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Knowledge · Effective 1 April 2026

Income-tax Act, 1961 → 2025: the transition, at a glance

The Income-tax Act, 2025 has replaced the six-decade-old 1961 Act with effect from 1 April 2026. It is largely a re-codification — rates and deductions are retained — but virtually every section is renumbered and the terminology has changed. Two frameworks now run in parallel:

For ITR filing now

AY 2026-27 — old 1961 Act

Income of FY 2025-26 is assessed under the Income-tax Act, 1961 and the 1962 Rules.

For current-year work

Tax Year 2026-27 — new 2025 Act

Income from 1 April 2026 onward is governed by the Income-tax Act, 2025 and the 2026 Rules.

Side by side

At a glance

Structural comparison of the two statutes. Tax policy is substantially unchanged.

AspectIncome-tax Act, 1961Income-tax Act, 2025
In forceUp to 31 March 2026From 1 April 2026
Size~819 sections, accumulated over 65 years536 sections · 23 chapters · 16 schedules
Period conceptPrevious Year + Assessment Year"Tax Year" (single, unified concept)
RulesIncome-tax Rules, 1962Income-tax Rules, 2026
Default regimeNew regime — s. 115BACNew regime — s. 202
Tax rates & slabsAs per annual Finance ActUnchanged — no new tax imposed
Drafting styleLayered with provisos & explanationsTables, plain language, ~half the length

What changed

Key changes, by area

Search or filter the changes practitioners need to action. Items marked Action require a change in how you file or report.

Terminology

"Tax Year" replaces PY & AY

1961 ActSeparate "Previous Year" (earning) and "Assessment Year" (assessment).
2025 ActA single unified "Tax Year" — both terms cease from 1 April 2026.

Structure

Re-codified & renumbered

1961 Act~819 sections built up over decades of amendments.
2025 Act536 sections across 23 chapters & 16 schedules; nearly every section renumbered.

Structure · Rules

New Income-tax Rules, 2026

1961 ActIncome-tax Rules, 1962 govern forms & procedure.
2025 ActIncome-tax Rules, 2026 supersede the 1962 Rules for all procedural matters.
Action

Rates & Regime

Rates unchanged; new regime default

1961 ActNew regime default under s. 115BAC.
2025 ActSame slabs, surcharge & 4% cess; new regime remains default under s. 202.

Deductions

80C / 80D retained, renumbered

1961 ActChapter VI-A deductions — 80C, 80D, 80G, etc.
2025 ActRetained in substance and renumbered (broadly into the s. 122–154 range). Standard deduction continues.

TDS

Salary TDS: s. 192 → s. 392

1961 ActSalary withholding under Section 192.
2025 ActSalary withholding now under Section 392 (slab-computed, unchanged).
Action

TDS

Non-salary TDS → one Section 393

1961 ActSeparate sections — 194C, 194J, 194I, 194H, 194Q, 193, 195, etc.
2025 ActAll consolidated under Section 393 (as sub-codes). Rates/thresholds largely unchanged, but returns using old 194-series codes are rejected by CPC from FY 2026-27.
Action

TCS

TCS → Section 394

1961 ActTCS provisions under the Section 206C series.
2025 ActConsolidated under Section 394; report under the new code from 1 April 2026.
Action

Presumptive & Audit

Presumptive & audit framework retained

1961 Act44AD / 44ADA presumptive; audit u/s 44AB (turnover up to ₹10 cr exempt where cash ≤ 5%).
2025 ActSame schemes & thresholds, renumbered into the new structure.

Transition

Prior years stay under the 1961 Act

Position1961 Act repealed on 1 April 2026.
SafeguardCompleted assessments & pending proceedings up to 31 March 2026 continue under the 1961 Act; no retrospective reopening.
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Reassurance

What stays the same

The 2025 Act does not impose any new tax. The change is structural and linguistic — the underlying tax burden, computation logic, and entitlements are retained.

Tax slabs & rates Surcharge & 4% cess Chapter VI-A deductions Capital gains rates TDS rates & thresholds Penalty framework

Budget 2026 — what it did (and didn't) change

  • No change to income-tax slabs under either regime for FY 2026-27 — existing rates continue.
  • The Section 87A rebate (nil tax up to ₹12 lakh under the new regime) and ₹75,000 standard deduction carry forward.
  • Securities Transaction Tax (STT) on F&O increased — futures to 0.05% and options to 0.15%.
  • Formal operationalisation of the Income-tax Act, 2025 from 1 April 2026, with the "Tax Year" framework.
Disclaimer: This guide is an indicative, high-level overview prepared for general information only, based on the Income-tax Act, 2025, the Finance Act for the relevant year, and official sources (incometax.gov.in) as available on the date below. It is not professional advice, and section numbers and provisions should be verified against the bare Act before being relied upon. Jai Prakash & Co. accepts no liability for any action taken on the basis of this material. This page is in conformity with the Website Guidelines of the Institute of Chartered Accountants of India (ICAI) and does not constitute an advertisement or solicitation.