ExplainedIncome tax
New Income Tax Act 2025 explained: the 'tax year', your slabs and the new filing deadlines
Since April 1, 2026, India's income tax has run under a new law that replaced the 1961 Act. What changed for salaried and business taxpayers, what did not, the slabs under the new regime, and the deadlines for your first return under the new Act.
The short answer
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 on April 1, 2026. It cuts the law's text and sections roughly in half and replaces the 'previous year' and 'assessment year' with a single 'tax year'. It does not change tax rates: those are set by the annual Finance Act, and the 2026-27 Budget left slabs unchanged, so income up to ₹12 lakh still pays no tax under the new regime, or ₹12.75 lakh for salaried people after the ₹75,000 standard deduction. From tax year 2026-27, simple returns are due by July 31, non-audit business returns by August 31 and audited returns by October 31, and revised returns can be filed for 12 months.
India’s income tax now runs under a new law. On April 1, 2026, the Income-tax Act, 2025 replaced the Income-tax Act, 1961, which had governed direct taxes for more than six decades. For most taxpayers the change is about language, structure and deadlines rather than how much tax they pay: the slabs and rates did not change.
What is the new Income-tax Act, and why was it needed?
A rewrite of the 1961 law in simpler form. Parliament passed the Income-tax Bill, 2025 on August 12, 2025, and it received the President’s assent on August 21, 2025. The new Act reduces the text and the number of sections by about half, removes provisions linked to taxes that no longer exist, and cuts down the cross-references that made the old law hard to read. The government’s stated aims are a clearer law and fewer disputes.
From the 1961 Act to the 2025 Act
- Feb 1, 2025Budget sets the new-regime threshold at ₹12 lakh of tax-free income.
- Aug 12, 2025Parliament passes the Income-tax Bill, 2025.
- Aug 21, 2025President gives assent.
- Feb 1, 2026Budget 2026-27 keeps slabs unchanged; new rules and forms to be notified.
- Apr 1, 2026Income-tax Act, 2025 takes effect.
- Jul 31, 2027Due date for simple returns for tax year 2026-27.
What is a “tax year”?
A single name for the year in which you earn and are taxed. Under the old law, income earned in the “previous year” was assessed in the following “assessment year”, so income from April 2025 to March 2026 was “financial year 2025-26, assessment year 2026-27”. The new Act drops that pairing. The year from April 1, 2026, to March 31, 2027, is simply tax year 2026-27.
Old Act and new Act
Did my tax slabs change?
No. Rates and slabs are set every year by the Finance Act that accompanies the Budget, not by the Income-tax Act. The Budget presented on February 1, 2026, left them unchanged. So the new regime still works as the 2025 Budget set it:
Because of the rebate, income up to ₹12 lakh pays no tax under the new regime. A salaried person also gets a standard deduction of ₹75,000, so gross salary up to ₹12.75 lakh is effectively tax-free. When the slabs were introduced, the Finance Minister said a person earning ₹12 lakh would save ₹80,000 a year, someone on ₹18 lakh ₹70,000, and someone on ₹25 lakh ₹1.10 lakh. The old regime, with its deductions and exemptions, remains available for those who choose it.
What are the new filing deadlines?
Staggered by type of taxpayer. From tax year 2026-27, returns are due on:
Return due dates from tax year 2026-27
- Jul 31individuals with simple returns (ITR-1, ITR-2)
- Aug 31business or professional income, no audit
- Oct 31companies and audited cases
- Nov 30special cases
The window to file a revised return has grown from 9 months to 12. A revision filed after nine months attracts a fee of ₹1,000 if income is up to ₹5 lakh and ₹5,000 above that.
What else changed on April 1, 2026?
A set of smaller changes, several of them taxpayer-friendly. Tax collected at source on money sent abroad for education or medical treatment above ₹10 lakh fell from 5% to 2%. Interest on motor accident compensation is now tax-free. Employer-provided travel between home and office is no longer a taxable perk. Taxpayers can claim TDS refunds in returns filed after the due date without penal charges for the claim.
On the other side, the Securities Transaction Tax went up on certain derivative trades, income from share buybacks is taxed as capital gains, and the tax benefits on Sovereign Gold Bonds apply only to bonds bought at the original issue price.
What should taxpayers do now?
Mostly, carry on, but learn the new labels. Your tax for 2026-27 is calculated as before, under the regime you choose. What changes is the vocabulary on forms and notices, the numbering of sections you may see quoted, and the due dates for your return. When she presented the Budget, Finance Minister Nirmala Sitharaman said the simplified rules and forms under the new Act would be notified with enough time for taxpayers to adjust, and the first returns under the new law, for tax year 2026-27, fall due from July 31, 2027.