The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. Most tax rates did not change. What changed is the language, the structure and the section numbers, and that touches your invoices, contracts, payroll and accounting software.
What changes
- "Tax year" replaces "previous year" and "assessment year". Income earned from 1 April 2026 to 31 March 2027 is tax year 2026-27.
- A shorter, renumbered law. Provisions are regrouped and renumbered, so references such as "section 194J" in contracts and systems now point to the old Act.
- TDS in one place. Non-salary TDS provisions are consolidated, with rates and thresholds set out in tables under section 393.
- Old years stay under the old Act. Income up to 31 March 2026, including the return you file in 2026, is still assessed under the 1961 Act.
What to update now
- Accounting and payroll software: TDS section codes, tax year labels and Form 16 templates.
- Vendor contracts and invoices that quote old section numbers for TDS.
- Internal policies and approval notes that cite old sections.
- Advance tax planning for tax year 2026-27, with instalments due on 15 June, 15 September, 15 December and 15 March.
- Team training, so your accounts staff use the new terms with vendors and the department.
What does not change
- Your tax rates, unless the Finance Act changed them.
- GST, which is under separate laws.
- Your obligation to keep books and get a tax audit when turnover crosses the threshold.
Use our free TDS rate finder for tax year 2026-27, and talk to our team about moving your systems to the new Act.
Frequently asked questions
Not by itself. The Act restructures and renumbers the law. Rates are set each year by the Finance Act.
The return you file in 2026, for income earned up to 31 March 2026, is under the Income-tax Act, 1961. Income from 1 April 2026 falls under the 2025 Act.
