India’s new Income-tax Act, 2025 came into force on 1 April 2026, replacing the Income-tax Act, 1961. The aim is a simpler, shorter law. For most businesses the tax rates do not change overnight, but the language, section numbers and some forms do.
1. “Tax year” replaces previous year and assessment year
The old two-year system of “previous year” and “assessment year” is replaced by a single tax year — the year in which income is earned. Income earned from April 2026 to March 2027 belongs to Tax Year 2026-27.
2. Tax audit moves to section 63
What was section 44AB is now section 63. The audit report moves to a new consolidated Form 26. Thresholds remain broadly the same.
3. TDS provisions are consolidated
The many TDS sections of the old Act (192 to 194T) are consolidated, largely into section 393, with rates and thresholds set out in tables. Your accounting software and TDS returns will need the new references.
4. Deductions are renumbered
Familiar deductions keep their substance but get new numbers — for example, the old section 80C deduction now appears in section 123.
5. Old years stay under the old Act
Returns, audits and assessments for FY 2025-26 and earlier years continue under the Income-tax Act, 1961. For a few years, you and your advisors will work with both laws side by side.
6. Update your contracts and templates
Agreements, invoices, board resolutions and internal policies that quote old section numbers should be reviewed so they refer to the correct provisions going forward.
7. Plan, do not panic
The new Act is a rewrite, not a rate revolution. The practical work is in mapping old sections to new ones, updating software and making sure your first tax year under the new law starts cleanly.
Want a quick review of how the new Act affects your business? Talk to a partner at SSRA & Co. or WhatsApp us on +91 98101 12652.
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