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India · Income tax
The Income-tax Act, 2025: what actually changes for businesses
From 1 April 2026, the Income-tax Act, 2025 replaced the Act of 1961. Tax rates still come through each year's Finance Act, but section numbers, form names and terms are new, and that touches invoices, payroll and TDS returns.
The main structural changes
- One "tax year". The tax year replaces the separate "previous year" and "assessment year". Income earned in 2026-27 is taxed in tax year 2026-27.
- A shorter law. The new Act has 536 sections in 23 chapters, replacing a much longer and heavily amended 1961 Act.
- TDS and TCS consolidated. Section 392 covers TDS on salary, section 393 covers TDS on other payments to residents and non-residents, and section 394 covers TCS. Payment types and rates are set out in tables.
- Renumbered forms. Form 16 becomes Form 130 and Form 16A becomes Form 131. Quarterly TDS returns 24Q and 26Q become Forms 138 and 140, and Form 26AS becomes Form 168.
What stays the same for now
- Returns and TDS statements for periods up to 31 March 2026 follow the 1961 Act, so the old law and forms still apply to 2025-26 income.
- Most familiar deductions and exemptions carry over, under new section numbers.
A checklist for your business
- Update TDS masters in your accounting and payroll software with the new section references for vendors and employees.
- Review templates. Purchase orders, contracts and invoices that quote old sections, such as "TDS under section 194J", need updating.
- Payroll. Employees will receive Form 130, not Form 16, for tax year 2026-27.
- Keep an old-to-new section map handy for your accounts team.
- Read notices carefully. For some time, correspondence will cite both Acts, so check which law a notice refers to before replying.
How we help
We handle income tax returns, TDS compliance and assessments for individuals and businesses, and can review your TDS set-up against the new sections.
General information as at October 2026. It is not advice on any particular case; check the current Act and rules or speak to us before acting.
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