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Major changes to the country's tax system are set to come into effect starting April 1, 2026. The new income tax framework will replace the existing 1961 Act, thereby altering several procedures—particularly for salaried individuals.

A New Document to Replace Form-16
Until now, salaried employees received Form-16 from their employers; however, under the new system, Form-130 has been introduced to take its place. This, too, will serve as a TDS certificate, but it will provide more detailed information compared to its predecessor.

What Makes Form-130 Unique?
Form 130 has been designed to provide taxpayers with a complete and accurate consolidated record of their income, deductions, and tax liability in a single document. Previously, discrepancies between the data in Form-16 and Income Tax Returns (ITR) often led to taxpayers receiving notices; the new system aims to significantly reduce such instances.

Stricter Rules for Digital Transactions
In addition to tax-related changes, the regulations governing digital payments are also transforming. In accordance with directives from the Reserve Bank of India (RBI), Two-Factor Authentication (2FA) will now be mandatory for every online transaction.

An OTP Alone Will No Longer Suffice
Effective April 1, 2026, payments based solely on an OTP will no longer be possible. Users will be required to verify their identity using at least two distinct methods—such as OTP + PIN, Biometrics (fingerprint/facial recognition) + Token, or Password + Device Verification.

Why Is This Change Necessary?
In recent years, there has been a surge in cases involving phishing, SIM swapping, and OTP-related fraud. The objective of these new regulations is to curb cyber fraud and enhance user security.

Impact on International Transactions
According to the RBI, these same 2FA regulations will be extended to international online transactions by October 2026. The new tax system and digital payment regulations represent a significant stride toward bolstering both transparency and security. However, it will be essential for users to familiarize themselves with and adapt to these upcoming changes.

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