Income-tax Act, 2025: the new law · Tax Year 2026-27
Is your tax liability changing under the new Act?
The Income-tax Act, 2025 applies from 1 April 2026, so the tax year 2026-27 is the first one under it. What changes for you today is mostly names, numbers and forms. Whether your rates change depends on the Finance Act 2026, which is why TaxCare labels its 2026-27 figures provisional.
On this page
For most people, the immediate change is vocabulary and paperwork, not the rate of tax. The Income-tax Act, 2025 took effect on 1 April 2026, so the tax year 2026-27 is the first under it, and its returns are filed from April 2027. TaxCare's calculations for 2026-27 currently repeat the 2025-26 slabs and deductions, and are marked provisional until the final figures and forms are confirmed.
Which Act applies to which return
Income earned | Tax year | Act | When filed |
|---|---|---|---|
1 Apr 2025 to 31 Mar 2026 | 2025-26 | Income-tax Act, 1961 | Now (normal due date 31-Jul-2026) |
1 Apr 2026 to 31 Mar 2027 | 2026-27 | Income-tax Act, 2025 | From 01-Apr-2027 |
The 2026-27 figures
TaxCare's rule set for 2026-27 carries these figures forward from 2025-26 and is labelled provisional until it is signed off. Each figure below has been checked against the Income-tax Act, 2025 and the Finance Act 2026, and they are the same as for 2025-26.
Item | New regime | Old regime |
|---|---|---|
Nil slab | Up to ₹4,00,000 | Up to ₹2,50,000 (₹3,00,000 for 60 to 79, ₹5,00,000 for 80 and above) |
Top rate | 30% above ₹24,00,000 | 30% above ₹10,00,000 |
Rebate | Up to ₹60,000 if income is ₹12,00,000 or less | Up to ₹12,500 if income is ₹5,00,000 or less |
Standard deduction | ₹75,000 | ₹50,000 |
Capital gains rates are also unchanged: 20% on short-term gains on listed equity and 12.5% on long-term gains above ₹1,25,000 (sections 196 and 198 of the 2025 Act). See slabs for the tax year 2026-27 and old vs new tax regime.
Changes from the Finance Act 2026
Two Finance Act 2026 changes to revised returns are already recorded in TaxCare's rule set:
- A revised return can be filed until twelve months from the end of the tax year (31 March after it), instead of 31 December.
- A fee of ₹5,000 (₹1,000 if total income is ₹5,00,000 or less) applies to a revision filed after 31 December.
For the tax year 2025-26 these sit in sections 139(5) and 234I of the 1961 Act. Under the Income-tax Act, 2025 they are section 263(5) and section 428(b).
Names and numbers that change
Before | Under the new Act |
|---|---|
Previous year and the following year as two terms | One term, tax year (1 April to 31 March) |
Form 26AS | Form 168 (from the tax year 2026-27) |
Form 16 (salary TDS certificate) | Form 130 |
Form 16A | Form 131 |
Form 24Q, 26Q (quarterly TDS statements) | Form 138, Form 140 |
Form 61A (SFT) | Form 165 |
TDS on salary, section 192 | Section 392 |
TDS on interest from deposits, section 194A | Section 393(1), Table S.No. 5 |
Familiar section numbers change too:
1961 Act | Income-tax Act, 2025 |
|---|---|
Rebate, 87A | Section 156 |
Standard deduction, 16(ia) | Section 19(1) table |
80C-type investments | Section 123 |
Health insurance, 80D | Section 126 |
Short-term capital gains on listed equity, 111A | Section 196 |
Long-term capital gains on listed equity, 112A | Section 198 |
Presumptive income, 44AD, 44ADA and 44AE | Section 58 |
New tax regime, 115BAC | Section 202 |
What does not change for you
- The duty to file when your total income, before deductions, is more than the amount not chargeable to tax (section 263(1) of the 2025 Act): see who must file an income tax return.
- Verifying the return after filing. The e-filing portal currently allows 30 days from filing to e-verify or send ITR-V: see how to e-verify your ITR.
- The need to match your return with AIS and the TDS statement.
- Old losses. Losses from earlier years survive the move to the new Act, within their time limits.
What to do now
- If you are filing a return in 2026, file for the tax year 2025-26 under the 1961 Act. Nothing new applies.
- Keep Form 130 (the new salary TDS certificate) for the tax year 2026-27 when your employer issues it.
- Do your planning with both regimes in the calculator, treating 2026-27 results as an estimate.
- Watch for the final figures and the 2027 forms. When they are available, TaxCare updates its rules and removes the provisional label.
How TaxCare helps
TaxCare keeps separate rule sets for each tax year and Act, shows when a year's figures are provisional, and moves your data to Form 168 for 2026-27 and Form 26AS for earlier years. It does not file a return on provisional rules. See pricing, or ask a Tax Expert about a specific change.
This guide gives general information and is not professional tax advice.
Questions on this topic
When does the Income-tax Act, 2025 apply to me?
It came into force on 1 April 2026. Income from 1 April 2026 (the tax year 2026-27) is taxed under it. Returns for income up to 31 March 2026, filed in 2026, are still under the 1961 Act.
Will my tax be higher under the new Act?
Not because of the new Act alone. For the tax year 2026-27 the slabs of both regimes, the rebate and the standard deduction are the same as for 2025-26, so the same income gives the same tax.
Are my old losses lost?
No. Losses from earlier years carry across to the new Act, within their normal time limits.
Do I have to do anything differently now?
For a return filed in 2026, nothing changes: it is for the tax year 2025-26 under the 1961 Act. The first return under the new Act is filed from April 2027.
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