After six decades, the Income-tax Act, 1961 has been retired. The Income-tax Act, 2025, passed by Parliament in August 2025, applies to income earned from 1 April 2026 — that is, from the current financial year. If you have been Googling "new income tax act sections" or "tax year meaning", you are not alone: it is one of the fastest-growing tax queries of 2026.
Here is the honest summary: your tax bill does not change because of the new Act. The rates, slabs, rebates and most deductions were carried over unchanged. What changed is the language and the structure.
The five things that actually changed
1. "Tax year" replaces "previous year" and "assessment year"
The old Act made you think in two years at once — the year you earned (previous year) and the year you were assessed (assessment year). The 2025 Act uses a single tax year: 1 April to 31 March. Income earned in FY 2026-27 is simply "tax year 2026-27". Forms, notices and challans now use this term.
2. Section numbers are renumbered
The new Act has 536 sections and 16 schedules versus 819 sections in the old one. Familiar numbers moved:
| What | Old section | New section (approx.) |
|---|---|---|
| Salary income | 15–17 | 15–19 |
| House property | 22–27 | 20–25 |
| Business & profession | 28–44 | 26–66 |
| Presumptive taxation (44AD/44ADA) | 44AD, 44ADA | 58 |
| Deductions (80C etc.) | Chapter VI-A | Chapter VIII (123 onward) |
| TDS | 192–206 | 393–398 |
| Rebate | 87A | 156 |
Your CA's software and the e-filing portal map these automatically, but notices you receive from now on quote the new numbers. Keep this table handy.
3. Plain-language drafting and tables
Provisos and explanations that ran for pages are now tables. For example, TDS rates and thresholds sit in one tabular schedule rather than scattered across two dozen sections. This makes self-filing meaningfully easier.
4. Digital-first assessment
Faceless assessment, which was bolted onto the old law, is native to the new one. The Act also explicitly allows officers to access digital records — email, cloud storage, social media — during a search, which triggered privacy debates. For ordinary taxpayers nothing changes, but keep your bookkeeping clean and backed up.
5. A few compliance details
- Nil-TDS certificates can now be obtained by more categories of taxpayers, reducing the refund-chasing cycle.
- Updated returns (ITR-U) can be filed up to four years after the end of the tax year (the extension had already come in via Finance Act 2025).
- Standard deduction, rebate and slabs are exactly as in the new regime: 0–4L nil, up to ₹12 lakh effectively tax-free via the ₹60,000 rebate, ₹75,000 standard deduction for salaried.
What did not change
- Old vs new regime choice (new is default).
- Section 80C-style deductions in the old regime (now under different section numbers).
- Presumptive taxation limits: ₹3 crore for 44AD businesses and ₹75 lakh for 44ADA professionals, provided cash receipts are within 5%.
- Advance tax instalments: 15 June, 15 September, 15 December, 15 March.
- Capital gains rates set in July 2024 (12.5% LTCG, 20% STCG on equity).
What small businesses should do this month
- Update templates and letters that cite sections — engagement letters, TDS certificates you issue to contractors, rent agreements referring to "194-I".
- Re-check your TDS deductions against the new tabular schedule using the TDS calculator — the rates are the same, but the thresholds raised in FY 2025-26 (₹6 lakh for rent, ₹50,000 for professional fees) are now the baseline.
- Plan advance tax for tax year 2026-27 — the advance tax calculator lays out the four instalments.
- Decide your regime with the old vs new comparison. For most people with under ₹4 lakh of deductions, the new regime wins.
FAQ
Did my tax rates change with the Income Tax Act 2025?
No. The Act consolidates and simplifies the law; slabs, rebates and deductions are those already in force from Finance Act 2025.
Is "tax year" the same as financial year?
Yes — 1 April to 31 March. The term replaces both "previous year" and "assessment year".
Do I need to refile or change anything for FY 2025-26?
No. FY 2025-26 income is assessed under the old Act's numbering (ITR filing in 2026 continued as before). The new Act applies to income from 1 April 2026 onward.
Where can I map old section numbers to new ones?
The Income Tax Department published a section-mapping table with the Act. The e-filing portal's help centre carries a searchable version.