Published 19 October 2026
Since 1 April 2026 there have been two income-tax Acts in daily use, not one. A notice received in October 2026 may cite section 148A of the 1961 Act or section 281 of the 2025 Act. A return filed in July 2026 was filed under section 139, and the TDS deducted on a payment in May 2026 was deducted under section 393. Which Act applies depends on the year the income belongs to, and the 2025 Act says so in one long section. This guide explains that rule, the new vocabulary, and where the provisions that people use most now sit. The site carries both texts: the Income-tax Act, 1961 and the Income-tax Act, 2025.
The new Act and its commencement
The Income-tax Act, 2025 (Act No. 30 of 2025) received the President’s assent on 21 August 2025. Section 1(3) brings it into force “on the 1st April, 2026”, save as otherwise provided. The rules under it are the Income-tax Rules, 2026, notified by CBDT Notification No. 22/2026 (G.S.R. 198(E)) dated 20 March 2026 under section 533. The Finance Act, 2026 (Act No. 4 of 2026, assented to on 30 March 2026) amended both Acts on the eve of commencement.
“Tax year” replaces previous year and assessment year
Section 3(1) defines “tax year” as “the twelve months period of the financial year commencing on the 1st April”. For a business or source newly set up, it runs from the date of setting up to the end of that financial year (section 3(2)). Income is charged, computed and returned for the same tax year. The two-year label of the 1961 Act (“previous year 2025-26, assessment year 2026-27”) is gone for new years.
Section 536(3) bridges the two: any reference in the 2025 Act to a tax year commencing on 1 April 2025 or earlier “shall be construed as a reference to the corresponding previous year under the repealed Income-tax Act”.
| Period of income | 1961 Act label | 2025 Act label | Governing Act |
|---|---|---|---|
| 1 April 2025 to 31 March 2026 | PY 2025-26 / AY 2026-27 | (tax year 2025-26, read as PY 2025-26) | 1961 Act |
| 1 April 2026 to 31 March 2027 | n/a | Tax year 2026-27 | 2025 Act |
The savings rule: what continues under the 1961 Act
Section 536(1) repeals the 1961 Act. Sub-section (2) then keeps most of it alive for the past. The provisions that matter most in practice are these.
- Clause ©, proceedings for old years. “The provisions of the repealed Income-tax Act shall continue to apply to any proceeding pending on the date of commencement of this Act and to any proceedings initiated on after the 1st April, 2026 (including notices, assessment, re-assessment, recomputation, rectification, penalty, reference, revision and appeals) in respect of any tax year beginning before the 1st April, 2026”, under the 1961 Act’s procedure. A scrutiny notice, a reassessment notice, a penalty or an appeal for AY 2026-27 or any earlier year is a 1961 Act matter, even if it is first issued in 2027 or later.
- Clause (d), penalties for old years. These may be initiated and imposed under the 1961 Act “as if this Act had not been enacted”.
- Clause (e), pending appeals and applications. Those pending before any authority, the Tribunal or a court on 1 April 2026 continue “as if this Act had not been enacted”.
- Clause (f), elections and options. An option exercised under the 1961 Act is deemed exercised under the corresponding provision of the 2025 Act.
- Clause (g), interest. This was substituted by the Finance Act, 2026. For old-year proceedings, a refund falling due, or a default occurring, on or after 1 April 2026 attracts interest under the 1961 Act’s provisions, but at the rate in the corresponding provision of the 2025 Act, from the date that rate changes.
- Clause (i), recovery. A sum payable under the 1961 Act “may be recovered under this Act”.
- Clause (j), subordinate instruments. Rules, notifications, circulars, instructions and schemes under the 1961 Act continue, “so far as it is not inconsistent with the corresponding provisions of this Act”, as if issued under the 2025 Act.
- Clause (k), no revival. An appeal or application whose period expired before 1 April 2026 is not revived because the 2025 Act allows a longer period.
- Clauses (l) to (t), carry-forwards. These cover MAT and AMT credit, brought-forward business, speculation and house-property losses, capital losses (up to eight years from the year first computed), unabsorbed depreciation, and certain deferred deductions. Each carries into the 2025 Act on stated terms.
- Clause (u), faceless schemes. Any scheme notified under the 1961 Act to eliminate interface is deemed made under the corresponding provision, or under section 532, and continues.
- Clause (v), searches. For a search or requisition initiated before 1 April 2026, the 1961 Act continues for connected proceedings.
Section 536(4) applies section 6 of the General Clauses Act, 1897 to the repeal. Section 535 lets the Central Government remove difficulties by order. Section 535(2) allows such an order to adapt or modify the 1961 Act for assessments of the tax year ending 31 March 2026 or earlier. Section 535(3) bars any order after three years from 1 April 2026.
What this means in October 2026
- Returns for AY 2026-27 (FY 2025-26) were, and belated or revised ones still are, filed under section 139 of the 1961 Act. The Finance Act, 2026 itself amended section 139 from 1 March 2026 for these returns. See Belated and Revised Returns.
- Advance tax and TDS on payments from 1 April 2026 fall under the 2025 Act: advance tax under section 404, TDS under section 393 and TCS under section 394.
- Scrutiny, reassessment, penalty and appeal proceedings for AY 2026-27 and earlier are 1961 Act proceedings, through section 536(2)© and (d).
- The first 2025 Act assessments will be of returns for tax year 2026-27, due in 2027.
Where the common provisions now sit
The 2025 Act renumbers everything. The table maps the provisions most often met in returns, notices and appeals. Each 2025 Act entry has been checked against the text of the Act as published in the Gazette (No. 30 of 2025), and amendments made by the Finance Act, 2026 are noted.
| Subject | 1961 Act | 2025 Act |
|---|---|---|
| Charge of income-tax | s.4 | s.4 |
| Scope of total income | s.5 | s.5 |
| Residence | s.6 | s.6 |
| Heads of income | s.14 | s.13 |
| Salaries (charge) | s.15 | s.15 |
| House property (charge) | s.22 | s.20 |
| Business or profession (charge) | s.28 | s.26 |
| Tax audit | s.44AB | s.63 |
| Capital gains (charge) | s.45 | s.67 |
| Other sources (charge) | s.56 | s.92 |
| Reference to Transfer Pricing Officer | s.92CA | s.166 |
| New tax regime | s.115BAC | s.202 |
| Return; belated, revised and updated returns | s.139(1), (4), (5), (8A) | s.263(1), (4), (5), (6) |
| Verification of return | s.140 | s.265 |
| Self-assessment tax | s.140A | s.266 |
| Tax on updated return | s.140B | s.267 |
| Inquiry before assessment | s.142 | s.268 |
| Intimation; scrutiny assessment | s.143(1), (3) | s.270(1), (10) |
| Best-judgment assessment | s.144 | s.271 |
| Faceless assessment | s.144B | s.273 |
| Dispute Resolution Panel | s.144C | s.275 |
| Income escaping assessment | s.147 | s.279 |
| Reassessment notice | s.148 | s.280 |
| Procedure before notice | s.148A | s.281 |
| Time limits for assessment | s.153 | s.286 |
| Rectification | s.154 | s.287 |
| Notice of demand | s.156 | s.289 |
| Appeal to Joint Commissioner (Appeals) | s.246 | s.356 |
| Appeal to Commissioner (Appeals) | s.246A | s.357 |
| Form of appeal, fee, limitation | s.249 | s.358 |
| Powers in first appeal | s.251 | s.360 |
| Appeal to Tribunal | s.253 | s.362 |
| Orders and stay by Tribunal | s.254 | s.363 |
| Appeal to High Court | s.260A | s.365 |
| Revision (prejudicial to revenue) | s.263 | s.377 |
| Revision (on application) | s.264 | s.378 |
| TDS (deduction table) | ss.192 to 196D | s.393 |
| TCS | s.206C | s.394 |
| TAN allotment | s.203A | s.397(1)(a) |
| Processing of TDS/TCS statements | ss.200A, 206CB | s.399 |
| Advance tax liability | s.208 | s.404 |
| When tax payable; stay pending appeal | s.220 | s.411 |
| Interest for late return; advance tax default; deferment | ss.234A, 234B, 234C | ss.423, 424, 425 |
| Interest on refunds | s.244A | s.437 |
| Penalty for under-reporting | s.270A | s.439 |
| Immunity from penalty | s.270AA | s.440 |
| Service of notices | s.282 | s.501 |
| Repeal and savings | n/a | s.536 |
A few of these are not one-for-one. Section 263 of the 2025 Act gathers the return, the belated return, the revised return and the updated return into one section. The Finance Act, 2026 substituted section 263(5) so that a revised return may be filed within twelve months from the end of the tax year. Section 393 replaces the run of separate TDS sections with tables. “Revision” under section 377 is not the return-of-income section 263 of the new Act, a trap when reading the two side by side.
Forms also change number
The Income-tax Rules, 2026 renumber the forms. For appeals:
- Form 35 becomes Form No. 99 (rule 167);
- Form 36 becomes Form No. 115, and Form 36A becomes Form No. 116 (rule 193).
These apply to orders under the 2025 Act. For old-year matters the e-filing portal continues to offer Form 35. Its user manual still refers to section 249(4)(b) of the 1961 Act. See Appealing to the Commissioner (Appeals).
Reading a notice: a checklist
- Find the year. A tax year beginning on or before 1 April 2025 (AY 2026-27 or earlier) means a 1961 Act proceeding.
- Check the section cited against that Act. A 1961 Act notice should cite 1961 sections, such as section 148A. A 2025 Act notice should cite 2025 sections, such as section 281.
- For time limits, look to the Act that governs the year. Section 536(2)© applies the 1961 Act’s procedure to old years.
- For interest after 1 April 2026 on an old-year demand or refund, apply the 1961 Act’s provision at the 2025 Act’s rate (section 536(2)(g), as substituted).
- Use the site’s two section browsers to move between them: 1961 and 2025.
This guide closes the appeals set. The returns, notices and TDS guides in this series each state which Act governs which years for their own provisions.