After six decades, the 1961 Act retires. Here is what actually changes for a business — and what does not.
The Income-tax Act, 2025 replaces the Income-tax Act, 1961 with effect from 1 April 2026. It applies from Tax Year 2026-27 onwards — everything up to FY 2025-26, including the current audit and return season, remains governed by the 1961 Act.
The familiar pair of Previous Year (when you earn) and Assessment Year (when you file) is replaced by a single Tax Year. This removes one of the most common points of confusion in Indian tax compliance — dates, notices and forms will all speak one language.
Six decades of amendments had taken the 1961 Act past 800 sections. The new Act consolidates this into 536 sections across 23 chapters, with tables and formulas in place of long provisos. Section numbers you have known for years will change — expect a transition period where old and new references are read side by side.
The Act itself does not alter tax rates. The new regime continues as the default, and slabs continue as they stand unless a Finance Act changes them. The reform is about structure and language, not about how much tax you pay.
From 1 April 2026, several familiar forms are replaced, renamed or consolidated into new formats and unified reporting structures. Systems, templates and internal checklists that hard-code form numbers will need updating.
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Updated 15 September 2026 · This note is general information, not professional advice for a specific case.
