What Changed for Indian Employers on 1 April 2026

Several things changed together this year, which is the difficulty. A single change gets noticed. Four at once, spread across tax law and labour law, get absorbed slowly — and most of the templates circulating online still predate all of them.

Here is what actually changed, and the provision behind each one.

1. A new Income-tax Act

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, and the Income-tax Rules, 2026 were notified on 20 March 2026 (G.S.R. 198(E)).

For payroll this is mostly renumbering, but the numbers are the ones people quote:

• The new regime is section 202. It was 115BAC.
• The rebate is section 156. It was 87A.
• The Act says “tax year”. “Assessment year” is gone.

The rates did not move. The Budget presented in 2026 left the slabs, the rebate, the surcharge and the cess alone, so FY 2025-26 and FY 2026-27 share them. A total income up to ₹12 lakh is untaxed after the rebate under the new regime, ₹12.75 lakh for a salaried person once the ₹75,000 standard deduction is counted.

2. Form 12BB is now Form 124

The declaration your staff give you at the start of the year — rent, home loan interest, 80C, the rest — is now Form 124, under section 392(5)(b) read with rule 205. Form 12BB sat under section 192 and rule 26C, both of which went with the old Act.

The purpose is unchanged, but there is a new question: anyone claiming HRA must declare their relationship with the landlord, if any.

That matters most for the very common arrangement of paying rent to a parent. It is legal and stays legal. Declaring it changes nothing where the arrangement is real — the property is genuinely theirs, the money actually leaves the employee’s account, and they show it as income. What it means for the employee filling it in: Form 12BB Is Gone.

While you are updating the form, correct one thing that is widely misquoted internally: the landlord’s PAN is required when the rent paid in the year exceeds ₹1,00,000. Not when the HRA claimed does, and not the exempt amount.

3. Eight cities now get the 50% HRA limit

The list used to be four — Mumbai, Delhi, Kolkata, Chennai. Under rule 279 read with Schedule III Table S. No. 11 it is now eight, with Bengaluru, Hyderabad, Pune and Ahmedabad added.

An employee renting in one of those four may have a larger exemption this year with no change to their salary or their rent. Plenty of payroll software has not caught up, so it is worth checking rather than assuming — and worth checking before the year’s final TDS is computed rather than leaving staff to claim it in their returns.

FY 2025-26 still uses the old four, so any calculation has to know which year it is for.

4. Final settlement in two working days

Under section 17(2) of the Code on Wages, 2019, where an employee is removed, dismissed, retrenched, resigns, or becomes unemployed because the establishment closed, the wages payable must be paid within two working days.

This is the one most handbooks have not caught. The old Payment of Wages Act, 1936 gave the second working day only where the employer terminated the employment — resignation was not covered, and in practice most companies followed their own notice-period policy. The Code puts resignation on the same footing as dismissal.

Note the scope: wages. Gratuity, provident fund withdrawal and annual bonus run on their own machinery and their own timelines.

Two working days is a process problem, not a policy one. The firms that meet it prepare the settlement during the notice period rather than starting on the last day.

5. Sixteen particulars on every appointment letter

Section 6(1)(f) of the OSH Code, read with rule 6 of the OSH (Central) Rules, 2026, requires every employee to be issued an appointment letter carrying sixteen prescribed particulars.

Not “an offer letter will do”, and not a paragraph confirming the salary. Sixteen specific items. Most templates online were written before the rules and are missing several. State rules may prescribe their own form as well.

What to do about it

• Replace the investment declaration form. It is Form 124 now
• Add the landlord-relationship question for anyone claiming HRA
• Check which city band each renting employee falls into for FY 2026-27
• Read your notice-period and settlement policy against two working days
• Compare your appointment letter against the sixteen particulars, in order

None of this is difficult. It is just that it all arrived at once, and the templates in circulation have not caught up.