Income Tax Act 2025 & Rules 2026
Complete mapping, transition timeline, and substantive changes effective 1 April 2026.
Transition Timeline
The Income Tax Act, 2025 (Act No. 30 of 2025, presidential assent 21 August 2025) and the Income Tax Rules, 2026 (notified 20 March 2026) come into force from 1 April 2026, replacing the Income Tax Act, 1961 and the Income Tax Rules, 1962. The transition is governed by Section 536 (Repeal and Savings) of the new Act.
| Period | Governing Law | Reference | ITR filed in |
|---|---|---|---|
| Up to 31 March 2026 (FY 2025-26) | Income Tax Act, 1961 | AY 2026-27 | 2026 (from 31 July 2026; belated by 31 Dec 2026) with OLD sections |
| From 1 April 2026 (FY 2026-27 onwards) | Income Tax Act, 2025 | Tax Year 2026-27 | 2027 (from 31 July 2027) with NEW sections |
Per CBDT FAQ on Interplay and Transition (April 2026): “Income earned during FY 2025-26 will be governed by the Income-tax Act, 1961 and assessed in AY 2026-27. Income earned from 01 April 2026 onwards will be governed by the Income Tax Act, 2025 and assessed for Tax Year 2026-27 and onwards.”
Section Mapping — ITA 1961 to ITA 2025
The Income Tax Act, 2025 contains 536 sections (down from 819 in the 1961 Act) and 16 schedules. Most sections are renumbered or consolidated; substantive provisions and rates are unchanged. Search the mapping below.
| Old (1961) | New (2025) | Description | Status |
|---|---|---|---|
| 4 | 4 | Charge of income-tax | Kept same |
| 5 | 5 | Scope of total income (residence-based) | Kept same |
| 10 | 11 (Schedules II-VII) | Exempt incomes - Section 11 read with Schedules II to VII | Restructured |
| 10(10AA) | 19 | Leave encashment on retirement - now a deduction from salary (Section 19 Table) | Restructured |
| 10(10B) | 19 | Retrenchment compensation - now a deduction from salary (Section 19 Table) | Restructured |
| 10(13A) | 11 (Schedule III) | House rent allowance - Section 11 read with Schedule III (Sl. No. 11) | Restructured |
| 17 | 17 / 18 | Perquisites (old 17(2) -> 17); profits in lieu of salary (old 17(3) -> 18) | Restructured |
| 24(b) | 22(1)(b) | Deduction for interest on borrowed capital (home loan) | Renumbered |
| 40A | 36 | Expenses not deductible in certain cases (40A(9) moved to 29(3)) | Renumbered |
| 44AB | 63 | Tax audit (report in Form 26) | Renumbered |
| 44AD | 58 | Presumptive taxation - business (merged into 58) | Merged |
| 44ADA | 58 | Presumptive taxation - profession (merged into 58) | Merged |
| 44AE | 58 | Presumptive taxation - goods carriages (merged into 58) | Merged |
| 45 | 67 | Charge of capital gains | Renumbered |
| 54 | 82 | Exemption - sale of residential house | Renumbered |
| 54EC | 85 | Exemption - investment in specified bonds | Renumbered |
| 54F | 86 | Exemption - sale of any LT asset for residential | Renumbered |
| 111A | 196 | Tax on STCG on listed equity (20%) | Renumbered |
| 112 | 197 | Tax on LTCG (12.5% post Jul 2024) | Renumbered |
| 112A | 198 | Tax on LTCG on listed equity (12.5% above 1.25L) | Renumbered |
| 80C | 123 | Investments - PPF, LIC, ELSS, EPF etc. (Rs 1.5L) | Renumbered |
| 80CCC | 123 | Pension fund contribution (merged into 123, read with Schedule XV) | Merged |
| 80CCD(1) | 124 | NPS employee contribution | Renumbered |
| 80CCD(1B) | 124 | NPS additional Rs 50,000 | Renumbered |
| 80CCD(2) | 124 | NPS employer contribution | Renumbered |
| 80D | 126 | Health insurance premium | Renumbered |
| 80DD | 127 | Maintenance of disabled dependent | Renumbered |
| 80DDB | 128 | Medical treatment of specified diseases | Renumbered |
| 80E | 129 | Interest on education loan | Renumbered |
| 80EE | 130 | Home loan interest - loans sanctioned in FY 2016-17 (up to Rs 50,000) | Renumbered |
| 80EEA | 131 | Home loan interest - affordable housing (up to Rs 1.5 lakh) | Renumbered |
| 80G | 133 | Donations to charitable institutions | Renumbered |
| 80GG | 134 | Rent paid (when HRA not received) | Renumbered |
| 80TTA | 153 | Interest on savings account (Rs 10,000) | Merged |
| 80TTB | 153 | Interest for senior citizens (Rs 50,000) | Merged |
| 80U | 154 | Deduction for disability | Renumbered |
| 87A | 156 | Rebate (Rs 60K new regime / Rs 12.5K old) | Renumbered |
| 89 | 157 | Relief for salary received in arrears or advance (Form 39 replaces Form 10E) | Renumbered |
| 192 | 392 | TDS on salary (payment codes 1001-1004) | Consolidated |
| 193 | 393 | TDS on interest on securities (table entry) | Consolidated |
| 194 | 393 | TDS on dividends (table entry) | Consolidated |
| 194A | 393 | TDS on interest (other than securities) | Consolidated |
| 194B | 393 | TDS on lottery/crossword winnings | Consolidated |
| 194C | 393 | TDS on contractor payments (incl. manpower) | Consolidated |
| 194D | 393 | TDS on insurance commission | Consolidated |
| 194H | 393 | TDS on commission / brokerage | Consolidated |
| 194I | 393 | TDS on rent | Consolidated |
| 194IA | 393 | TDS on transfer of immovable property | Consolidated |
| 194IB | 393 | TDS on rent by individual/HUF not liable to audit - 2% where rent exceeds Rs 50,000 per month; reported in Form 141 | Consolidated |
| 194J | 393 | TDS on professional / technical fees | Consolidated |
| 194LA | 393 | TDS on compensation on acquisition | Consolidated |
| 194LD | - | TDS on interest to FII/QFI (concessional 5% only for interest payable before 1 July 2023; no equivalent in the 2025 Act) | Deprecated |
| 194M | 393 | TDS by individual/HUF on contract/professional | Consolidated |
| 194N | 393 | TDS on cash withdrawal | Consolidated |
| 194O | 393 | TDS by e-commerce operator | Consolidated |
| 194Q | 393 | TDS on purchase of goods | Consolidated |
| 194R | 393 | TDS on benefits / perquisites | Consolidated |
| 194S | 393 | TDS on VDA transfer | Consolidated |
| 194T | 393 | TDS on salary, interest etc. paid by firm to partner (code 1067) | Consolidated |
| 195 | 393 | TDS on payment to non-resident (393(2), codes 1039-1057) | Consolidated |
| 206C | 394 | TCS provisions (codes 1068 onwards) | Consolidated |
| 206C(1G) | 394 | TCS on LRS / foreign remittance | Consolidated |
| 139 | 263 | Return of income | Renumbered |
| 139(1) | 263(1) | Original return | Renumbered |
| 139(4) | 263(4) | Belated return | Renumbered |
| 139(5) | 263(5) | Revised return | Renumbered |
| 139(8A) | 263(6) | Updated return (ITR-U) | Renumbered |
| 143(1) | 270(1) | Intimation after processing of return | Renumbered |
| 143(3) | 270(10) | Scrutiny assessment order (notice under 270(8), old 143(2)) | Renumbered |
| 144 | 271 | Best judgment assessment | Renumbered |
| 147 | 279 | Income escaping assessment (reassessment) | Renumbered |
| 148 | 280 | Notice for reassessment | Renumbered |
| 148A | 281 | Show-cause procedure before reassessment notice | Renumbered |
| 234A | 423 | Interest on late filing | Renumbered |
| 234B | 424 | Interest on default in advance tax | Renumbered |
| 234C | 425 | Interest on deferment of advance tax | Renumbered |
| 234E | 427 | Fee for late TDS/TCS statement (Rs 200 per day, capped at TDS/TCS amount) | Renumbered |
| 234F | 428 | Fee on late filing of ITR | Renumbered |
| 270A | 439 | Penalty for under-reporting (50%) and misreporting (200%) | Renumbered |
| 271(1)(c) | No equivalent | Concealment penalty - not carried into the 2025 Act; replaced by 270A from AY 2017-18 (now Section 439) | No equivalent |
| 271B | 446 | Penalty for failure to get accounts audited / furnish audit report (0.5% of turnover, max Rs 1.5L) | Renumbered |
| 271H | 461 | Penalty for not filing / incorrect TDS/TCS statement (Rs 10,000 to Rs 1 lakh) | Renumbered |
| 277 | 482 | Prosecution for false statement in verification (e.g. false Form 15G/15H / Form 121) | Renumbered |
| 115BAC | 202 | New tax regime (default) | Renumbered |
Form Mapping — Rules 1962 to Rules 2026
Commonly-used forms have been renumbered under the Income Tax Rules, 2026. The most important changes affect TDS certificates, audit reports, PAN applications and TDS returns.
| Old Form | New Form (Rules 2026) | Purpose |
|---|---|---|
| Form 16 | Form 130 | TDS certificate for salary |
| Form 16A | Form 131 | TDS certificate for non-salary |
| Form 16B/C/D/E | Form 132 | Merged: TDS certificate for property/rent/contract-professional/VDA |
| Form 27D | Form 133 | TCS certificate |
| Form 26AS | Form 168 | Annual Tax Statement |
| Form 15G | Form 121 | Merged: declaration for nil TDS (below 60) |
| Form 15H | Form 121 | Merged: declaration for nil TDS (senior citizen) |
| Form 15CA | Form 145 | Information for foreign remittance |
| Form 15CB | Form 146 | Certificate by CA for foreign remittance |
| Form 3CA/3CB | Form 26 | Tax audit report (Part C replaces 3CA, Part D replaces 3CB) |
| Form 3CD | Form 26 | Statement of particulars - now Parts A and B of Form 26 |
| Form 10CCB | Form 32 | Audit report for specified deductions |
| Form 3CEB | Form 48 | Transfer Pricing audit |
| Form 12BB | Form 124 | Investment declaration to employer (HRA etc.) |
| Form 49A | Form 93 / 94 | PAN application - Form 93 (Indian citizen), Form 94 (Indian non-individual) |
| Form 49AA | Form 95 / 96 | PAN application - Form 95 (foreign individual), Form 96 (foreign entity) |
| Form 24Q | Form 138 | TDS return for salary (quarterly) |
| Form 26Q | Form 140 | TDS return for non-salary (quarterly) |
| Form 27Q | Form 144 | TDS return for non-resident payments |
| Form 26QB/QC/QD/QE | Form 141 | Consolidated challan-cum-statement (TDS PAN-based) |
| Form 27EQ | Form 143 | TCS return (quarterly) |
| Form 10A | Form 104 | Registration of charitable trust |
| Form 10AB | Form 105 | Re-registration of charitable trust |
| Form 10-IEA | No separate form | Option under Section 202 exercised in the return of income (Rule 136) |
| Form 35 | Form 99 | Appeal to JCIT(A) / CIT(A) |
| Form 36 | Form 115 | Appeal to ITAT |
| Form 36A | Form 116 | Cross-objection to ITAT |
TDS Payment Codes (Sections 392 and 393)
Under the Income Tax Act, 2025, salary TDS moves to Section 392 and all non-salary TDS provisions (the entire 194-series of the old Act) are consolidated into Section 393. TDS challans and quarterly returns reference payment codes 1001 - 1067 instead of section numbers: 1001-1004 salary (Section 392, Form 138); 1005-1038 resident non-salary payments (Section 393(1), Form 140 / Form 141); 1039-1057 non-residents (Section 393(2), Form 144); 1058-1067 Section 393(3). TCS codes under Section 394 start at 1068 (Form 143). Using old section numbers for payments on or after 1 April 2026 will cause portal validation failures. The table below lists common codes only; confirm the code in the e-Pay Tax (ITNS 281N) drop-down before depositing.
| NPC | Nature of Payment | Old Section | Rate |
|---|---|---|---|
| 1001 | Salary - Government employees (Section 392) | 192 | Slab rates |
| 1002 | Salary - other employees (Section 392) | 192 | Slab rates |
| 1005 | Insurance commission | 194D | 2% / 10% (company) |
| 1006 | Commission / brokerage | 194H | 2% |
| 1008 | Rent - plant / machinery / equipment | 194I(a) | 2% |
| 1009 | Rent - land / building / furniture | 194I(b) | 10% |
| 1020 | Interest other than on securities - senior citizen payee | 194A | 10% |
| 1021 | Interest other than on securities - other payees | 194A | 10% |
| 1023 | Contractor / sub-contractor - Individual / HUF | 194C | 1% |
| 1024 | Contractor / sub-contractor - other payees | 194C | 2% |
| 1026 | Fees for technical services / call centre / film royalty | 194J(a) | 2% |
| 1027 | Fees for professional services | 194J(b) | 10% |
| 1028 | Director remuneration (other than salary) | 194J | 10% |
| 1029 | Dividends | 194 | 10% |
| 1031 | Purchase of goods | 194Q | 0.1% |
| 1057 | Any other sum payable to a non-resident (Section 393(2)) | 195 | Rates in force / DTAA |
| 1067 | Salary, remuneration, commission, bonus or interest to partner | 194T | 10% |
Income Tax Rules 2026 — Substantive Changes
Beyond renumbering, the Income Tax Rules, 2026 introduce these substantive changes effective 1 April 2026:
| Area | Change | Effective |
|---|---|---|
| HRA Metro Cities | Added Bengaluru, Hyderabad, Pune, Ahmedabad to 50% list (now 8 cities) | 1 Apr 2026 |
| Children Education Allowance | Increased to Rs 3,000 per month per child (max 2 children). Earlier Rs 100/month. | 1 Apr 2026 |
| Hostel Expenditure Allowance | Increased to Rs 9,000 per month per child (max 2 children). Earlier Rs 300/month. | 1 Apr 2026 |
| HRA Declaration Form | Form 12BB replaced by Form 124; relationship with landlord now mandatory disclosure | 1 Apr 2026 |
| PAN Quoting Threshold | Vehicle purchase up to Rs 5L exempt from PAN quoting; certain immovable property thresholds relaxed | 1 Apr 2026 |
| Manpower Supply TDS | Manpower / labour deployment explicitly covered under TDS (was ambiguous earlier) | 1 Apr 2026 |
| Section 194LD | Concessional 5% TDS on interest to FII/QFI applied only to interest payable before 1 July 2023; not extended; no equivalent in the 2025 Act | 1 Jul 2023 |
| MACT Interest Exemption | Interest awarded by Motor Accident Claims Tribunal to natural person fully exempt | 1 Apr 2026 |
| TRACES Correction Lockout | Corrections for FY 2018-19 Q4 to FY 2023-24 Q3 permanently time-barred from 1 Apr 2026 | 1 Apr 2026 |
| Future Corrections | Only 2 years from end of relevant Tax Year (Section 397(3) ITA 2025) | TY 2026-27 onwards |
Frequently Asked Questions
Which Act governs my ITR for FY 2025-26 (AY 2026-27)?
Income Tax Act, 1961. Even if you file the return after 1 April 2026, the income earned during FY 2025-26 will be assessed under the 1961 Act using the old section numbers (80C, 80D, 87A, 192 etc.). The portal will use “Tab 1 — Forms as per Income Tax Act 1961” for these filings.
Do my pending appeals / assessments under the old Act continue?
Yes — under Section 536(2)(c) of the ITA 2025 (Repeal & Savings), all proceedings pending on 1 April 2026 (assessments, reassessments, appeals, penalty proceedings, prosecutions) continue under the 1961 Act provisions. Any proceeding initiated after 1 April 2026 in respect of a tax year beginning before that date also follows the 1961 Act procedure.
Are tax rates / slab structures changing under the new Act?
No new taxes are imposed by the Income Tax Act, 2025. Slab rates, surcharge, cess, the Rs 1.5L 80C / Section 123 limit, the Rs 60K rebate under Section 156 (old 87A), the Rs 75K standard deduction — all remain identical. The new Act is structural and language-simplification only.
What is the concept of “Tax Year”?
The Income Tax Act, 2025 replaces the dual concept of “Previous Year” (when income is earned) and “Assessment Year” (when it is taxed) with a single concept of Tax Year. Tax Year 2026-27 covers 1 April 2026 to 31 March 2027 — the same year you earn the income and the year it is taxed. For new businesses, the first Tax Year runs from the date of commencement to 31 March of that financial year.
What changes for TDS deductors from 1 April 2026?
Three structural changes: (i) all 60+ non-salary TDS provisions consolidate into Section 393; (ii) TDS challans / returns use payment codes 1001 - 1067 (TCS codes start at 1068) instead of section numbers; (iii) Forms 26QB / 26QC / 26QD / 26QE merge into a single Form 141 with sub-schedules, and quarterly returns move to Forms 138 / 140 / 144 (TCS: 143). Payroll, ERP and accounting software must use the new sections, payment codes and forms for all payments made or credited on or after 1 April 2026; the old 1961 sections and Forms 24Q / 26Q / 27Q continue only for deductions up to 31 March 2026, including their correction statements.
What is the TRACES correction lockout?
All TDS / TCS correction statements for the period FY 2018-19 Q4 through FY 2023-24 Q3 had to be filed on or before 31 March 2026. From 1 April 2026, these years are permanently time-barred on the TRACES portal. From Tax Year 2026-27, Section 397(3) of the ITA 2025 allows corrections only within 2 years from the end of the relevant Tax Year. Plan reconciliations accordingly.
Is the Old Tax Regime discontinued?
No. Both the Old Regime and the New Regime continue under the Income Tax Act, 2025. The New Regime remains the default (Section 202, ITA 2025; old Section 115BAC). From Tax Year 2026-27 there is no separate Form 10-IEA: under Rule 136 of the Income Tax Rules, 2026, the option to opt out of (or withdraw from) the new regime under Section 202 is exercised in the return of income filed under Section 263(1). Form 10-IEA continues only for FY 2025-26 (AY 2026-27) under the 1961 Act. (Form 32 under the 2026 Rules replaces Form 10CCB, not Form 10-IEA.)
This page is a curated reference compiled by SKAG and Associates from publicly-available CBDT notifications and the official gazette. It is not exhaustive — the new Act has 536 sections and the new Rules cover 333+ rules. For specific provisions, please refer to the official text on incometax.gov.in or consult the firm.
Need help updating your TDS, payroll or compliance systems for the new Act / Rules? Get in touch.