Last updated: October 2026 Β· 3 min read
India’s income tax law has been rewritten. The Income-tax Act, 2025 replaced the 64-year-old Income-tax Act, 1961 from 1 April 2026. The aim is simpler language and structure, not new taxes. Here is what changed for ordinary taxpayers.
Key changes at a glance
| Topic | Old Act (1961) | New Act (2025) |
|---|---|---|
| In force | 1962-31 March 2026 | From 1 April 2026 |
| Year concept | Previous Year + Assessment Year | Single “Tax Year” |
| Size | 700+ sections | 536 sections, 23 chapters, 16 schedules |
| Language | Many provisos and explanations | Simpler, with tables and formulas |
| TDS provisions | Sections 192-194T spread out | Consolidated in a single section with tables |
The “tax year”
Earlier, income earned in a financial year (Previous Year) was assessed in the next year (Assessment Year), which confused many people. Now, income earned from 1 April 2026 to 31 March 2027 belongs to Tax Year 2026-27.
New section numbers you will see
| Benefit | Old section | New section (2025 Act) |
|---|---|---|
| PPF, ELSS, LIC, EPF etc. | 80C | 123 |
| NPS contributions | 80CCD | 124 |
| Health insurance | 80D | 126 |
| Education loan interest | 80E | 129 |
| Donations | 80G | 133 |
| Savings interest | 80TTA | 153 |
| Rebate | 87A | 156 |
| New tax regime | 115BAC | 202 |
| Home loan interest | 24(b) | 22 |
| Filing of return | 139 | 263 |
Section numbers are as reported in official summaries and tax publications; check the Income Tax Department’s mapping utility for exact references.
What has not changed
- Tax slabs and rates are still set by the yearly Finance Act; Budget 2026 kept them unchanged.
- Popular deductions continue under new numbers.
- TDS, advance tax and return filing continue.
- Capital gains rates continue as before.
What it means for your ITR
Returns for income earned in FY 2025-26 (AY 2026-27), filed during 2026, follow the old 1961 Act. Income from 1 April 2026 onwards follows the new Act, so the first returns under it will be filed in 2027 for Tax Year 2026-27. New forms and rules have been notified, so expect form names and numbers to change.
Frequently asked questions
When did the Income-tax Act, 2025 come into force?
On 1 April 2026.
Does the new Act increase taxes?
No. It mainly simplifies and restructures the law; tax rates are decided by the Finance Act each year.
Is Assessment Year abolished?
Yes, under the new Act the concepts of Previous Year and Assessment Year are replaced by a single Tax Year.
Keep exploring
- New vs old tax regime 2026-27
- How to file ITR online
- TDS, Form 26AS and AIS
- More Tax & ITR articles on Tiwaripedia
This article is for general information, not financial, tax or legal advice. Rates, limits and rules change; always confirm on the official website or with a qualified advisor before you act. Spotted something that needs updating? Let us know.
