Income Tax Updates

NOTIFICATION  |  CBDT  |  28 MARCH 2026

Form 121 UIN System: How No-TDS Declarations Work from 1 April

CBDT has issued Notification No. 01/CPC(TDS)/2026 dated 28 March 2026, laying down the operational framework for Unique Identification Numbers (UINs) for declarations in Form No. 121 under the Income Tax Act, 2025. The notification operates under Section 393(6) read with Rule 211 of the Income-tax Rules, 2026 and comes into effect from 1 April 2026.

Form 121 is the unified successor to the familiar Forms 15G and 15H — it merges both into a single declaration form for resident individuals and HUFs whose estimated tax liability for the year is nil. With approximately 90 lakh 15G declarations and 1 crore 15H declarations filed annually, this affects every bank, NBFC, company, and institution that handles no-TDS declarations. Under the new system, every payer receiving a Part A declaration (whether on paper or electronic) must generate a 26-character UIN — structured as a sequence number, the relevant tax year, and the payer's TAN. For example: D000000001202627MUMN12345A for the first declaration received by a payer with TAN MUMN12345A in Tax Year 2026-27. PAN quoting by the declarant is mandatory. Payers must then file quarterly Part B of Form 121 via their TAN login on the income tax e-filing portal, consolidating all declarations received that quarter — irrespective of whether tax was actually deducted.

Sources: CA Club India — CBDT Notification 01/CPC(TDS)/2026  |  TaxGuru — Form 121 FAQs & Guidance Note

NOTIFICATION  |  CBDT  |  MARCH 2026

ITR Forms for AY 2026-27 Notified Ahead of Schedule — Due Dates Revised

CBDT has notified ITR-1 to ITR-7 for Assessment Year 2026-27 (FY 2025-26) vide Notification No. 19/2026 (F.No. 370149/209/2025-TPL), with a Corrigendum issued via Notification No. 20/2026 (F.No. 370149/209/2026-TPL). This is the return for income earned between 1 April 2025 and 31 March 2026 — income that falls squarely under the Income Tax Act, 1961, even though the return will be filed after 1 April 2026. The familiar ITR-1 to ITR-7 structure continues without structural overhaul, and the forms incorporate changes introduced by Budget 2026 including the enhanced ₹60,000 rebate under Section 87A for income up to ₹12 lakh, updated FAST-DS (Foreign Assets Small Taxpayer Disclosure Scheme) disclosures, and Budget 2026 capital gains adjustments.

Budget 2026 also revised the ITR filing due dates applicable from AY 2026-27 onwards. ITR-1 and ITR-2 (non-audit individuals, HUFs): 31 July 2026 — unchanged. ITR-3 and ITR-4 (non-audit business/professional): extended to 31 August 2026 (was 31 July). Tax audit cases: 31 October 2026. Transfer pricing cases: 30 November 2026. Revised return deadline has been extended to 31 March 2027 (previously 31 December). Belated return: until 31 December 2026. ITR filing for FY 2025-26 has not yet started — utilities will be available on the e-filing portal well before the due dates.

Sources: SAGInfotech — IT Notification 19/2026  |  TaxGuru — ITR Filing Transition Obligations

TRANSITION GUIDE  |  CBDT / IT ACT 2025  |  EFFECTIVE 1 APRIL 2026

IT Act 1961 Repealed at Midnight — What Actually Changes from Tomorrow

Section 536 of the Income Tax Act, 2025 formally repeals the Income Tax Act, 1961, effective 1 April 2026. India's tax law has been restructured for the first time in 65 years. Here is what changes in practice from tomorrow. The concept of "Assessment Year" and "Previous Year" is replaced by a single term: "Tax Year" — Tax Year 2026-27 runs from 1 April 2026 to 31 March 2027. HRA exemption: the 50% salary cap now extends to eight cities — the original four (Mumbai, Delhi, Kolkata, Chennai) plus Hyderabad, Bengaluru, Pune, and Ahmedabad (previously 40%). Children's education allowance and hostel allowance limits revised upward to reflect current costs. Meal vouchers: ₹200 per day is now tax-free (previously ₹50). Digital Rupee (eRs.) recognised as a prescribed mode of electronic payment for all TDS and tax deduction purposes.

Forms are renumbered across the board. Form 16 (TDS certificate for salary) becomes Form 130. Form 26AS (Annual Information Statement) becomes Form 168. Form 15G and Form 15H are merged into Form 121 (see above). Form 12BB (investment declaration) becomes Form 124. ITR-U (Updated Return) is renamed ITR-UN. No old form is valid for Tax Year 2026-27 onwards. TDS on salary moves from Section 192 to Section 392. On the transition, there is no "missing year": income up to 31 March 2026 is taxed under IT Act 1961; income from 1 April 2026 is taxed under IT Act 2025. Pending assessments, appeals, and reassessments continue under the old Act for the relevant years.

Sources: ClearTax — Top 15 Income Tax Changes from 1 April 2026  |  CA Club India — CBDT Transition FAQs

RBI & Financial Sector

CIRCULAR  |  RBI  |  27 MARCH 2026

RBI Caps Banks' Forex Open Positions at $100 Million as Rupee Hits Record Low

The Reserve Bank of India issued a circular on 27 March 2026 under FEMA and its Master Direction on Risk Management & Inter-Bank Dealings, directing all authorised dealer banks to ensure their Net Open Position in Rupee (NOP-INR) in the onshore deliverable foreign exchange market does not exceed $100 million at the end of each business day. Full compliance is required by 10 April 2026. The circular comes after the Indian rupee breached ₹94.84 per dollar on 27 March — its all-time low — driven by surging crude oil prices (Brent above $110 per barrel amid the ongoing West Asia conflict), sustained foreign portfolio outflows exceeding $11 billion in March alone, and a strengthening dollar.

Previously, banks' boards set their own Net Overnight Open Position Limits capped at up to 25% of Tier-I + Tier-II capital — giving large banks headroom of $150–300 million or more. The new hard cap of $100 million applies uniformly to all banks and covers only onshore deliverable market positions. Total arbitrage positions across the banking system are estimated at $10–40 billion, primarily structured as long-dollar onshore and short-dollar in the offshore Non-Deliverable Forwards (NDF) market. Banks must unwind these positions by 10 April, which is expected to generate forced dollar selling in the onshore market and potential mark-to-market losses. Major banks including SBI, HDFC Bank, ICICI Bank, and Axis Bank are most exposed given their large forex treasury operations. The rupee briefly recovered to ₹93.59 on Monday following the announcement before sliding back above ₹95.

Sources: Business Standard — RBI Caps Banks' NOP-INR at $100 Million  |  BusinessToday — Rupee Response to RBI Cap

KEY COMPLIANCE DEADLINES — MARCH 2026 TO JULY 2026

31 MAR 2026 — TODAY ⚠ TDS/TCS corrections FY 2018-19 Q4 to FY 2023-24 Q3 · LUT (RFD-11) · CMP-02 Composition opt-in · GST reconciliation FY 2025-26	1 APR 2026 IT Act 2025 + IT Rules 2026 go live — IT Act 1961 repealed (Section 536). Banks' NOP-INR compliance window opens.
6 APR 2026 RBI draft digital fraud compensation framework — public comments close (₹25,000 proposed cap for small-ticket fraud)	7 APR 2026 TDS/TCS deposit for March 2026 deductions · Banks: full NOP-INR compliance deadline (RBI circular 27 Mar 2026)
15 APR 2026 CCFS-2026 (MCA Companies Compliance Facilitation Scheme) window opens — 90% waiver on additional annual filing fees	30 APR 2026 GST QRMP scheme opt-in/opt-out closes for the April–June 2026 quarter
31 JUL 2026 ITR-1 & ITR-2 due date for AY 2026-27 (non-audit individuals & HUFs) · Director triennial KYC — all active DINs	31 AUG 2026 ITR-3 & ITR-4 due date for AY 2026-27 (non-audit business & professionals) — new due date from Budget 2026

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