Income-tax Act 2025 Explained: New Section Numbers, Tax Year and Forms
Last updated: 13 October 2026
Quick answer: The Income-tax Act 2025 replaced the 1961 Act from 1 April 2026. For most individuals it is a rewrite, not a tax hike: slabs, capital gains rates and deduction limits are unchanged. What changed is the language and numbering. "Previous year" and "assessment year" became a single "tax year", 80C is now section 123, 80D is section 126, and Form 16 is now Form 130.
Last updated: 13 October 2026 Quick answer: The Income-tax Act 2025 replaced the 1961 Act from 1 April 2026. For most individuals it is a rewrite, not a tax hike: slabs, capital gains rates and deduction limits are unchanged. What changed is the language and numbering. "Previous year" and "assessment year" became a single "tax year", 80C is now section 123, 80D is section 126, and Form 16 is now Form 130. Key takeaways Effective date: income earned from 1 April 2026 (tax year 2026-27) is taxed under the new Act; FY 2025-26 income stays under the 1961 Act. Tax year: section 3 defines it as the 12-month financial year starting 1 April; the term "assessment year" is gone. New numbers: 80C → 123, 80CCD → 124, 80D → 126, 87A → 156, 115BAC → 202, 139 → 263. New forms: Form 16 → 130, 26AS → 168, 15G/15H → 121, 12BB → 124. A real change for Pune: from tax year 2026-27, the 50% HRA limit applies to Pune, Hyderabad, Ahmedabad and Bengaluru too. Ask a salaried professional in Hinjewadi how they save tax and the answer still starts with "80C". That number is now history. Since 1 April 2026, the same ₹1.5 lakh deduction sits in section 123 of the Income-tax Act, 2025. Your payslip, your employer's declaration form and next year's return will all use the new vocabulary. The Income-tax Act 2025 is the first full rewrite of India's income tax law since 1961. Parliament passed it in August 2025, and it received Presidential assent on 21 August 2025 as Act No. 30 of 2025. This guide explains, in plain English, what the new Act means for individual taxpayers and investors: the "tax year" idea, a verified old-to-new section map, the renamed forms, the few real changes, and what has not changed at all. What is the Income-tax Act 2025? The Income-tax Act, 2025 is the law that now governs income tax in India, replacing the Income-tax Act, 1961 from 1 April 2026. Its stated aim was simplification. Six decades of amendments had left the old Act with more than 800 sections, including oddities like section 80-IAC and section 115BAC that came from inserting new rules between old ones. The new Act has 536 sections in 23 chapters, with 16 schedules. Many provisions that used to be long paragraphs of provisos are now tables. Lists of exempt income, for example, have moved out of the old section 10 into schedules. The Income-tax Rules, 1962 have likewise been replaced by the Income-tax Rules, 2026. Key numbers of the Income-tax Act 2025: 536 sections, 23 chapters, 16 schedules India is not the first country to do this. The UK ran a Tax Law Rewrite project from 1996 to 2010 that rewrote its income tax law in plainer language, and Australia rewrote its main income tax law in the 1990s. The lesson from both: a rewrite reduces disputes over wording over time, but taxpayers face a learning curve while old and new references co-exist. That is exactly where Indian taxpayers are in 2026. What does "tax year" mean under the new Act? Under the 1961 Act you earned income in a "previous year" and were assessed in the following "assessment year". Income earned from April 2025 to March 2026 was FY 2025-26 and AY 2026-27. Mixing the two was a classic source of confusion, especially for first-time filers and senior citizens. Section 3 of the Income-tax Act 2025 replaces both with one term. A tax year is the 12-month financial year beginning on 1 April. If a business, profession or new source of income starts mid-year, its first tax year runs from that start date to 31 March. So income you earn between 1 April 2026 and 31 March 2027 is simply "tax year 2026-27". You will file the return for it in 2027, but the year is not renamed. Forms, notices and TDS certificates will refer to the tax year only. Income-tax Act 2025 timeline showing which Act applies to FY 2025-26 and tax year 2026-27 Which Act applies to my return filed in 2026? The switch is by year of income, not by date of filing. Returns for FY 2025-26 (AY 2026-27), including belated or revised returns filed in late 2026, follow the 1961 Act, its ITR forms and its section numbers. Our guide on which ITR form to file (/insights/which-itr-form-to-file) covers that return. Anything relating to income from 1 April 2026 onwards follows the new Act. That already includes your employer's TDS on salary, TDS on FD interest, and the declarations you submit this year. Old vs new section numbers: the mapping table individuals need The table below maps the provisions individuals and investors use most. We checked each new section against the text published on the Income Tax Department's website (incometaxindia.gov.in) as of October 2026. Limits shown are the same as under the 1961 Act unless noted. What it covers Income-tax Act, 1961 Income-tax Act, 2025 Definition of the year of income Section 3 (previous year) + assessment year Section 3 (tax year) Exempt income, including HRA Section 10, HRA in 10(13A) Section 11 with Schedules II–VII; HRA in Schedule III, Sl. No. 11 Standard deduction, professional tax, gratuity, leave encashment, commuted pension Sections 16, 10(10), 10(10A), 10(10AA) Section 19 (₹75,000 standard deduction in the new regime, ₹50,000 in the old) Perquisites, including ESOPs and RSUs Section 17(2) Section 17 (shares in 17(1)(d)) House property: 30% deduction and home loan interest Section 24, including 24(b) Section 22 (₹2 lakh interest cap for self-occupied) Capital gains exemption on sale of a house Section 54 Section 82 Capital gains bonds (NHAI/REC), ₹50 lakh cap Section 54EC Section 85 Exemption on sale of other assets reinvested in a house Section 54F Section 86 Clubbing of spouse's and minor child's income Section 64 Section 99 LIC, PF, PPF, ELSS, tuition fees, home loan principal (₹1.5 lakh) Sections 80C, 80CCC, 80CCE Section 123 with Schedule XV NPS: employer contribution and extra ₹50,000 Section 80CCD(1), (1B), (2) Section 124 Health insurance and preventive check-up Section 80D Section 126 Education loan interest (8 years) Section 80E Section 129 Donations Section 80G Section 133 Savings interest (₹10,000) and senior citizens' deposit interest (₹50,000) Sections 80TTA, 80TTB Section 153 Rebate (zero tax up to ₹12 lakh in the new regime) Section 87A Section 156 Relief on salary arrears Section 89 Section 157 Double taxation relief (DTAA) Sections 90, 91 Sections 159, 160 STCG on listed equity and equity funds (20%) Section 111A Section 196 LTCG, general (12.5%) Section 112 Section 197 LTCG on listed equity and equity funds (12.5% above ₹1.25 lakh) Section 112A Section 198 New tax regime (default) Section 115BAC Section 202 Filing the return, due dates Section 139 Section 263 TDS on salary Section 192 Section 392 TDS on interest, rent, dividends and others Sections 194A, 194, 194-I and others Section 393 (one consolidated table) No-TDS declaration (Form 15G/15H) Section 197A Section 393(6), Form 121 Interest for advance tax shortfall (1% a month) Section 234B Section 424 Two practical tips. First, when a CA, insurer or fund house quotes "80C" or "80D" in 2026, they are usually referring to the same benefit by its old name. Ask which year they mean. Second, receipts and certificates issued after 1 April 2026 should cite the new sections, but an old section number on a premium receipt does not invalidate your deduction. Capital gains: same rates, new sections Investors will mainly notice three numbers. Short-term gains on listed shares and equity funds are taxed at 20% under section 196. Long-term gains above ₹1.25 lakh a year on the same assets are taxed at 12.5% under section 198. Other long-term gains, such as unlisted or foreign shares, fall under section 197 at 12.5%. Our guide to capital gains tax on mutual funds (/insights/capital-gains-tax-mutual-funds-2026) explains the holding periods for each fund type. Which forms have been renamed? The Income-tax Rules, 2026 contain 190 numbered forms, most of them renumbered versions of old forms. Most individuals deal with only a handful, shown below. Income-tax Act 2025 forms mapping: Form 16 to Form 130, Form 26AS to Form 168, Form 15G/15H to Form 121 Form 130 is the new Form 16. Your employer will issue it for tax year 2026-27 in mid-2027. Form 123 replaces Form 12BA (the perquisites statement). Form 168 is the Annual Information Statement, replacing Form 26AS. Form 121 merges Forms 15G and 15H into one declaration for avoiding TDS on interest. It is filed under section 393(6). Our FD and TDS guide (/insights/fd-calculator-cumulative-vs-payout-tds) explains when to submit it. Form 124 replaces Form 12BB, the investment and rent proof you give your employer. Form 44 replaces Form 67 for claiming foreign tax credit, relevant to anyone with US stock dividends or RSUs. Form 128 replaces Form 13 for lower or nil TDS certificates, and Forms 145 and 146 replace Forms 15CA and 15CB for foreign remittances. What did not change for individual taxpayers? The rewrite was designed to be largely revenue-neutral. Rates and thresholds come from each year's Finance Act, and the Act itself carried forward the position after Budget 2025. For an individual, these are the same as before: Two regimes. The new regime under section 202 is the default. You can still opt for the old regime each year with your return if you have no business income. New regime slabs. Nil up to ₹4 lakh, then 5% to 30% in ₹4 lakh steps, with 30% above ₹24 lakh. Zero tax up to ₹12 lakh. The section 156 rebate of up to ₹60,000 means taxable income up to ₹12 lakh pays no tax in the new regime. With the ₹75,000 standard deduction, a salary of ₹12.75 lakh is tax-free. Deduction limits. ₹1.5 lakh under section 123, ₹50,000 extra for NPS under section 124, and ₹25,000/₹50,000 for health insurance under section 126 are unchanged, and still old-regime only. Capital gains rates and holding periods. 12 months for listed equity, 24 months for most other assets; 20% short-term and 12.5% long-term on equity. Return due date. Section 263 keeps 31 July for salaried and other non-audit individual taxpayers. Advance tax instalments, PAN, the e-filing portal and tax treaties. The machinery is the same; only the section references changed. New tax regime slab rates under section 202 of the Income-tax Act 2025 To check which regime suits you this year, use our old vs new regime tax planning guide (/insights/tax-planning-guide-india) . For investors weighing tax-saving funds, see ELSS under the new regime (/insights/elss-funds-new-tax-regime-2026) . What actually changed in practice? Beyond numbering, a few changes matter to households. Some came through the new Rules, which took effect on the same day. HRA: Pune is now a "metro" Under the old rules, the 50% of salary limit for HRA applied only to Mumbai, Delhi, Kolkata and Chennai. Rule 279 of the Income-tax Rules, 2026 extends it to Hyderabad, Pune, Ahmedabad and Bengaluru. For a Pune tenant on the old regime, this can raise the exempt HRA from tax year 2026-27. Our HRA exemption calculation guide (/insights/hra-exemption-calculation) works through examples. Plainer structure, tables and one TDS section TDS on non-salary payments, earlier spread across dozens of sections like 194A and 194-I, is now one table in section 393. Exempt incomes are in schedules. This makes the law easier to search, though older articles and software screens will keep using the old numbers for a while. Foreign tax credit timing Under Rule 76 of the 2026 Rules, Form 44 for foreign tax credit can be filed within 12 months from the end of the tax year, provided the return itself is filed on time or as a belated return. RSU holders should read our ESOP and RSU taxation guide (/insights/esop-rsu-taxation-india) . How should you prepare for tax year 2026-27? Update your vocabulary. Think "tax year 2026-27", not "AY 2027-28". When reviewing your payslip and investment declaration, look for sections 123, 124 and 126. Submit the new forms. Use Form 124 for employer declarations and Form 121 at your bank if your income is below the taxable limit. Recheck HRA if you live in Pune, Bengaluru, Hyderabad or Ahmedabad and are on the old regime. Keep FY 2025-26 records separate. Any revision, notice or refund for that year follows the 1961 Act; see our guide to income tax notice types (/insights/income-tax-notice-types-how-to-respond) . Plan advance tax on capital gains and interest under the new sections; our advance tax guide (/insights/advance-tax-for-investors) covers the dates. Watch Budget 2027. Rates for tax year 2027-28 will come through the next Finance Act; see our Budget 2027 preview (/insights/union-budget-2027-personal-finance-preview) . Related reading Section 126 (old 80D): health insurance deductions for you and parents (/insights/section-80d-health-insurance-deduction) Home loan tax benefits under old and new regimes (/insights/home-loan-tax-benefits-old-new-regime) Capital gains tax on shares and tax harvesting (/insights/capital-gains-tax-shares-tax-harvesting) Which ITR form to file for FY 2025-26 (/insights/which-itr-form-to-file) Tax planning for salaried families (/insights/tax-planning-salaried-families-india) Frequently Asked Questions When did the Income-tax Act 2025 come into force? It came into force on 1 April 2026, replacing the Income-tax Act, 1961. It applies to income earned from that date, which is tax year 2026-27. Income earned in FY 2025-26 is still assessed under the 1961 Act, even if you file the return or receive a notice after April 2026. Pending proceedings continue under the repeal-and-savings provision in section 536. What is section 80C called in the new Income-tax Act? Section 80C is now section 123 of the Income-tax Act, 2025, read with Schedule XV, which lists the eligible items such as PF, PPF, ELSS, life insurance premium, tuition fees and home loan principal. The combined limit is still ₹1,50,000, and it is still available only if you choose the old tax regime. Is assessment year abolished? Yes, for income from 1 April 2026. The new Act uses a single term, "tax year", defined in section 3 as the financial year starting 1 April. You still file the return after the year ends, but forms and notices refer to the tax year, such as tax year 2026-27, instead of an assessment year. Did income tax rates change because of the new Act? No. The rewrite kept the rates applicable after Budget 2025. The new regime under section 202 still has a nil slab up to ₹4 lakh and a 30% top rate above ₹24 lakh, and the section 156 rebate still makes income up to ₹12 lakh tax-free. Rates can change in future Finance Acts, as before. Is Form 16 still issued? For FY 2025-26, employers issued Form 16 as usual. For tax year 2026-27 onwards, the salary TDS certificate is Form 130 under the Income-tax Rules, 2026. Similarly, Form 26AS becomes Form 168, Form 12BB becomes Form 124, and Forms 15G and 15H are replaced by a single Form 121. Can I still choose the old tax regime under the new Act? Yes. Section 202 makes the new regime the default, but individuals without business income can opt out each year when filing the return under section 263. Those with business or professional income must exercise the option by the due date and can switch back only once. Do I need to redo my tax-saving investments because of the new Act? No. PPF, ELSS, life insurance, NPS and health insurance continue to qualify under the new section numbers with the same limits. Review them only for the usual reasons: whether the old regime still saves you money, and whether each product fits your goals. Sources: Income Tax Department, Income-tax Act, 2025 page (https://www.incometaxindia.gov.in/income-tax-act-202511) ; Section 3, tax year (https://www.incometaxindia.gov.in/w/section-3-1) ; Section 202, new tax regime (https://www.incometaxindia.gov.in/w/section-202-78) ; Section 156, rebate (https://www.incometaxindia.gov.in/w/section-156-84) ; Section 123 (https://www.incometaxindia.gov.in/w/section-123-92) ; Section 263, return of income (https://www.incometaxindia.gov.in/w/section-263-72) ; Rule 279, HRA limits (https://www.incometaxindia.gov.in/w/rule-279-1) ; FAQs on forms under the Income-tax Rules, 2026 (https://www.incometaxindia.gov.in/faqs-and-guidance-notes-on-forms-as-per-income-tax-rules-2026) ; Income Tax Department utility, 1961 vs 2025 provisions (https://www.incometaxindia.gov.in/utility-to-check-provisions-of-income-tax-act-1961-vis-a-vis-income-tax-act-2025) . Worked examples are Money n Wealth calculations. Not sure how the new section numbers affect your return? The switch is simple on paper, but HRA, RSUs and capital gains can change how much you owe. Talk to Money n Wealth (/contact) for a free portfolio review, or use our tax consultation service (/products/tax) . This article is for general educational purposes only and does not constitute financial advice. Figures and examples are illustrative. Please consult a qualified financial adviser for guidance specific to your situation. Money n Wealth (Predics Fintech Services Pvt Ltd) is an AMFI-registered Mutual Fund Distributor (ARN-121995) and APMI-registered PMS Distributor (APRN07444); it is not a SEBI-registered investment adviser and may earn distribution commission on investments made through it.
Frequently Asked Questions
When did the Income-tax Act 2025 come into force?
It came into force on 1 April 2026, replacing the Income-tax Act, 1961. It applies to income earned from that date, which is tax year 2026-27. Income earned in FY 2025-26 is still assessed under the 1961 Act, even if you file the return or receive a notice after April 2026. Pending proceedings continue under the repeal-and-savings provision in section 536.
What is section 80C called in the new Income-tax Act?
Section 80C is now section 123 of the Income-tax Act, 2025, read with Schedule XV, which lists the eligible items such as PF, PPF, ELSS, life insurance premium, tuition fees and home loan principal. The combined limit is still ₹1,50,000, and it is still available only if you choose the old tax regime.
Is assessment year abolished?
Yes, for income from 1 April 2026. The new Act uses a single term, "tax year", defined in section 3 as the financial year starting 1 April. You still file the return after the year ends, but forms and notices refer to the tax year, such as tax year 2026-27, instead of an assessment year.
Did income tax rates change because of the new Act?
No. The rewrite kept the rates applicable after Budget 2025. The new regime under section 202 still has a nil slab up to ₹4 lakh and a 30% top rate above ₹24 lakh, and the section 156 rebate still makes income up to ₹12 lakh tax-free. Rates can change in future Finance Acts, as before.
Is Form 16 still issued?
For FY 2025-26, employers issued Form 16 as usual. For tax year 2026-27 onwards, the salary TDS certificate is Form 130 under the Income-tax Rules, 2026. Similarly, Form 26AS becomes Form 168, Form 12BB becomes Form 124, and Forms 15G and 15H are replaced by a single Form 121.
Can I still choose the old tax regime under the new Act?
Yes. Section 202 makes the new regime the default, but individuals without business income can opt out each year when filing the return under section 263. Those with business or professional income must exercise the option by the due date and can switch back only once.
Do I need to redo my tax-saving investments because of the new Act?
No. PPF, ELSS, life insurance, NPS and health insurance continue to qualify under the new section numbers with the same limits. Review them only for the usual reasons: whether the old regime still saves you money, and whether each product fits your goals.
Not sure how the new section numbers affect your return?
The switch is simple on paper, but HRA, RSUs and capital gains can change how much you owe. Talk to Money n Wealth for a free portfolio review, or use our tax consultation service .
