The Income-tax Act, 2025 is in force. What actually changes, and what does not

The Income-tax Act, 2025 came into force on 1 April 2026, replacing the Act of 1961. The scale of that sentence tends to produce more alarm than the change deserves. The new Act is largely a restatement: the structure of the charge, the heads of income, the way business profits are computed, the appellate machinery — these carry forward. What has changed is the arrangement, the vocabulary in places, and a great many numbers.

The practical consequence for most people this year is narrower than the headlines suggest, and it is worth being precise about it.

Two Acts are live at the same time

This is the point that causes the most confusion, and it is simple once stated. A return is governed by the law applying to the income it reports, not by the law in force on the day it is filed.

• Income earned in the year ended 31 March 2026 is governed by the 1961 Act. The return filed for it during 2026 is a return under the old law, in the familiar ITR forms.
• Income earned from 1 April 2026 onward is governed by the 2025 Act. That return will not be filed until 2027.

So 2026 is a transition year in which the old Act governs what you are filing and the new Act governs what you are earning. Compliance during the year — deduction of tax, advance tax, the returns a business files month by month — is already under the new Act. The annual return is not, yet.

The tax year replaces the previous year and the assessment year

The 2025 Act uses a single concept, the tax year, in place of the pair the 1961 Act used. Anyone who has ever tried to explain to a client why income of 2025-26 is taxed in assessment year 2026-27 will recognise this as an improvement. Nothing about the period changes — it is still the twelve months ended 31 March — only the way it is named and referred to.

The forms have been renumbered

From the year beginning 1 April 2026 the TDS and TCS statements and certificates carry new numbers. The dates for depositing tax and filing the statements are unchanged; only the numbering moved. For this year, people will be holding documents printed under the old numbering and filing under the new, so both are worth knowing.

The consolidation of the four property and rent forms into a single Form 141 is the one worth noting for individuals. A person buying a flat, or paying rent above the threshold, previously had to identify which of four near-identical forms applied. Now there is one, with schedules.

The return date for business income has moved — permanently

What decides which date applies is whether the accounts are liable to audit, not the form number in isolation. An assessee whose accounts are liable to audit files by 31 October, with the audit report due by 30 September, exactly as before.

What has not changed

• Advance tax instalments — 15 June, 15 September, 15 December and 15 March, cumulative at 15, 45, 75 and 100 per cent.
• Deposit of tax deducted — the 7th of the following month, with March deposited by 30 April.
• The quarterly statement dates, and the date for the salary certificate.
• The basic architecture of appeals — the first appeal, then the Tribunal, then the High Court on a question of law.

What to do about it

For a salaried individual: very little. The return for this year is filed as it always was, and the certificate you receive from your employer may carry either number.

For a business: the work is in the systems rather than in the law. Accounting and payroll software has to emit statements in the new numbering; templates, engagement checklists and internal calendars that name forms by number need a pass; and anyone who has automated a filing reminder against a form number should check it still points at something that exists. None of this is difficult. All of it is easier done in a quiet month than in a filing week.