Income-tax Act 2025 Key Changes: Tax Year, New Sections, Forms

The Income-tax Act 2025 key changes are about structure, not tax rates: the new Act replaced the Income-tax Act, 1961 from 1 April 2026, swapped “previous year” and “assessment year” for a single “tax year”, renumbered almost every section and renamed the main forms (Form 16 is now Form 130, Form 26AS is now Form 168). Slabs, the ₹12 lakh rebate and the basic scheme of taxation were carried over. Income earned from 1 April 2026 is tax year 2026-27, and its return will be filed in 2027 under the new Act.

Income-tax Act 2025 key changes at a glance

The government’s stated aim was simplification: the 1961 Act had been amended so often that one rule could run across a section, several provisos and explanations. What did not change matters as much. The five heads of income, the default new regime, the ₹12 lakh rebate limit and capital gains rates all continue. If your income is the same, your tax for 2026-27 is broadly what it would have been under the old Act.

• One tax year. Income earned from 1 April 2026 to 31 March 2027 is income of “tax year 2026-27”. The old pair, “financial year 2026-27, assessment year 2027-28”, is gone. See our guide on what is tax year in the new Income-tax Act.
• Tables in place of scattered sections. TDS on rent, professional fees, contracts, property and interest, which sat in dozens of sections from 194A to 194T, is now in one table in section 393.
• Presumptive taxation in one place. Old sections 44AD, 44ADA and 44AE are now section 58.

The new section numbers you will meet most

These are the new numbers ordinary taxpayers see most often:

Residential status stays in section 6; heads of income move from section 14 to 13; tax audit from 44AB to 63.

Income-tax Act 2025 key changes in forms: Form 16 is now Form 130

The Income-tax Rules, 2026 renumbered the forms. If someone asks you for “Form 16” for tax year 2026-27, they mean Form 130.

• Form 130: salary TDS certificate from your employer (was Form 16).
• Form 131: TDS certificate for other payments such as interest, rent or fees (was Form 16A).
• Form 168: your annual tax statement on the e-filing portal (was Form 26AS).
• Form 121: one no-TDS declaration replacing Forms 15G and 15H.

What changed from 1 April 2026: the transition year explained

Two laws run side by side for a while, and this is where most confusion arises.

1. Income earned up to 31 March 2026 (financial year 2025-26, assessment year 2026-27): returns filed in 2026 used the old Act, old section numbers and old forms.
2. Income earned from 1 April 2026 (tax year 2026-27): governed by the new Act. Returns will be filed in 2027.
3. Old assessments, notices and appeals continue under the old law’s substantive provisions through the saving clauses. A notice for an old year may still quote 1961 Act sections.

The Finance Act, 2026 also amended the new Act: non-audit businesses and professionals now file by 31 August, and a revised return can be filed up to 12 months from the end of the tax year, with a fee in the last three months.

Common mistakes about the Income-tax Act 2025 key changes

• Writing “80C” or “87A” in a declaration for 2026-27. Use the new numbers (s.123, s.156), or simply describe the item.
• Thinking the new Act raised or cut your tax. For most people it did neither; check the slabs in our new vs old tax regime 2026-27 guide.
• Ignoring a notice that quotes an unfamiliar section. See how to reply to an income tax notice.
• Quoting old TDS sections. See our TDS rules 2026 guide.

For your own return or a notice, consult a chartered accountant.

Frequently asked questions

What are the Income-tax Act 2025 key changes for a salaried person?

For a salaried person, the key changes are labels, not tax. Income from April 2026 is called tax year 2026-27, the employer’s certificate is Form 130 instead of Form 16, and Form 26AS is now Form 168. The slabs, the ₹75,000 standard deduction and the ₹12 lakh rebate limit continue.

When did the new Income-tax Act come into force?

The Income-tax Act, 2025 came into force on 1 April 2026. It received the President’s assent on 21 August 2025 and repealed the Income-tax Act, 1961, subject to saving provisions for earlier years.

Did the new Income-tax Act change tax slabs?

No. The new Act carried over the existing rates, and the Union Budget of 1 February 2026 made no change to the new regime slabs. Income up to ₹12 lakh remains tax-free for resident individuals under the new regime because of the rebate in section 156.

What is section 80C called in the new Income-tax Act?

The deduction for items such as provident fund, PPF, life insurance premium and tuition fees is now in section 123 of the Income-tax Act, 2025, with the eligible items listed in a schedule. It is available only under the old regime, up to ₹1.5 lakh.

Quick quiz

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Sources

• Income-tax Act, 2025 (Act 30 of 2025): ss.3, 6, 13, 19, 58, 63, 123, 156, 202, 263, 280, 281, 392, 393, 394
• Income-tax Act, 1961 (repealed from 1 April 2026, subject to saving provisions)
• Income-tax Rules, 2026 (form numbers)
• Finance Act, 2026 (due dates and revised return window)
• Income Tax Department, published text of the Income-tax Act, 2025 on incometaxindia.gov.in

This page is for education and general information, not tax or legal advice for a specific case. Consult a chartered accountant for your own return. Law as on 31 October 2026.