The Income-tax Act, 2025 explained: what changed on 1 April 2026 and what didn’t
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. It is a rewrite for simplicity: about 536 sections instead of 800+, the single term “Tax Year” instead of “previous year” and “assessment year”, and exemptions moved into schedules. Tax rates and the tax on salary did not change because of the new Act. Income earned from 1 April 2026 is taxed under the new law; your return for FY 2025-26 (filed in 2026) still uses the old Act.
Key facts Last verified: 25 Sep 2026
| Item | Details | Source |
|---|---|---|
| In force from | 1 April 2026 | Income Tax Dept |
| Replaces | Income-tax Act, 1961 | Income Tax Dept |
| Size | About 536 sections (vs 800+) | Income-tax Act, 2025 |
| Key term | “Tax Year” replaces previous year and assessment year | Income Tax Dept |
| Salary taxation | No change in rates due to the new Act | Income Tax Dept FAQs |
| Transition FAQs | Official FAQs on interplay of the two Acts | Income Tax Dept |
What changed
| Area | Before (1961 Act) | Now (2025 Act) |
|---|---|---|
| Year terms | Previous year + assessment year | Tax Year only |
| Size | 800+ sections, many provisos | ~536 sections, tables and schedules |
| Exemptions (HRA, gratuity, etc.) | Section 10 | Moved to schedules |
| Deductions (80C, 80D…) | Chapter VI-A (80C–80U) | Sections 122–154 |
| Rebate 87A | Section 87A | Section 156 |
| TDS | Dozens of sections (192–194T) | Consolidated into a few sections with tables |
| Rules and forms | Income-tax Rules, 1962 | Income-tax Rules, 2026 (new form numbers, e.g. PAN Form 93) |
What did not change
- Tax slabs and rates for 2026-27 (Budget 2026 kept them the same)
- ₹75,000 standard deduction and the ₹12 lakh rebate in the new regime
- The old vs new regime choice
- Your PAN, TDS on salary, and the need to link PAN with Aadhaar
What it means for you in practice
- Filing in 2026 (for FY 2025-26): use the old Act’s terms and section numbers — nothing changes for this return.
- From Tax Year 2026-27 (return filed in 2027): forms will use new section numbers. Our section finder table maps the common ones.
- Salary slips and Form 16: employers may start quoting new section numbers; the amounts work the same way.
- HRA: the 50% city list grew to 8 cities from 2026-27 — see the HRA calculator.
Frequently asked questions
When did the Income-tax Act, 2025 come into force?
On 1 April 2026. Income earned from that date is governed by the new Act.
Did the new Income-tax Act change tax rates for salaried people?
No. Rates, the standard deduction and the rebate stayed the same. The Act mainly simplifies language, structure and section numbering.
Which Act applies to my return filed in 2026?
The return for FY 2025-26 (AY 2026-27), filed in 2026, follows the Income-tax Act, 1961.
What is a Tax Year?
The 12-month period from 1 April to 31 March in which income is earned. It replaces both “previous year” and “assessment year”.
Official links
Use only these government websites. HumainOne is not connected to any of them.
- Income Tax Department — New Act overviewScope and objectives
- Income Tax India — Transition FAQsInterplay between the 1961 and 2025 Acts
- India CodeFull text of central Acts
Disclaimer: HumainOne is an independent information website. We are not affiliated with UIDAI, the Income Tax Department, EPFO, NPCI, the Election Commission, the Government of Maharashtra or any government body. We do not accept applications, documents or fees. Information is checked against official sources on the date shown but rules change — always confirm on the official website before acting. Calculators give estimates, not official figures, and this is not tax or legal advice.