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 | July 2026 with OLD sections |
| From 1 April 2026 (FY 2026-27 onwards) | Income Tax Act, 2025 | Tax Year 2026-27 | 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 | Schedule II | Exemptions (moved to Schedule II) | Restructured |
| 17 | 17 | Salary, perquisites and profits in lieu | Kept same |
| 24(b) | 24 | Deduction for interest on home loan | Renumbered |
| 40A | 36 | Expenses not deductible in certain cases | Renumbered |
| 44AB | 63 | Tax audit | Renumbered |
| 44AD | 64 | Presumptive taxation - business | Renumbered |
| 44ADA | 65 | Presumptive taxation - profession | Renumbered |
| 44AE | 66 | Presumptive taxation - transporter | Renumbered |
| 45 | 67 | Charge of capital gains | Renumbered |
| 54 | 85 | Exemption - sale of residential house | Renumbered |
| 54F | 88 | Exemption - sale of any LT asset for residential | Renumbered |
| 54EC | 86 | Exemption - investment in specified bonds | Renumbered |
| 111A | 198 | Tax on STCG on listed equity (20%) | Renumbered |
| 112 | 199 | Tax on LTCG (12.5% post Jul 2024) | Renumbered |
| 112A | 200 | 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) | Merged |
| 80CCD(1) | 123 | NPS employee contribution (merged into 123) | Merged |
| 80CCD(1B) | 124 | NPS additional Rs 50,000 | Renumbered |
| 80CCD(2) | 125 | 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 | First-time home buyer interest deduction | Renumbered |
| 80EEA | 131 | Additional home loan interest | Renumbered |
| 80G | 133 | Donations to charitable institutions | Renumbered |
| 80GG | 135 | Rent paid (when HRA not received) | Renumbered |
| 80TTA | 138 | Interest on savings account (Rs 10,000) | Renumbered |
| 80TTB | 139 | Interest for senior citizens (Rs 50,000) | Renumbered |
| 80U | 140 | Deduction for disability | Renumbered |
| 87A | 157 | Rebate (Rs 60K new regime / Rs 12.5K old) | Renumbered |
| 89 | 160 | Relief for arrears of salary | Renumbered |
| 192 | 392 | TDS on salary | 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 | Consolidated |
| 194J | 393 | TDS on professional / technical fees | Consolidated |
| 194LA | 393 | TDS on compensation on acquisition | Consolidated |
| 194LD | - | TDS on interest to FII (DEPRECATED 31-Mar-2026) | 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 |
| 195 | 393 | TDS on payment to non-resident | Consolidated |
| 206C | 394 | TCS provisions | 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(8) | Updated return (ITR-U) | Renumbered |
| 143(1) | 270 | Intimation after processing of return | Renumbered |
| 143(3) | 271 | Scrutiny assessment | Renumbered |
| 147 | 278 | Reassessment | Renumbered |
| 148 | 279 | Notice for reassessment | Renumbered |
| 234A | 410 | Interest on late filing | Renumbered |
| 234B | 411 | Interest on default in advance tax | Renumbered |
| 234C | 412 | Interest on deferment of advance tax | Renumbered |
| 234F | 413 | Fee on late filing of ITR | Renumbered |
| 270A | 435 | Penalty for under-reporting | Renumbered |
| 271(1)(c) | 436 | Penalty for concealment | Renumbered |
| 115BAC | 202 | New tax regime (default) | Renumbered |
Form Mapping — Rules 1962 to Rules 2026
Nearly 30 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 on property/rent/professional/VDA |
| 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 |
| Form 3CD | Form 27 | Statement of particulars - tax audit |
| Form 3CEB | Form 48 | Transfer Pricing audit |
| Form 12BB | Form 124 | Investment declaration to employer (HRA etc.) |
| Form 49A | Form 93 | PAN application (Indian citizen/company) |
| Form 49AA | Form 94 | PAN application (NRI/foreign) |
| Form 24Q | Form 156 | TDS return for salary (quarterly) |
| Form 26Q | Form 157 | TDS return for non-salary (quarterly) |
| Form 27Q | Form 158 | TDS return for non-resident payments |
| Form 26QB/QC/QD/QE | Form 141 | Consolidated challan-cum-statement (TDS PAN-based) |
| Form 27EQ | Form 159 | TCS return (quarterly) |
| Form 10A | Form 104 | Registration of charitable trust |
| Form 10AB | Form 105 | Re-registration of charitable trust |
| Form 10-IEA | Form 32 | Option to opt out of new regime (business income) |
| Form 35 | Form 114 | Appeal to CIT(A) |
| Form 36 | Form 115 | Appeal to ITAT |
| Form 36A | Form 116 | Cross-objection to ITAT |
TDS Numeric Payment Codes (Section 393)
Under the Income Tax Act, 2025, all non-salary TDS provisions (the entire 194-series of the old Act) are consolidated into Section 393. TDS challans and quarterly returns reference Numeric Payment Codes 1001 - 1067 instead of section numbers. Using old section numbers for payments on or after 1 April 2026 will cause portal validation failures.
| NPC | Nature of Payment | Old Section | Rate |
|---|---|---|---|
| 1001 | Salary (Section 392) | 192 | Slab rates |
| 1002 | Interest on securities | 193 | 10% |
| 1003 | Dividends | 194 | 10% |
| 1004 | Interest other than securities | 194A | 10% |
| 1005 | Winnings - lottery / crossword puzzle | 194B | 30% |
| 1006 | Winnings - horse races | 194BB | 30% |
| 1007 | Contractor / sub-contractor payments | 194C | 1% / 2% |
| 1008 | Manpower supply / labour deployment (NEW) | 194C(extended) | 1% / 2% |
| 1009 | Insurance commission | 194D | 5% / 10% |
| 1010 | Insurance maturity (non-exempt) | 194DA | 5% |
| 1015 | Commission - lottery tickets | 194G | 5% |
| 1016 | Commission / brokerage | 194H | 5% |
| 1017 | Rent - plant / machinery | 194I(a) | 2% |
| 1018 | Rent - land / building / furniture | 194I(b) | 10% |
| 1019 | Rent by individual/HUF (no audit) | 194IB | 5% |
| 1020 | Transfer of immovable property | 194IA | 1% |
| 1021 | Professional / technical fees | 194J | 10% / 2% |
| 1022 | Income from MF units | 194K | 10% |
| 1023 | Compensation on acquisition | 194LA | 10% |
| 1025 | Payment by Individual/HUF (no audit) | 194M | 5% |
| 1026 | Cash withdrawal (banks) | 194N | 2% / 5% |
| 1027 | E-commerce participant | 194O | 1% |
| 1028 | Purchase of goods | 194Q | 0.1% |
| 1029 | Perquisites in business | 194R | 10% |
| 1030 | Virtual Digital Asset (VDA) transfer | 194S | 1% |
| 1050 | Payment to non-resident | 195 | As per DTAA |
| 1060 | TCS - foreign remittance (LRS) | 206C(1G) | 5% / 20% |
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 | TDS on interest to FII permanently deprecated effective 31 March 2026 | 31 Mar 2026 |
| 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
Q. 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.
Q. 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.
Q. 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 157 (old 87A), the Rs 75K standard deduction — all remain identical. The new Act is structural and language-simplification only.
Q. 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.
Q. 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 Numeric Payment Codes 1001 - 1067 instead of section numbers; (iii) Forms 26QB / 26QC / 26QD / 26QE merge into a single Form 141 with sub-schedules. Existing payroll, ERP and accounting software must be updated before the first TDS deposit in April 2026.
Q. 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.
Q. 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). Taxpayers may opt out using Form 32 (replacing Form 10-IEA) — switching rules for business income earners remain unchanged (once-in-lifetime switch back after opting out).
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.