From 1 April 2026, the Income-tax Act, 1961 stands repealed and the new Income-tax Act, 2025 is in force. The change is procedural and structural — the rules of taxation themselves are largely intact — but every TDS deductor, taxpayer, auditor and consultant has had to re-learn the section numbers, form numbers and statement formats. This note is a practitioner’s read on what changed and what to do about it.
Why a new Act
The 1961 Act had grown to 819 sections and 14 schedules across more than six decades of amendments. The 2025 Act re-codifies the same material into 536 sections and 16 schedules, with consolidated provisions, modernised drafting and clearer cross-references. Sections that had become unwieldy with sub-clauses and provisos have been split or re-grouped. The objective — per the Income Tax Department’s own published material — is to reduce compliance burden through plainer language and cleaner structure, not to change the underlying tax positions.
The “Tax Year” concept
One of the most visible changes is terminology. The 2025 Act introduces a single “Tax Year” concept, applicable from 1 April 2026 onwards (i.e., for income earned in FY 2026-27). This replaces the previous distinction between “previous year” (the year in which income is earned) and “assessment year” (the year in which it is assessed) for most computational purposes. The shift is meant to remove a long-standing source of confusion for first-time filers and overseas readers.
Form renumbering — the change you will feel
The most operationally significant change is the renumbering of TDS, TCS and audit forms. The mapping that affects most clients:
- Form 24Q (salary TDS, quarterly) → Form 138
- Form 26Q (resident non-salary TDS) → Form 140
- Form 27Q (non-resident TDS) → Form 144
- Form 27EQ (TCS, quarterly) → Form 143
- Forms 26QB, 26QC, 26QD and 26QE (challan-cum-statement for property purchase, rent, contractor and crypto transfers) → consolidated into a single Form 141 with separate schedules per transaction type
- Form 3CD (tax audit report) → Form 26; the TDS/TCS disclosure that lived in Clause 34 is now distributed across Clauses 49, 50 and 51 with a dedicated schedule
- Form 3CEB (transfer pricing report) → Form 48
- Form 29B (MAT) → Form 66
- Form 15CA and 15CB (foreign remittance certificate and CA report) → Form 145 and Form 146
- Form 61A (statement of financial transactions) → Form 165
The transition rule that catches people out
Because the new Act came into force on 1 April 2026, Q4 of FY 2025-26 (Jan–Mar 2026) is still filed under the old framework — old form numbers, old section references, old templates. The new numbering only applies to transactions and statements from 1 April 2026 onwards. A Q4 FY 25-26 24Q filed in May 2026 still says “Form 24Q”, not “Form 138”. We have already seen TRACES rejections in the early weeks of April–May 2026 from deductors who tried to use the new numbers a quarter too early.
Deduction sections also renumbered
The familiar deduction block under Chapter VI-A of the 1961 Act — sections 80C through 80U — has been re-grouped under the new Act. Public-facing references should now use the new section numbers. The substance of each deduction (PPF, LIC, ELSS, NPS, mediclaim, donations, disability) is preserved; only the citation changes. Practitioners should expect to update template engagement letters, client memos, ITR working files and internal SOPs to reflect the new section references.
Pending matters — the rules continue
The 2025 Act includes transitional provisions that allow assessments, appeals, refunds, scrutiny and search proceedings already in motion under the 1961 Act to continue under the old framework until concluded. So a 2024-25 scrutiny notice does not become invalid on 1 April 2026; it carries forward and is concluded under the law in force when it was issued. The Department has published an FAQ document covering interplay and transition that is worth reading in full.
What we recommend
- Update your software stack. If you use TDS return-preparation software, ensure your vendor has released the FY 2026-27 update with new form codes. The major vendors had releases in March-April 2026; check yours is current.
- Re-issue engagement letters. Engagement letters that cite section numbers from the 1961 Act should be updated for engagements covering FY 2026-27 and beyond.
- Re-train accounting staff on form codes. The names look similar but the numbers are different. A simple desk-card mapping the old-to-new is worth printing.
- Don’t pre-empt the transition. For Q4 FY 25-26 statements (filed by 31 May 2026), continue with the 1961 Act forms.
- Watch the Rules. The Income-tax Rules 2026 (the procedural rules under the 2025 Act) continue to evolve through CBDT notifications. Subscribe to CBDT updates or work with a CA firm that does.
If you want a one-page mapping of the old-to-new sections and forms relevant to your business, write to us at [email protected] and we’ll send it.
Sources
Talk to a partner.
A 30-minute call with a partner — no deck, no follow-up email blasts. Just a read on how this applies to your facts.