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Your salary slip math doesn't change — but your Form 16 gets a new name, and a new number.
For salaried individuals, the new Act's impact is mostly procedural — the underlying salary tax computation, the standard deduction, and the TDS process all work the same way. What changed is the paperwork you'll actually see, and it's worth knowing what to expect.
The most visible change for salaried employees: the familiar Form 16 (your annual TDS certificate) is replaced by Form 130 from April 1, 2026 onward. Its structure is more detailed than the old Form 16:
| Part | Contents |
|---|---|
| Part A | Employer and employee details |
| Part B | Summary of salary and TDS |
| Part C (with Annexures I & II) | Detailed computation and perquisite breakup |
The quarterly salary TDS reporting form used by employers, previously Form 24Q, is also replaced — now Form 138 under the new Income-tax Rules, 2026. Data from Form 138 pre-fills salary and TDS details directly into your ITR.
None of this changes what you're taxed on — it changes the document naming and format your employer provides.
The standard deduction — available to every salaried employee and pensioner without needing receipts — carries over at the same amounts under the new Act:
New (default) tax regime: ₹75,000 standard deduction, applied automatically unless you opt out.
Old tax regime: ₹50,000 standard deduction, available only if you specifically elect the old regime.
Illustration: A salaried employee with a gross salary of ₹7,00,000 has a taxable salary of ₹6,25,000 under the new regime (₹7,00,000 − ₹75,000) versus ₹6,50,000 under the old regime (₹7,00,000 − ₹50,000) — before any other deductions are applied.
The mechanics of how your employer calculates and deducts tax haven't changed: they still estimate your annual taxable salary, apply your standard deduction and any declared deductions, apply the relevant slab rates, and spread the resulting TDS across your monthly paychecks. Only the forms used to document this process have new names and numbers.
The new (concessional) tax regime remains the default option for salaried individuals unless you actively opt for the old regime. Under the new regime, most deductions (Section 123/80C-style investments, HRA, home loan interest) aren't available — only the standard deduction and employer NPS contributions typically apply.
1. Not checking which form your employer issued. If your employer already switched to Form 130 for FY 2026-27 salary, don't confuse it with the old Form 16 format when reviewing your TDS details — the layout and part structure are different.
2. Forgetting to actively elect the old regime if it benefits you. Since the new regime is the default, salaried employees who want the old regime's deductions (80C/123, HRA, home loan interest) need to actively communicate this to their employer, not assume it happens automatically.
Key Takeaway: Salaried individuals see mostly form and terminology changes — Form 16 becomes Form 130, Form 24Q becomes Form 138 — while standard deduction amounts (₹75,000 new regime, ₹50,000 old regime) and the underlying TDS mechanics stay the same. The new regime remains the default, so actively opt into the old regime if its deductions suit you better. Want to see how this compares for investors? See Impact on Investors & Traders.
No direct action needed — your employer issues it in place of Form 16, and the information it contains (salary, TDS, deductions) serves the same purpose, just in an updated format.
No — it remains ₹75,000 under the new regime and ₹50,000 under the old regime, the same amounts that applied before the new Act came into force.
No — the calculation method (estimate annual income, apply deductions and slabs, spread as monthly TDS) is unchanged; only the reporting forms are renamed.
Yes — the new regime remains the default. If you want the old regime's deductions, you need to communicate that choice to your employer, typically at the start of the financial year or when submitting investment declarations.
Disclaimer: This article is for general educational purposes only and does not constitute personalized financial, investment, tax, or legal advice. Figures, rates, and rules mentioned may change over time — verify current details with an official source or a qualified professional before making financial decisions.