The new income‑tax regime has altered slabs, deductions and planning strategies for many small businesses and proprietors in India.
This overview highlights key changes founders should track in 2026.
Different treatment for individuals and companies
Understand the distinction between:
- Tax on **company profits** (for private limited companies), and
- Tax on **individual income** (salary, dividend, interest, capital gains) for founders.
Decisions on salary vs dividend, bonus vs distribution and business structure all interact with the new regime.
Deductions and exemptions
Under the new regime, many traditional deductions are forgone in exchange for lower tax rates. Founders should:
- Compare tax payable under old vs new regime with realistic income projections
- Consider impact on **ESOP exercises**, bonuses and exit events
A one‑time spreadsheet exercise with your CA can clarify which regime suits you for the next few years.
Documentation still matters
Even when deductions reduce, the department still relies on:
- Clean books of account
- Reconciled bank statements
- Proper documentation for major transactions
The new regime changes rates and options—not the importance of basic compliance hygiene.
