Introduction
The Income-tax Act, 2025 came into force on 1 April 2026, replacing the Income-tax Act, 1961 for Tax Year 2026-27 onwards.
Detailed explanation
The new Act restructures and simplifies the law. Key changes include the single concept of tax year in place of "previous year" and "assessment year", renumbered sections, and consolidation of provisions into tables and schedules. Tax rates for Tax Year 2026-27 are set by the Finance Act, 2026 and were not changed from FY 2025-26.
Applicability and transition
- Income of Tax Year 2026-27 onwards: Income-tax Act, 2025 and Income-tax Rules, 2026.
- FY 2025-26 and earlier (AY 2026-27 and earlier): Income-tax Act, 1961, including returns filed after 1 April 2026.
- Pending assessments, appeals and proceedings for earlier years continue as provided in the repeal and savings provisions of the 2025 Act.
Relevant statutory provisions (illustrative mapping, to be verified)
| Subject | 1961 Act | 2025 Act |
|---|---|---|
| New tax regime | Section 115BAC | Section 202 |
| Rebate | Section 87A | Section 156 |
| Savings deduction (80C) | Section 80C | Section 123 with Schedule XV |
| Health insurance | Section 80D | Section 126 |
| Return of income | Section 139 | Section 263 |
These references come from published correspondence tables and are shown pending verification against the official text and the CBDT correspondence table.
Practical example
A salaried employee files the return for FY 2025-26 in July 2026 under the 1961 Act, but the employer's TDS for April 2026 onwards is deducted under the 2025 Act.
Important conditions and exceptions
Do not apply new section numbers to earlier years. Where a document refers to a provision, check which Act governs the period.
Common mistakes
- Quoting 1961 Act sections for Tax Year 2026-27 transactions, or vice versa
- Assuming tax rates changed with the new Act
Frequently asked questions
Do I need a new PAN? No. Existing registrations continue.
Are deductions like 80C gone? No. They continue under renumbered provisions, subject to the regime you choose.