The Income-tax Act, 2025 —
A New Law, Not New Taxes
The Income-tax Act, 2025 replaces the 60-year-old 1961 Act from 1 April 2026. It is a clean-language recodification — same slabs, same deductions, renumbered sections. Here is exactly what changes, when it applies and how the old sections map across.
The Income-tax Act, 2025 replaces the Income-tax Act, 1961 and comes into force on 1 April 2026 — so it first governs FY 2026-27 (AY 2027-28). It is a simplification and recodification: no new taxes, the same slabs and the same deductions, with sections renumbered and the language cleaned up. Returns you file in July 2026 for FY 2025-26 are still assessed under the old 1961 Act.
Which Act Applies to Your Return?
The switch is by assessment year, not by the calendar date you file. Anything up to and including FY 2025-26 stays on the 1961 Act; FY 2026-27 onwards moves to the 2025 Act.
| Financial Year | Assessment Year | Governing Act | ITR Due Date (individuals) |
|---|---|---|---|
| FY 2024-25 | AY 2025-26 | 1961 Act | 31 Jul 2025 |
| FY 2025-26 | AY 2026-27 | 1961 Act | 31 Jul 2026 |
| FY 2026-27 | AY 2027-28 | 2025 Act | 31 Jul 2027 |
| FY 2027-28 | AY 2028-29 | 2025 Act | 31 Jul 2028 |
Existing assessments, refunds, appeals and demands raised under the 1961 Act continue under the transition/repeal-and-savings provisions of the 2025 Act.
Nothing about your July 2026 filing changes because of the new Act. FY 2025-26 is filed under the 1961 Act, using the same new-regime default slabs (nil up to ₹12 lakh taxable via the Section 87A rebate, plus the ₹75,000 standard deduction for salaried taxpayers). The 2025 Act only affects income earned from 1 April 2026.
What Actually Changed in the 2025 Act
The recodification reorganises the law — it does not re-tax you. The change is in how the statute reads and is numbered, not in what you owe.
What stayed the same
- Tax slabs & rates (new regime is the default)
- All deductions — 80C, 80D, 80G, 24(b), HRA, LTA
- The ₹75,000 (new) / ₹50,000 (old) standard deduction
- Section 87A rebate — nil tax up to ₹12 lakh (new regime)
- Capital-gains rates from Finance Act 2024
- TDS/TCS thresholds, advance tax & due dates
What is new
- 800+ sections consolidated & renumbered
- Plain-language drafting with tables, fewer provisos
- Obsolete / spent provisions removed
- A single unified "tax year" concept
- Cleaner chapter structure & cross-references
- Same rules, far easier to navigate
- No new tax and no rate change — the 2025 Act did not introduce a single new levy.
- The new tax regime stays the default for individuals and HUFs (the old Section 115BAC framework), with the old regime available on election.
- Established case law and interpretation from the 1961 Act era continue to guide the equivalent 2025-Act provisions.
From AY 2027-28, professionals and software will quote new section numbers. The provision may be identical in substance but carry a different number — always confirm you are citing the 2025-Act section for FY 2026-27 income and the 1961-Act section for earlier years.
Not sure which regime or slab applies to you this year?
Compare old vs new regime →Key Section Mapping: 1961 Act → 2025 Act
Section numbers change but the substance is carried over. This is an indicative map of major provisions — verify the exact new-Act section on the official portal before citing it.
| Provision | 1961 Act | 2025 Act position | Substantive change? |
|---|---|---|---|
| Exemptions (HRA, LTA, agriculture) | Section 10 | Retained; reorganised into sub-chapters | No |
| Chapter VI-A deductions (80C, 80D, 80G) | Sec 80A–80U | Retained; regrouped | No |
| New tax regime (default slabs) | Section 115BAC | Default-regime chapter, simplified | No |
| Salary income | Sec 15–17 | Salary chapter | No |
| Capital gains | Sec 45–55A | Retained; Finance Act 2024 rates | No |
| TDS / TCS framework | Sec 192–206CCA | TDS chapter, reorganised | No |
| Return of income | Section 139 | Filing-provisions chapter | No |
| Presumptive taxation | Sec 44AD / 44ADA | Retained | No |
| Assessment & reassessment | Sec 143–153 | Retained; reorganised | No |
Indicative mapping only. Section numbers under the 2025 Act should be confirmed against the enacted text on incometax.gov.in.
Want a return filed correctly under the right Act and regime?
Get expert ITR filing →Your Deductions Are Retained
Every popular deduction and exemption survives the recodification — renumbered, but with the same limits and conditions. If you plan under the old regime, you keep the full Chapter VI-A toolkit.
- Section 80C — investments up to ₹1.5 lakh
- Section 80D — health insurance premium
- Section 80G — donations
- Section 24(b) — home loan interest
- HRA & LTA exemptions
- Standard deduction — ₹75,000 (new) / ₹50,000 (old)
- Section 87A rebate — nil tax up to ₹12 lakh (new)
- Section 80TTA / 80TTB — savings & senior interest
Remember that 80C, 80D, HRA and most Chapter VI-A deductions are only usable if you opt for the old regime. The default new regime allows the ₹75,000 standard deduction and 80CCD(2) employer NPS, but not the broader 80C-style deductions — this logic is unchanged under the 2025 Act.
From Direct Tax Code to the 2025 Act
The idea of replacing the 1961 Act was first floated as the Direct Tax Code (DTC) in 2009, with further drafts in 2010, 2013 and 2019 that were never enacted. The Income-tax Act, 2025 is the culmination of that 15-year effort — but it takes the conservative path: it keeps the tested provisions and simply rewrites them in cleaner language.
That is deliberate. Because the substance is preserved, taxpayers and practitioners do not have to relearn the law from scratch, and decades of jurisprudence continue to apply to the equivalent new-Act provisions.
Good news for you
- No relearning — same rules, cleaner text
- Existing case law still guides interpretation
- Past filings, refunds and demands stay valid
- Easier to read and cite going forward
Things to watch
- New section numbers from AY 2027-28
- Software & templates must be updated
- Cite the correct Act for the correct year
- Confirm section references before quoting them
Have a specific question about how the new Act affects you?
Talk to a tax expert →Frequently Asked Questions
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