The Income Tax Act, 2025 came into force on 1 April 2026 and replaced the Income Tax Act, 1961. The biggest change for you is the language, not the bill. Income is now counted by Tax Year instead of “previous year” and “assessment year”. Money you earn in FY 2026-27 is taxed as Tax Year 2026-27. Rates and slabs are unchanged.
Short on time? Jump to What changes for your 2026-27 ITR. For everything else, your tax position is the same as last year, only the wording on notices is new.
The 1961 Act ran for over six decades and grew to 819 sections. It was hard to read. Parliament passed a rewrite. The Income Tax Department confirms the “1961 Act stands repealed on the 01.04.2026”, with the new Act applying from that date.
The new Act is a cleaner version of the same tax system. It has 536 sections and 23 chapters. It folds old explanations and provisos into the main text, and replaces wordy paragraphs with tables. The Department is clear that this is a simplification: “The Income Tax Act, 2025 does not impose any new tax.”
So the three things you should remember are simple. The tax year wording changed. The section numbers changed. Your actual tax did not.
Under the old Act you dealt with two years for the same income. The “previous year” was the year you earned the money. The “assessment year” was the next year, when you filed and were assessed. People mixed them up constantly.
The 2025 Act drops both terms. It uses one term: Tax Year. A Tax Year is “a period of twelve months contained in a financial year”. The Department states that the “Tax Year concept under the new Act corresponds to Previous Year concept under the Income Tax Act, 1961”.
In plain terms, your Tax Year is the same 1 April to 31 March financial year you already use. There is no separate assessment year to remember.
Two worked examples make this clear.
Note: the new “Tax Year” applies only from 1 April 2026 onward. The return you are filing right now for last year is still an old-Act return.
Every section in the Act was renumbered. The familiar landmarks moved. The deductions you knew by their old numbers now sit under new numbers, and several scattered provisions were merged into single sections.
This guide does not print a made-up old-to-new table. Many websites publish renumbering charts that disagree with each other, and a wrong section number on a tax page is dangerous. Use the government's own tool instead.
The Income Tax Department has published an official utility to check provisions of the 1961 Act against the 2025 Act. Open the official 1961-vs-2025 section utility, type the old section you know, and read the matching new provision. That is the only mapping you should trust.
What this means for you day to day: if a notice or form cites a section number you do not recognise, do not panic. Look it up in the official utility. The underlying rule is almost certainly the same one you already know under its old number.
HRA still works the way it did. The new Act carried the house rent allowance exemption forward. If you are salaried, live in rented accommodation, and file under the old tax regime, part of your HRA stays tax-free.
The exemption is the least of these three amounts:
The four long-standing metro cities for the 50% rate are Delhi, Mumbai, Kolkata and Chennai. Some reports say the 50% list has been expanded to add Bengaluru, Hyderabad, Pune and Ahmedabad from FY 2026-27. As of this writing that expansion has not been confirmed in an official notification we could verify, so treat it as unconfirmed and check the position with the Income Tax Department or your employer before you rely on it.
Two rules to remember. HRA exemption is not available under the new tax regime, only the old one. And if your rent is more than ₹1,00,000 a year, you must give your landlord's PAN to your employer and report it in your return.
A common worry is whether a repealed Act wipes out cases already running. It does not.
The new Act has a savings clause. The Department confirms that “provisions of the repealed Income Tax Act shall continue to apply to any proceeding pending” as on 1 April 2026, for tax years before that date. The broad savings provision, Section 536 of the new Act, “preserves rights and obligations arising under the previous Act”.
In practice that means:
If you are caught in a refund delay, a faceless assessment, or an appeal that the department is sitting on, the approach in The RTI Playbook still applies. You can still file an RTI to ask for the file status, the officer handling it, and the reason for delay.
For the return covering income earned from 1 April 2026, expect these differences:
If a deadline or refund is stuck, the fastest civic tool is still an RTI to the public authority sitting on your file. Our guide to which regulator to complain to helps you route grievances that fall outside the tax department.
No. Both the old regime and the new regime continue. The old regime still allows HRA and Chapter VI-A type deductions. The new regime offers lower slab rates with fewer deductions. The 2025 Act renumbered the provisions but did not abolish the regime choice. You still pick the regime that gives you less tax each year.
No new tax and no rate hike came from the rewrite itself. The Income Tax Department states the 2025 Act “does not impose any new tax”. Slabs and rates are set each year by the Finance Act, as before. So your rate for a given income is the same. Always confirm the current year's slab from the latest Finance Act before filing.
Do not assume it is a new rule. Almost every old section was simply renumbered. Open the Income Tax Department's official utility to check 1961 provisions against the 2025 Act, type the section on the notice, and read the matching old provision. If you are still unsure, file an RTI asking the assessing officer to state the provision relied on and the reason for the notice.
There is no assessment year any more. The 2025 Act discontinued both “assessment year” and “previous year” and uses one term, Tax Year. A Tax Year is the 12-month financial year in which you earn the income. You no longer count a separate later year for assessment. Income from FY 2026-27 is simply Tax Year 2026-27.
No. The 2025 Act has a savings clause, Section 536, and the Department confirms pending proceedings continue under the repealed 1961 Act for periods before 1 April 2026. Your appeal, rectification or refund claim keeps running under the old rules. If it is delayed, you can file an RTI for the file status and the reason for the delay.
The return due in 2026 covers income you earned in FY 2025-26, which ended on 31 March 2026. That income is governed by the old 1961 Act and assessed as AY 2026-27. The new Tax Year wording starts only with income earned from 1 April 2026, which you will file for in 2027.