From 1 April 2026, India's income tax runs on a new law — the Income-tax Act, 2025 — in place of the Income-tax Act, 1961 that governed it for more than sixty years. The new Act was written to be simpler to read. For most taxpayers the amount of tax does not change. What changes is the vocabulary, the section numbers you will see on notices and forms, and some of the paperwork.
What stays the same
- Tax rates and slabs. Budget 2026 made no change to the slabs. The new regime still starts at ₹4 lakh, and the rebate still means no tax on income up to ₹12 lakh (₹12.75 lakh for salaried people, after the ₹75,000 standard deduction).
- Deductions and exemptions carry over — standard deduction, HRA (old regime), home-loan interest, 80C-type savings and so on. Several now sit under new section numbers.
- The two regimes. The new regime is still the default; the old regime is still available if you choose it.
What changes
"Tax year" replaces "previous year" and "assessment year"
The confusing pair of previous year (when you earn) and assessment year (when you are assessed) is gone. There is now one tax year — the year April to March in which you earn the income. Income earned from 1 April 2026 to 31 March 2027 is tax year 2026-27, and you file its return in 2027.
New section numbers
Almost every provision has moved. A few you will meet often:
| What it is | Old section | New section |
|---|---|---|
| TDS on salary | 192 | 392 |
| TDS on other payments (rent, fees, contractors…) | 194 series, 195 | 393 |
| TCS | 206C | 394 |
| Interest for late return | 234A | 423 |
| Interest for short advance tax | 234B | 424 |
| Interest for deferred advance tax | 234C | 425 |
Notices, challans and forms from April 2026 quote the new numbers. Tax professionals will refer to both for a while — our calculators show the old number alongside.
What about returns and notices for earlier years?
The old Act still applies to everything up to 31 March 2026. The return for FY 2025-26 (filed in 2026) is filed under the 1961 Act, and notices, assessments and appeals for earlier years continue under it. The new Act's first full returns will be for tax year 2026-27, filed in 2027.
What you should do now
- Businesses and anyone who deducts TDS — update your accounting software and vendor masters to the new TDS sections for payments made from 1 April 2026. Old section codes are rejected for new-period challans and returns.
- Salaried employees — tell your employer your regime choice for tax year 2026-27 if you have not; it decides how much TDS is taken from your salary.
- Everyone — keep the April 2026 date in mind when reading a notice. If it quotes a section you do not recognise, it is probably the new number for a familiar rule.
This article is general information based on the law as it stood on 26 Sep 2026. It is not advice for your situation — rules and dates change, and the right answer depends on your facts. Speak to us before acting on it.