ITR due date, but can come back to the new regime only once in their lifetime. Salaried taxpayers without business income can choose afresh every year when filing the return.

What does Tax Year mean under the Income-tax Act, 2025?

The 2025 Act replaces the separate previous year and assessment year with a single Tax Year, the financial year in which income is earned. Tax Year 2026-27 runs from 1 April 2026 to 31 March 2027, and its return will be filed in 2027. For income of FY 2025-26, the old terms FY 2025-26 and AY 2026-27 continue to apply.