The Income-tax Act, 2025 (Act 30 of 2025) received Presidential assent on 21 August 2025 and replaced the Income-tax Act, 1961 with effect from 1 April 2026. It is largely a structural rewrite: the government's stated aim was simpler language and a cleaner layout, not a change in tax policy.
What has changed
- A single "Tax Year". The old pairing of previous year and assessment year is gone. Income earned between 1 April 2026 and 31 March 2027 is income of Tax Year 2026-27.
- A shorter, reorganised statute. The new Act has 536 sections in 23 chapters with 16 schedules, compared with more than 800 sections in the 1961 Act. Many provisions are now presented in tables.
- New section and form numbers. Familiar references, such as the scattered TDS sections, have been consolidated and renumbered, and the Income-tax Rules, 2026 bring new form numbers.
What has not changed
- Tax slabs and rates, the new and old regimes, the standard deduction and the rebate continue as before. Budget 2026 made no change to personal tax slabs.
- Income for years up to 31 March 2026 continues to be governed by the 1961 Act, including the returns, assessments and appeals for those years.
Points for businesses to act on: update section and form references in invoices, contracts and agreements; remap TDS codes in payroll and ERP systems; review templates for certificates and declarations; and brief your finance team on the new terminology.
We are helping clients review their compliance calendars, system mappings and documentation for the transition. If you would like us to look at yours, get in touch.
This article is for general information and is not professional advice. Please consult us on the facts of your case before acting on it.
