As India is set to enter the final month of the 2025-26 financial year, a series of critical regulatory changes and fiscal updates are set to take effect on March 1, 2026. From a highly anticipated salary hike for central government employees, under the 8th Pay Commission, to major structural shifts in the banking sector and the phase-out of specific tax brackets, these changes will impact household budgets and corporate compliance across the country.

8th Pay Commission and DA Hike

Central government employees and pensioners are looking toward March for a formal announcement regarding the first Dearness Allowance (DA) revision of 2026. Based on the latest All India Consumer Price Index (AICPI) data, the government is expected to approve a 2% hike, likely raising the DA from 58% to 60%.

While the 8th Pay Commission officially has a reference date of January 1, 2026, the comprehensive restructuring of pay scales is still in the memorandum stage. For now, the expected DA hike will serve as an immediate relief measure, with arrears for January and February expected to be disbursed along with March salaries.

Banking: Structural 'Ring-Fencing' and KYC

The Reserve Bank of India (RBI) has set March 31, 2026, as a major deadline for commercial banks to submit implementation plans for "structural ring-fencing." This mandate requires banks to legally and operationally separate their core retail banking activities from riskier investment divisions to better protect depositor funds.

Additionally, many public and private sector banks have issued alerts for a KYC (Know Your Customer) refresh. Accounts with outdated documentation may face transaction restrictions starting in March. Notably, the RBI has also directed banks to remain open on March 31, despite the Mahavir Jayanti holiday, to facilitate year-end government tax transactions. Bank Holidays in March 2026: Full State-Wise List of Holiday Dates.

The Transition to 'GST 2.0'

March 2026 marks the final transition month before the official removal of the 12% GST bracket. As part of the "GST 2.0" reforms, the fitment committee is finalizing the migration of goods - ranging from processed foods to certain household electronics - into the simplified 5% or 18% slabs.

Businesses are also bracing for stricter automated validation of Input Tax Credit (ITC). Starting this month, any significant mismatch between buyer and seller filings will trigger immediate system blocks to prevent revenue leakage. Understanding GST on Used Cars: Rates and Key Rules.

Income Tax: Preparing for the 2025 Act

While the landmark Income-tax Act, 2025 officially replaces the 1961 Act on April 1, March serves as the final window for taxpayers to align with existing rules.

  • Investment Deadline: March 31 remains the cutoff for tax-saving investments under Section 80C and 80D for the current assessment year.

  • Foreign Assets: Taxpayers with undisclosed foreign holdings have until the end of March to utilize the FAST-DS 2026 disclosure scheme to avoid the steeper penalties introduced under the new Act.

New LPG Price Announcement

As is standard on the first of every month, Oil Marketing Companies (OMCs) will review prices for Commercial LPG and Aviation Turbine Fuel (ATF) on March 1. Following a cumulative increase of over INR 160 in the first two months of the year, market analysts are watching global benchmarks for signs of a price correction or further hikes that could impact the hospitality and aviation sectors.

(The above story first appeared on LatestLY on Feb 26, 2026 11:08 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).