Income-tax Act 2025: What \"Tax Year\" Means for You
India's new income tax law is in force from 1 April 2026. Here is what the 'tax year' change means, what stays the same, and how to read it as a salaried person.
Contentsविषय-सूची
Short answer
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 and came into force on 1 April 2026 (it received Presidential assent on 21 August 2025). The biggest visible change is wording: the old pair "previous year" and "assessment year" is replaced by a single "tax year" — the 12 months from 1 April to 31 March in which you earn the income. So income earned from April 2026 to March 2027 belongs to tax year 2026-27. Income earned up to 31 March 2026 is still taxed and filed under the 1961 Act.
There's a lot of confusion about this, mostly because two different things are being called "new". Let me separate them.
Why this confused everyone
Under the old law you earned income in "FY 2025-26" but filed it in "AY 2026-27". Two different labels for one set of income caused endless mistakes in forms and challans. The new law uses one label: the year in which you earn is the tax year.
| Old law (1961 Act) | New law (2025 Act) | |
|---|---|---|
| Year you earn | Previous year / financial year (FY) | Tax year |
| Year you file/assess | Assessment year (AY) | Not a separate label; filing happens after the tax year ends |
| Example | Earn in FY 2026-27, file in AY 2027-28 | Earn and file for tax year 2026-27 |
What actually changes for a salaried person?
Right now, very little in daily life.
- Your employer still deducts TDS from salary every month.
- You still file a return after the year ends, using your Form 16, AIS and Form 26AS equivalents.
- The basic structure of taxing salary, house property, business, capital gains and other sources continues, though section numbers have changed.
What to watch:
- Section numbers. Familiar numbers like 80C or 139(4) may appear under new section numbers in new forms and notices. Many sources publish "old-to-new" mapping tables. Use the official text or the e-filing portal's guidance, not memory.
- New forms. Return forms for income earned from 1 April 2026 onwards are expected to follow the new Act. Your first return under it will be for tax year 2026-27, filed in 2027.
- Rates and slabs are set by Finance Acts each year. The new Act doesn't automatically mean new rates; check the Budget for each year.
The transition in one timeline
| Income earned | Law that applies | When you file |
|---|---|---|
| Apr 2025 – Mar 2026 | 1961 Act (AY 2026-27) | 2026 (belated till 31 Dec 2026) |
| Apr 2026 – Mar 2027 | 2025 Act (tax year 2026-27) | 2027 |
If you still need to file for income up to March 2026, see belated ITR filing.
Step-by-step: what you should do this year
- Finish old filings under the 1961 Act (belated/revised for AY 2026-27 if pending).
- Save proofs for investments and expenses from April 2026 onwards as usual.
- Read your Form 16 next year carefully: section references may look different.
- Use the portal's help. The income tax portal publishes FAQs and utilities for each new form.
- Ask before acting on WhatsApp claims that "deduction X is gone". Verify on incometax.gov.in or with a CA.
Common questions people mix up
"Is the new tax regime the same as the new Income-tax Act?" No. The "new tax regime" (lower slabs, fewer deductions) is an option that existed under the 1961 Act too. The Income-tax Act 2025 is the new law itself. Choosing between old and new regime is a separate decision — we cover it in old vs new tax regime (coming soon).
"Will my old notices become invalid?" No. Proceedings for years under the old Act continue under transition provisions.
"Do I need to re-do my PAN or bank details?" No. Your PAN, Aadhaar link and portal account continue.
Quick glossary
| Term | Meaning |
|---|---|
| Tax year | 1 April – 31 March in which income is earned (new Act) |
| Previous year | Old term for the same period (1961 Act) |
| Assessment year | Old term for the following year in which income was assessed |
| AIS | Annual Information Statement on the portal |
| TDS | Tax deducted at source, e.g. by your employer |
FAQ
When did the Income-tax Act 2025 come into force?
On 1 April 2026.
Which law applies to my return filed in 2026?
For income earned up to 31 March 2026, the Income-tax Act 1961.
Is "assessment year" gone completely?
Under the new Act, the concept is replaced by "tax year". You will still see "AY" on old-year filings and notices.
Have tax slabs changed because of the new Act?
Slabs are set through annual Finance Acts. The new Act by itself is a rewrite of the law. Check the latest Budget for current slabs.
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