Last reviewed: 4 September 2026
Quick answer: The Income-tax Act, 1961 is still the law in force. The Income Tax Act, 2025 — assented to in August 2025 — takes effect on 1 April 2026 and repeals the 1961 Act from that date. It restructures and simplifies the law (fewer sections, one unified “tax year” concept) rather than changing tax rates or introducing new taxes. Returns, assessments, and notices up to 31 March 2026 continue under the 1961 Act.
Two Income Tax Acts are relevant to filings right now, and it’s easy to mix them up in the middle of a filing season. Here’s the factual position — what each Act is, what actually changes, and what stays the same — for individuals and businesses filing in Vadodara and across India.
Income-tax Act, 1961 vs Income Tax Act, 2025 — the short version
| Income-tax Act, 1961 | Income Tax Act, 2025 | |
|---|---|---|
| In force | 1 April 1962 – 31 March 2026 | From 1 April 2026 |
| Status | Current law; being repealed | Enacted; not yet in force |
| Sections | 700+ (819 including omitted/renumbered provisions, per published trackers) | 536 |
| Chapters | 23 | 23 |
| Schedules | 14 | 16 |
| Time-period concept | “Previous Year” and “Assessment Year” (two linked, offset periods) | Single unified “Tax Year” |
| TDS provisions | Spread across multiple sections (192–206 and others) | Consolidated under one section |
| Common forms | Form 16, Form 26AS, Forms 15G/15H | Renumbered (e.g. Form 16 → Form 130, Form 26AS → Form 168, 15G/15H merged) |
| Tax rates & slabs | Set separately by the annual Finance Act either way — not fixed by either Act itself, and not changed by this transition on its own. | |
What actually changes for you
- If you’re filing a return now, for AY 2026-27 or earlier income: nothing changes — your return is governed by the Income-tax Act, 1961, the same as always.
- If you’re responding to a notice or an ongoing assessment: it continues under the 1961 Act until the transition date, regardless of when your response is due.
- From 1 April 2026 onward: compliance work — filings, TDS, audits, assessments — moves to the Income Tax Act, 2025 framework. The underlying computation of income, most deductions, and exemption structures carry over conceptually; what changes is mainly section numbering, defined terms (like “tax year”), and where specific provisions now sit.
- Businesses and NRIs with ongoing cross-border or multi-year matters: transitional provisions govern how matters that straddle the two Acts are treated — this is the area most worth a direct review with us rather than assuming continuity.
- No rate changes from this Act alone: tax slabs, rates, and thresholds are set by the annual Finance Act each year, independent of this restructuring — don’t read a rate change into the 2025 Act itself.
We track this transition as part of the ongoing compliance calendar we run for clients (see how the practice operates) rather than as a one-time notice — the practical detail that matters is usually specific to your filing category, which is worth a direct conversation rather than a general guide.
Questions we’re asked about the transition
Do I need to refile anything because of the new Act?
No. Returns and filings already made under the Income-tax Act, 1961 stand as filed. The 2025 Act applies going forward from its commencement date; it isn’t retroactive.
Will my tax liability change because of the new Act?
Not on its own. The Income Tax Act, 2025 restructures and simplifies the law rather than changing tax policy — rates and slabs are set separately by each year’s Finance Act, under either law.
Which businesses should review their position before 1 April 2026?
Anyone with matters that span the transition date — ongoing assessments, multi-year contracts, NRI or cross-border positions, or TDS arrangements that reference specific section numbers in internal systems — is worth a direct review, since those are where the renumbering and consolidated provisions have the most practical effect.
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