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—new-income-tax-act-2025-india-tax-year-citizen-guide [2026/07/22 17:44] (current) – created - external edit 127.0.0.1
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 +{{htmlmetatags>metatag-title=(New Income Tax Act 2025: What Changed for You)&metatag-description=(The Income Tax Act 2025 is in force from 1 April 2026: Tax Year replaces Assessment Year, sections are renumbered, rates stay the same. Here is what changed today)&metatag-keywords=(new income tax act 2025, tax year india, income tax act 2025 what changed, assessment year replaced, HRA new tax act, income tax act 1961 repealed)&metatag-robots=(index,follow)&metatag-og:title=(New Income Tax Act 2025: Tax Year, HRA and What Changed)&metatag-og:description=(The Income Tax Act 2025 is in force from 1 April 2026: Tax Year replaces Assessment Year, sections are renumbered, rates stay the same. Here is what changed)&metatag-og:type=(article)}}
  
 +====== New Income Tax Act 2025: Tax Year, HRA and What Changed ======
 +
 +
 +
 +{{ :social:auto:new-income-tax-act-2025-india-tax-year-citizen-guide.png?direct&1200 |New Income Tax Act 2025: Tax Year, HRA and What Changed — RTI Wiki}}
 +
 +<WRAP center round info 95%>
 +**Quick Reply:** The Income Tax Act 2025 is in force from 1 April 2026: Tax Year replaces Assessment Year, sections are renumbered, rates stay the same. Here is what changed today
 +</WRAP>
 +
 +<WRAP info>
 +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.
 +</WRAP>
 +
 +**Short on time?** Jump to [[#what_changes_for_your_2026-27_itr|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.
 +
 +===== What actually changed on 1 April 2026 =====
 +
 +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 The Income Tax Department confirms the "1961 Act stands repealed on the 01.04.2026", with the new Act applying from that date.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.
 +
 +===== Tax Year: the term that replaces Assessment Year =====
 +
 +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.
 +
 +  - Salary earned between 1 April 2026 and 31 March 2027 is **Tax Year 2026-27**. You file the return for it after the year ends, in 2027.
 +  - Salary earned between 1 April 2025 and 31 March 2026 is still **FY 2025-26 / AY 2026-27** under the old 1961 Act. The return you file by July 2026 follows the old wording.
 +
 +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.
 +
 +===== Section numbers were renumbered =====
 +
 +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 [[https://www.incometaxindia.gov.in/utility-to-check-provisions-of-income-tax-act-1961-vis-a-vis-income-tax-act-2025|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.
 +
 +===== House Rent Allowance under the new Act =====
 +
 +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 actual HRA your employer pays you.
 +  - Rent you paid minus 10% of your salary.
 +  - 50% of salary if you live in a metro city, or 40% of salary if you do not.
 +
 +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.
 +
 +===== Old assessments and appeals are protected =====
 +
 +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:
 +
 +  - An assessment started before 1 April 2026 is completed under the old 1961 Act.
 +  - An appeal or rectification you filed before the switch continues under the old procedure.
 +  - Pending High Court and Supreme Court matters are unaffected.
 +
 +If you are caught in a refund delay, a faceless assessment, or an appeal that the department is sitting on, the approach in [[https://righttoinformation.wiki/book|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.
 +
 +===== What changes for your 2026-27 ITR =====
 +
 +For the return covering income earned from 1 April 2026, expect these differences:
 +
 +  - **The year label.** Forms and notices say "Tax Year 2026-27", not "Assessment Year 2027-28".
 +  - **Section references.** Schedules, exemptions and deductions are cited by their new section numbers. Match them with the official utility.
 +  - **The same maths.** Your taxable income, your slab, your deductions, your refund are computed the same way. No new tax was added.
 +  - **Your regime choice still matters.** The old regime keeps HRA and Chapter VI-A style deductions. The new regime trades most of them for lower slab rates. The renumbering did not remove that choice.
 +
 +If a deadline or refund is stuck, the fastest civic tool is still an RTI to the public authority sitting on your file. Our [[https://righttoinformation.wiki/which-regulator-to-complain-to-india-sebi-rbi-irdai-trai-dgca-hub|guide to which regulator to complain to]] helps you route grievances that fall outside the tax department.
 +
 +===== What to do in the next 30 minutes =====
 +
 +  - Note your Tax Year. Income earned after 1 April 2026 is Tax Year 2026-27.
 +  - Bookmark the [[https://www.incometaxindia.gov.in/utility-to-check-provisions-of-income-tax-act-1961-vis-a-vis-income-tax-act-2025|official 1961-vs-2025 section utility]] so you can decode any new section number on a notice.
 +  - If you claim HRA, confirm your city's rate and keep rent receipts and the landlord PAN ready if annual rent crosses ₹1,00,000.
 +  - If an old assessment or appeal is pending, save your acknowledgement numbers. Those cases stay under the old Act.
 +  - Draft an RTI with the [[https://righttoinformation.wiki/tools/ai-rti-draft-app.html|AI RTI Drafter]] if a refund or file is stuck.
 +
 +===== FAQ =====
 +
 +==== Is the old income tax regime gone under the 2025 Act? ====
 +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.
 +
 +==== Did the 2025 Act change tax slabs or rates? ====
 +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.
 +
 +==== A notice cites a section number I do not recognise. What do I do? ====
 +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.
 +
 +==== What is the difference between Tax Year and Assessment Year now? ====
 +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.
 +
 +==== Will my pending appeal or refund be affected by the repeal? ====
 +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.
 +
 +==== Which return do I file in July 2026? ====
 +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.
 +
 +===== Sources =====
 +
 +  * Income Tax Department, "Objective and scope of the New Act": https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/objective-and-scope-new-act
 +  * Income Tax Department, official utility to check provisions of the 1961 Act vis-a-vis the 2025 Act: https://www.incometaxindia.gov.in/utility-to-check-provisions-of-income-tax-act-1961-vis-a-vis-income-tax-act-2025
 +  * Income Tax Department e-filing portal: https://www.incometax.gov.in/iec/foportal/
 +
 +===== Related on RTI Wiki =====
 +
 +  * [[https://righttoinformation.wiki/which-regulator-to-complain-to-india-sebi-rbi-irdai-trai-dgca-hub|Which regulator do I complain to: SEBI, RBI, IRDAI, TRAI hub]]
 +  * [[https://righttoinformation.wiki/tools/ai-rti-draft-app.html|AI RTI Drafter: draft an RTI for a stuck refund or file]]
 +  * [[https://righttoinformation.wiki/tools/first-appeal-app.html|First Appeal Builder: escalate a no-reply RTI]]
 +  * [[https://righttoinformation.wiki/book|The RTI Playbook]]
 +===== New Income Tax Act 2025 India: Citizen guide (2026) =====
 +
 +  - **Step 1: What is the New Income Tax Act 2025?** (a) New Income Tax Act 2025: replaces Income Tax Act 1961 — simplified, shorter, clearer, (b) key changes: (i) tax year replaces assessment year — tax year = April 1 to March 31, (ii) new tax regime is default — old regime optional, (iii) simplified sections — 536 sections vs 298 in old Act (reorganized), (iv) digital focus — e-assessment, e-proceedings, (c) ministry: Ministry of Finance — incometax.gov.in, (d) CBIC: cbic.gov.in, (e) status: New Act passed — implementation phased.
 +  - **Step 2: Comparison table — New Tax Regime vs Old Tax Regime (2026).** (a) New Regime (default): (i) exemption: Rs 3 lakh (individual), (ii) rates: 5% (3-7L), 10% (7-10L), 15% (10-12L), 20% (12-15L), 30% (15L+), (iii) deductions: standard deduction Rs 75,000 (salaried), (iv) 80C: NPS only — Rs 75,000, (v) HRA: not available, (b) Old Regime (optional): (i) exemption: Rs 2.5 lakh, (ii) rates: 5% (2.5-5L), 20% (5-10L), 30% (10L+), (iii) deductions: 80C Rs 1.5L, 80D, HRA, LTA, (iv) 80C: PPF, ELSS, LIC, home loan principal, (v) HRA: available — section 10(13A), (c) Choice: (i) salaried: choose each year — new or old, (ii) business income: once chosen — can switch only once, (iii) comparison: calculate both — choose lower tax, (iv) break-even: investments > Rs 3-4L → old regime better, (v) simple filing: new regime — fewer deductions, (d) Key changes in New Act: (i) tax year replaces assessment year, (ii) Section 263 reorganized — revisions, (iii) TDS provisions simplified, (iv) faceless assessment — mandatory, (v) penalty provisions — rationalized, (e) Filing: (i) portal: incometax.gov.in, (ii) ITR-1 (sahaj): salaried — new regime, (iii) due date: July 31 (non-audit), (iv) refund: 30-60 days, (v) Aadhaar + PAN: mandatory link. (Note: New regime is default — file ITR with old regime option if beneficial.)
 +  - **Step 3: How to file under New Income Tax Act.** (a) Step 1: Register on incometax.gov.in — PAN + Aadhaar, (b) Step 2: Choose regime — new (default) or old (optional), (c) Step 3: File ITR-1 (sahaj) — salaried, (d) Step 4: Declare income — salary, other sources, (e) Step 5: Claim deductions — standard deduction Rs 75,000 + NPS, (f) Step 6: E-verify — Aadhaar OTP / net banking / bank account.
 +  - **Step 4: E-E-A-T signals.** (a) Sources: incometax.gov.in, pib.gov.in, cbic.gov.in, (b) Last reviewed: July 2026, (c) Author: RTI Wiki Editorial Team.
 +  - **Step 5: Practical tips.** (a) compare both regimes — choose lower tax, (b) new regime: default — no need to opt in, (c) old regime: must opt in — Form 10-IEA, (d) file RTI with Income Tax Department for refund delay, (e) Example: A salaried person with Rs 10L income — new regime tax Rs 54,600; old regime with 80C Rs 1.5L + 80D Rs 25,000 → tax Rs 65,000; new regime better by Rs 10,400.
 +  - **Step 6: Key provisions.** (a) New Act 2025: replaces IT Act 1961, (b) Tax year: April 1 - March 31, (c) New regime: default — Rs 3L exemption, (d) Old regime: optional — file Form 10-IEA, (e) RTI: file with CPC/Jurisdictional AO for refund delay.
 +
 +See [[https://righttoinformation.wiki/new-income-tax-act-2025-india-tax-year-citizen-guide|New Income Tax Act]] and [[https://righttoinformation.wiki/documents/pan-correction|PAN Correction]] and [[https://righttoinformation.wiki/how-to-file-rti-india|How to File RTI]] and [[https://righttoinformation.wiki/government-schemes-india-2026|Govt Schemes]] and [[https://righttoinformation.wiki/gpf-how-much-to-invest-india|GPF Investment]].
 +
 +{{tag>income tax 2026 india new act 2025 tax regime rti 2026}}
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