Income-tax Act, 2025: What Changed from 1 April 2026

Updated 29 October 2026

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. The new Act is mainly a rewrite in simpler language with fewer sections; the tax rates and slabs did not change. This guide explains what is different and what it means for you.

Which law applies to which year

• Income earned up to 31 March 2026 (FY 2025-26 and earlier): the Income-tax Act, 1961. Returns for AY 2026-27, filed in 2026, are under the old Act.
• Income earned from 1 April 2026 (tax year 2026-27 onwards): the Income-tax Act, 2025.
• Assessments, appeals and other proceedings for earlier years continue under the 1961 Act.

One 'tax year' instead of previous year and assessment year

The old law used two terms: the previous year (when income is earned) and the assessment year (the following year, when it is assessed). The new Act replaces both with a single tax year, which runs from 1 April to 31 March. For example, the year from 1 April 2026 to 31 March 2027 is tax year 2026-27.

Fewer sections, new numbers

The new Act has 536 sections in 23 chapters, against more than 800 sections in the 1961 Act. Provisions have been regrouped and renumbered, and many explanations and provisos have been turned into tables and simpler sentences.

Familiar references such as 80C, 194J or 44AB therefore have new section numbers under the 2025 Act. Forms and certificates issued for the new tax year refer to the new sections, and contracts, invoices and internal templates that quote section numbers should be updated for transactions from April 2026.

What stays the same

• Tax rates and slabs, under both the new and the old regime
• The new tax regime remains the default, and individuals without business income can still choose the old regime each year in a return filed by the due date
• Deductions, exemptions, TDS rates and the basic structure of the heads of income
• PAN, the e-filing portal, AIS and Form 26AS

What you should do

• File your return for FY 2025-26 as usual under the old Act; the missed due date guide explains the options if the due date has passed
• If you deduct TDS or collect TCS, check that your accounting software and returns use the new section references for payments from 1 April 2026
• Update agreements, invoices and payroll documents that mention income tax section numbers
• Keep records as before: the documents in our ITR filing checklist are still what you need

This guide is general information based on the law as on the date shown above, and is not professional advice. Rules and due dates change, and the right course depends on your facts. Please speak to us before acting on it.