New Income Tax Act 2025: What Changed From April 2026 and What Did Not

The Income-tax Act, 2025 replaced the 1961 Act on 1 April 2026 and governs tax year 2026-27, meaning income you earn from 1 April 2026. It reorganises and renames the law rather than creating a new tax: slabs, rates and most limits carry over. Returns for FY 2025-26 (assessment year 2026-27) still follow the 1961 Act.

Which Act covers which year

Change 1: one "tax year" replaces previous year and assessment year

Section 3 defines a tax year as the twelve months of the financial year starting 1 April, and Section 4 charges tax on the income of that tax year. The assessment year is discontinued. A tax year can be shorter than twelve months when a business or source of income starts mid-year. Where the 2025 Act refers to a tax year starting on or before 1 April 2025, it is read as the matching previous year (Section 536(3)), so "tax year 2024-25" means previous year 2024-25, which was AY 2025-26.

Change 2: section numbers moved

The new Act has 536 sections and 16 schedules, against 819 sections and 14 schedules, in the same 23 chapters. TDS provisions that sat in sections 192 to 194T are now two sections: 392 for salary and 393 for everything else, with tax collected at source in 394. The CBDT utility lists no corresponding provision for Sections 206AB and 206CCA, the higher TDS and TCS rates for people who have not filed returns, so do not assume they carried over. Use the 1961 numbers for FY 2025-26 returns and the 2025 numbers from tax year 2026-27.

Change 3: forms were renumbered

For FY 2025-26 employers still issue the old Form 16 (due 15 June 2026). For tax year 2026-27 the salary certificate is Form 130, due 15 June 2027, per the CBDT transition FAQ. See our Form 16 guide and Form 15CA/15CB guide.

Change 4: return deadlines and fees

For tax year 2026-27 onwards, Section 263 allows a belated return within nine months of the end of the tax year and, after the Finance Act 2026, a revised return within twelve months, up from nine. Section 428 sets a fee of ₹1,000 if income is ₹5 lakh or less and ₹5,000 otherwise, both for a late return and for a revised return filed after nine months. The updated return (ITR-U) stays at 48 months from the end of the financial year after the tax year. To carry forward a capital loss you must still file the return by the due date. See our revised return guide for the 1961 Act position on AY 2026-27.

Change 5: Finance Act 2026 changes layered on top

• Share buy-backs: the consideration is charged as capital gains rather than as dividend, from tax year 2026-27, with an additional tax for promoters. See our buy-back guide.
• Sovereign Gold Bonds: the redemption exemption applies only to an individual who held the bond from original issue until maturity.
• Securities transaction tax: futures rise from 0.02% to 0.05%, sale of options from 0.1% to 0.15% of premium, and exercised options from 0.125% to 0.15% of intrinsic price, from 1 April 2026.
• A resident individual or HUF buying property from a non-resident does not need a TAN to deduct tax, from 1 October 2026 per the Finance Bill memorandum.

What did not change

An option exercised under the 1961 Act is treated as exercised under the matching 2025 provision (Section 536(2)(f)), so you do not re-opt for the new regime because of the changeover.

What to do differently

• Write "tax year 2026-27" on new documents and in your records; there is no AY 2027-28 for this income.
• Use old section numbers when you file the FY 2025-26 return, and new ones for FY 2026-27 planning and advance tax.
• Keep both Form 16 versions straight: the old form for FY 2025-26, Form 130 for FY 2026-27.
• Losses and rights from FY 2025-26 carry into the new Act if you filed on time (Section 536(2)). See our ITR guide for AY 2026-27.