The new Income-tax Act replaces the 1961 law from 1 April 2026. Here is what changes in plain language — and what stays the same.
The Income-tax Act, 2025 replaces the Income-tax Act, 1961 with effect from 1 April 2026. The aim is a shorter, simpler law that is easier to read — not a wholesale change in tax rates.
What changes
- "Tax year" replaces "previous year" and "assessment year". Income earned in a year is taxed for that same tax year, removing the confusing FY/AY pairing.
- Renumbered sections. Familiar references such as 80C or 44AD map to new section numbers. Forms, certificates and notices will gradually use the new references.
- Simpler language and tables. Many provisos and explanations have been consolidated into tables and formulas.
What stays the same
- Tax slabs and rates continue as set by the Finance Act.
- Both the old and new regimes remain available to individuals.
- Returns for income earned up to 31 March 2026 are filed under the earlier law's framework.
What you should do
For most salaried taxpayers, nothing changes immediately. Businesses should review accounting software, TDS processes and invoice templates for the new section references. If you receive a notice that cites unfamiliar section numbers, talk to us before responding.
This summary is for general awareness. Refer to official notifications and CBDT guidance for specifics.
Want an expert to handle this for you?
Our CAs can do it for you — accurately, on time, with a fixed fee. First consultation is free.