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From Bill to law
The Income-tax Bill, 2025 was introduced in February 2025, sent to a Select Committee, and replaced by a revised Bill in August 2025. It received Presidential assent on 21 August 2025 and came into force on 1 April 2026, replacing the Income-tax Act, 1961 after 65 years. The Income-tax Rules, 2026 replaced the 1962 Rules on the same day.
The aim was simplification, not a new tax policy: about 536 sections in 23 chapters, against more than 800 sections in the old Act, with tables and formulae in place of long provisos.
'Tax year' replaces previous year and assessment year
Under the old law you earned income in the previous year and were assessed in the assessment year. The 2025 Act uses a single tax year — the year in which income is earned (Section 3).
| Period of income | Old description | New description |
|---|---|---|
| 1 April 2025 – 31 March 2026 | FY 2025-26 / AY 2026-27 | — (still under the 1961 Act) |
| 1 April 2026 – 31 March 2027 | FY 2026-27 / AY 2027-28 | Tax Year 2026-27 |
Almost every section has a new number
The most visible change. A few you will meet often:
| Provision | 1961 Act | 2025 Act |
|---|---|---|
| Deductions — PPF, ELSS, LIC, tuition | 80C | 123 |
| Health insurance | 80D | 126 |
| Rebate (zero tax up to ₹12 lakh) | 87A | 156 |
| New tax regime | 115BAC | 202 |
| Presumptive income | 44AD / 44ADA / 44AE | 58 |
| Return of income | 139 | 263 |
| Assessment / intimation | 143 | 270 |
| Reassessment notice | 148 | 280 |
| TDS on salary / other payments / TCS | 192 / 193–196D / 206C | 392 / 393 / 394 |
| Interest for late return / advance tax | 234A / 234B / 234C | 423 / 424 / 425 |
Search any other section in our Section Finder.
Forms got new numbers too
The Income-tax Rules, 2026 renumbered the forms. Salary TDS certificates (old Form 16) are now Form 130; quarterly TDS statements 24Q/26Q/27Q are Forms 138/140/144; the TCS statement 27EQ is Form 143; the property and rent challan-cum-statements 26QB/26QC/26QD are combined in Form 141; and the 15G/15H declarations became a single Form 121. See the Form Finder.
What did not change
- Slab rates and both regimes — the new regime remains the default, and Budget 2026 kept the slabs unchanged.
- The ₹12 lakh zero-tax threshold under the new regime and the ₹75,000 standard deduction.
- Capital-gains rates (20% STCG on listed equity, 12.5% LTCG) and holding periods.
- The broad scheme of TDS, advance tax, interest and penalties — only the numbering and drafting changed.
Which law applies to what
| Situation | Law |
|---|---|
| Return for FY 2025-26, filed in 2026 | 1961 Act |
| Notice, assessment or appeal for AY 2026-27 or earlier | 1961 Act (saved by the repeal clause) |
| TDS/TCS on payments from 1 April 2026 | 2025 Act — new forms |
| Advance tax for Tax Year 2026-27 | 2025 Act — Sections 403 to 408 |
| Return for Tax Year 2026-27, filed in 2027 | 2025 Act |
If a notice for an old year quotes a section you don't recognise, it is almost certainly a 1961-Act section. Send it to us and we will explain it.
What you should do now
- Employers and businesses: make sure payroll and TDS software use the new sections and forms for Tax Year 2026-27.
- Salaried people: expect Form 130 instead of Form 16 for salary paid from April 2026.
- Everyone: keep using old numbers for FY 2025-26 matters; switch to new numbers for income from April 2026.
- Pay advance tax for Tax Year 2026-27 by selecting the 2025 Act in the e-pay tax facility.
Frequently asked questions
No. Income of FY 2025-26 is governed by the 1961 Act. The 2025 Act applies to income from 1 April 2026.
No. Rates and slabs carried over; Budget 2026 did not change the slabs.
Founder, VJ & Associates, Jind — Taxation Lawyer & Legal Consultant, backed by the firm's Chartered Accountants, Company Secretaries and Tax Advocates. About the author · vinujaglan.com
General information as on 10 Nov 2026, not advice for your specific case. Laws, rates and dates change — see the disclaimer.
