Income-tax Act, 2025: What Changed (and What Hasn't)

When each Act applies — the transition boundary

This is the one thing worth getting exactly right, because getting it backwards means citing law that doesn't govern your filing:

• AY 2026-27 filings (income earned in the old "FY 2025-26," being filed during 2026) — governed by the Income-tax Act, 1961. Old section numbers, old forms (Form 10E, Form 12BB, and so on).
• Tax Year 2026-27 onward (income earned from 1 April 2026, advance tax from June 2026, eventual return filed in 2027) — governed by the Income-tax Act, 2025. New section numbers, new forms.

The 1961 Act formally "stands repealed" from 1 April 2026, but with transitional provisions that keep it governing assessments, appeals, and proceedings for any tax year that began before that date. In practice, both Acts are "live" simultaneously for a while — the 1961 Act for what's being filed now, the 2025 Act for what's currently being earned.

"Tax Year" replaces Financial Year and Assessment Year

Under the 1961 Act, income earned in a Previous Year (e.g. FY 2025-26) is assessed and taxed in a separate Assessment Year (AY 2026-27) — two labels for two sides of the same period. The 2025 Act collapses this into one label: a Tax Year is the twelve-month period (1 April–31 March) in which income is both earned and taxed. Tax Year 2026-27 is income earned 1 April 2026–31 March 2027 — what the old system would have called "FY 2026-27," then assessed the following year as "AY 2027-28." Under the new Act, it's just one thing, with one name.

What actually changed

By the numbers: the Income-tax Act, 2025 consolidates 819 sections down to 536, and the accompanying Income-tax Rules, 2026 go from 511 rules/399 forms down to 333 rules and 190 forms. CBDT's own press release describes this as a simplification and modernisation effort — "without altering the underlying tax policy." That framing matters: this is a renumbering and restructuring exercise, not a change to rates, slabs, deduction amounts, or exemption limits. The math you already know still applies; only the section number you'd cite for it has, in many cases, changed.

A worked example: Section 89(1) → Section 157(1), Form 10E → Form 39

Relief for salary received in arrears or advance — the rule that stops a lump-sum payment (arrears, gratuity, retrenchment compensation) from being taxed at a punishingly high marginal rate just because it landed in one year — is a clean illustration of how the transition actually works:

• Filing for AY 2026-27 right now? You claim this relief under Section 89(1) of the Income-tax Act, 1961, using Form 10E. That's still correct.
• Planning for Tax Year 2026-27 onward? The same relief is Section 157(1) of the Income-tax Act, 2025, claimed via Form No. 39 (Rule 73 of the Income-tax Rules, 2026).

Same relief, same underlying logic, two different citations depending on which period you're dealing with. That pattern repeats across the Act.

What hasn't changed

• Tax slabs, the standard deduction, the 87A/156 rebate threshold and amount, surcharge, and cess — all unchanged by this Act. See our Old vs New Tax Regime Calculator, last verified against the current figures independently of this renumbering.
• Deduction and exemption amounts (₹1,50,000 under 80C/123, HRA's 3-way-minimum formula, and so on) — the numbers are the same; only some of the section labels are different.
• Old-regime-vs-new-regime mechanics, eligibility, and the choice itself — unaffected.

Which of our own citations we've updated, and which we haven't yet

We audited every statutory citation across this site against this transition before writing a word of this page, and have kept re-checking since. Where we can confirm the new section number against at least two independent, non-contradicting sources (or a primary source directly), we add it — dual-cited, not replaced, since the old number is still correct for AY 2026-27 filings. 11 section mappings (plus one form) are confirmed as of this update:

• Section 87A → Section 156 (the new-regime rebate)
• Section 80C → Section 123 (the ₹1,50,000 deduction cap)
• Section 89(1) → Section 157(1) (relief on salary arrears/advance) — and Form 10E → Form No. 39, the form filed alongside it
• Section 192 → Section 392 (TDS on salary specifically) — and Sections 193–196D → Section 393 (TDS on everything else)
• Section 139 → Section 263 (return of income, also absorbing old Sections 139D and 194P)
• Sections 234A/234B/234C/234D → Sections 423/424/425/426 (interest for late filing, advance-tax shortfall, instalment deferment, and excess refund — 4 separately-confirmed mappings)
• Sections 44AD/44ADA/44AE → Section 58 (all three presumptive taxation schemes, merged into one tabular section — confirmed directly on incometax.gov.in's own FAQ)

See the full section concordance for the complete table, including every mapping we've checked and couldn't confirm.

For several other sections we cite — 80GG, 10(13A) (HRA exemption), 10(10) (gratuity exemption), 24(b) (home loan interest), and 16(ia) (standard deduction scope) — the sources we could reach either gave no mapping at all or actively disagreed with each other on the new number. Rather than guess, we've left the old citation in place with a note that the renumbering exists but isn't yet reliably confirmed on our end. A wrong section number is worse than an honest "we don't know yet" — see how we verify for why we work this way generally.

Related reading

• Tax Year vs Financial Year and Assessment Year — the terminology change, in depth.
• Form 10E vs Form 39 — which one applies to your filing, worked through with the exact transition trap.
• What the 819→536 section consolidation actually means — the four mechanisms behind the drop, straight from CBDT's own FAQ.
• Income-tax Act 2025 section concordance — every old-to-new section mapping we've confirmed, and every one we haven't.
• Advance tax and TDS under the new Act — new section numbers, same due dates and instalment percentages.
• Standard deduction under the new regime — where the Section 87A rebate threshold actually sits, worked through.
• Which tax regime is better for me? — a decision guide using this site's own verified figures, unaffected by this renumbering.