What changed
Section, rule and form numbers have changed, and “previous year” and “assessment year” give way to a single “tax year”. For example, the ₹1.5 lakh savings deduction formerly in Section 80C is now Section 123, with the eligible items listed in Schedule XV; the rebate formerly in Section 87A is Section 156; TDS on salary is under Section 392, and most other TDS under Section 393.
TDS and TCS statements are renumbered: 24Q is now Form 138, 26Q is Form 140, 27Q is Form 144 and 27EQ is Form 143. Forms 15G and 15H are merged into Form 121. TDS deducted on or after 1 April 2026 is paid through e-Pay Tax using new four-digit payment codes in place of the old section codes, so check the code against the portal list for each payment.
Income for FY 2025-26 and earlier years, and the returns, assessments and appeals for those years, generally stay under the 1961 Act. The Income Tax Department publishes navigators that map old rules and forms to new ones, and FAQs on the transition.
The 2025 Act has 536 sections in 23 chapters and keeps the existing tax rates and slabs. Section 536 repeals the 1961 Act and saves things done under it, so notices, assessments, appeals and refunds for earlier years run on under the old provisions. References to old section numbers in agreements, board resolutions and HR policies are not invalid, but they should be read with the corresponding new sections.
Who is affected
All taxpayers, employers, TDS deductors and users of payroll or accounting software.
Effective dates
| Item | Date or period |
|---|---|
| Income-tax Rules, 2026 notified | 20 March 2026 |
| Income-tax Act, 2025 and Rules in force | 1 April 2026 |
| First tax year under the new Act | Tax Year 2026-27 (1 April 2026 to 31 March 2027) |
| Returns for FY 2025-26 (AY 2026-27) | Under the 1961 Act |
What to do now
- Update section and form references in payroll, accounting and TDS software.
- Use the new TDS statement forms (138, 140, 144, 143) for quarters of Tax Year 2026-27.
- Pick the new payment code on e-Pay Tax for each TDS payment made under the 2025 Act.
- Keep 1961 Act references for FY 2025-26 returns and for older proceedings.
Penalty or consequence if missed
Tax deposited under a wrong payment code, or a TDS statement filed in an old form, can show up as a short payment or short deduction when TRACES processes the statement. That leads to a demand with interest for late deduction or payment, and a late fee of ₹200 a day where the statement itself is late (Section 234E of the 1961 Act; Section 427 of the Income-tax Act, 2025). Corrections are made by a revised TDS statement.
Official source
- CBDT press release, 1 April 2026: Income-tax Act, 2025 comes into force (PDF)
- Form mapping guide (PDF)
Effective: 1 Apr 2026 · Note published · Last reviewed
Related on this site
- Income Tax Act 2025 guide
- Income Tax Act 2025 section finder
- Income tax return filing
- Income tax tools
- Compliance calendar
This note summarises a public notification for general information. It is not professional advice and does not cover every condition or exception, and the rule can change again by a later notification. Read the notification itself before acting on it, or consult a qualified professional on your own facts.