The Short Version
The Income Tax Act 2025 (ITA 2025) replaces the Income Tax Act 1961. It is not a new tax law — the rates, slabs, deductions and most provisions remain the same. What has changed is the structure, language and section numbering.
ITA 2025 is written in plain English, uses consistent terminology, and reorganises sections into a logical sequence. For most taxpayers, the practical impact is minimal — your tax liability for the same income will be the same. For CAs and practitioners, the change is significant because every section reference in agreements, returns, notices and compliance work must be updated.
ITA 2025 applies from Tax Year 2026-27 — i.e., income earned on or after 1 April 2026. For FY 2025-26 income (returns filed in July 2026), ITA 1961 sections continue to apply. There is no transition confusion for current year compliance.
Big Structural Changes
Tax Year replaces Previous Year + Assessment Year
Section 3 (ITA 1961) → Section 3 (ITA 2025)
ITA 1961
Previous Year 2025-26 → assessed in AY 2026-27
ITA 2025
Tax Year 2026-27 → assessed in Tax Year 2026-27
Presumptive Taxation — 44AD, 44ADA, 44AE merged
Sections 44AD / 44ADA / 44AE → Section 58 (ITA 2025)
ITA 1961
Sec 44AD · Sec 44ADA · Sec 44AE — three sections
ITA 2025
Section 58 — single unified provision
All TDS rates consolidated into a single table
194A, 194C, 194J, 194I etc. → Section 393 table
ITA 1961
40+ separate TDS sections (194A through 194S)
ITA 2025
Section 393 (TDS) · Section 394 (TCS) — rate tables
Updated Return window extended to 48 months
Section 139(8A) (ITA 1961) → Section 263(6) (ITA 2025)
ITA 1961 — Sec 139(8A)
24 months from end of relevant assessment year
ITA 2025 — Sec 263(6)
48 months from end of relevant assessment year
Forms renamed — Form 16 becomes Form 130
TDS certificate forms renumbered under ITA 2025 Rules
ITA 1961
Form 16 (salary TDS) · Form 16A (non-salary TDS)
ITA 2025
Form 130 (salary TDS) · Form 131 (non-salary TDS)
Return filing due dates — partial change
Section 139 (ITA 1961) → Section 263 (ITA 2025)
ITA 1961
31 Jul (salaried + non-audit business) · 31 Oct (audit) · 30 Nov (companies)
ITA 2025
31 Jul (salaried) · 31 Aug (non-audit business) · 31 Oct (audit) · 30 Nov (companies)
Key Deductions — What Stayed the Same
Despite the renumbering, all major deductions are preserved under ITA 2025 with the same limits and conditions.
| Deduction | ITA 1961 | ITA 2025 | Limit / Note |
|---|---|---|---|
| LIC, PPF, ELSS, NSC, home loan principal, tuition fees | Section 80C | Section 123 | ₹1,50,000 — unchanged |
| NPS — employer contribution | Section 80CCD(2) | Section 125 | Max 10% of basic salary — allowed in New Regime too |
| NPS — self contribution (additional) | Section 80CCD(1B) | Section 124 | ₹50,000 — Old Regime only |
| Health insurance premium | Section 80D | Section 127 | Self+family ₹25K · with parents ₹50K–75K |
| Interest on education loan | Section 80E | Section 130 | Full interest — no cap |
| Donations (50% / 100%) | Section 80G | Section 133 | Conditions and limits unchanged |
| Interest on home loan — self-occupied | Section 24(b) | Section 22(2) | ₹2,00,000 — Old Regime only |
| Savings a/c interest (non-senior) | Section 80TTA | Section 153 | ₹10,000 — 80TTA + 80TTB merged into Sec 153 |
| Deposits interest (senior citizen 60+) | Section 80TTB | Section 153 | ₹50,000 — merged with 80TTA |
| Rebate u/s 87A | Section 87A | Section 156 | ₹12L taxable income — New Regime rebate unchanged |
| Standard deduction — salaried | Section 16(ia) | Section 19 | ₹75,000 New Regime · ₹50,000 Old Regime |
TDS — Key Section Changes
All TDS rates and thresholds are consolidated under Section 393 in ITA 2025. Individual section numbers (194C, 194J etc.) are abolished. The rates remain the same.
| Payment Type | ITA 1961 | ITA 2025 | Rate / Note |
|---|---|---|---|
| Payments to contractors | Section 194C | Section 393 | 1% individual / 2% others — unchanged |
| Professional / technical fees | Section 194J | Section 393 | 10% professional · 2% technical — unchanged |
| Interest (other than securities) | Section 194A | Section 393 | 10% · Senior citizen threshold ₹1L (ITA 2025 increase) |
| Rent — land, building, machinery | Section 194I | Section 393 | 10% land/building · 2% plant/machinery — unchanged |
| Commission / brokerage | Section 194H | Section 393 | 5% — unchanged |
| Salary | Section 192 | Section 391 | At applicable slab rates — unchanged |
| Tax Collected at Source (TCS) | Section 206C | Section 394 | TCS consolidated separately from TDS |
| TDS certificate — salary | Form 16 | Form 130 Renamed | Effective when ITA 2025 Rules notified by CBDT |
Assessment & Returns
| Provision | ITA 1961 | ITA 2025 | What changed |
|---|---|---|---|
| Return of income — filing | Section 139 | Section 263 | Non-audit businesses: new 31 Aug deadline Change |
| Revised return | Section 139(5) | Section 263(5) | Within 12 months from end of tax year — unchanged |
| Updated return (ITR-U) | Section 139(8A) | Section 263(6) | Window extended: 24 months → 48 months Major change |
| Scrutiny assessment | Section 143(3) | Section 271 | Powers and procedure unchanged |
| Faceless assessment | Scheme-based | Section 273 Codified | Now statutory, not just a scheme — stronger footing |
| Best judgement assessment | Section 144 | Section 272 | Unchanged |
| Search and seizure | Section 132 | Section 247 | ITA 2025 adds: access to virtual digital space (emails, social media, investment accounts) Expanded |
| Appeal to Commissioner (Appeals) | Section 246A | Section 357 | Faceless appeal mechanism codified |
Under ITA 2025 Section 247, income tax authorities have explicit statutory power to access virtual digital spaces — email accounts, social media accounts, digital investment platforms and cloud storage — during search and seizure operations. This was not explicitly mentioned in ITA 1961 Section 132.
New Tax Regime — No Change
The New Tax Regime under ITA 2025 (Section 202, formerly Section 115BAC) is unchanged. The same slabs, the same default status, the same deduction restrictions, and the same 87A rebate (now Section 156) continue to apply. FY 2025-26 slabs are the same as FY 2024-25.
₹0–4L: Nil · ₹4–8L: 5% · ₹8–12L: 10% · ₹12–16L: 15% · ₹16–20L: 20% · ₹20–24L: 25% · Above ₹24L: 30%
Rebate u/s 87A (now Section 156) makes net taxable income up to ₹12 lakh effectively tax-free. For salaried employees, this is ₹12.75 lakh after the ₹75,000 standard deduction.
Capital Gains — Section Numbers Changed
| Provision | ITA 1961 | ITA 2025 | Note |
|---|---|---|---|
| Short-term capital gains | Section 111A | Section 196 | 15% on listed equity / equity MF — unchanged (Budget 2024: now 20%) |
| Long-term capital gains | Section 112A | Section 198 | 10% on LTCG exceeding ₹1.25L on listed equity — unchanged |
| Exemption — residential house sale | Section 54 | Section 82 | Conditions and limits unchanged |
| Exemption — agricultural land | Section 54B | Section 83 | Unchanged |
| Stamp duty value — immovable property | Section 50C | Section 78 | Unchanged |
What Stayed Exactly the Same
- Tax slabs and rates — New Regime and Old Regime slabs, surcharge rates, cess (4%) — all unchanged
- Deduction limits — 80C ₹1.5L, 80D, NPS, HRA exemption rules — all unchanged
- TDS rates — All TDS rates and thresholds — same as ITA 1961, just consolidated into Section 393
- Capital gains exemptions — Section 54, 54B, 54F etc. provisions — unchanged
- Presumptive taxation thresholds — ₹3 crore (44AD), ₹75 lakh (44ADA) — unchanged, now under Section 58
- New Tax Regime — Default regime, no deductions (except standard deduction and employer NPS) — unchanged
- Advance tax — Instalment schedule (15 Jun 15%, 15 Sep 45%, 15 Dec 75%, 15 Mar 100%) — unchanged
- Appeal mechanisms — CIT(A), ITAT, High Court, Supreme Court — hierarchy unchanged
All section references in legal agreements, tax audit reports, notices, appeals, and compliance filings will need to be updated to ITA 2025 numbering from Tax Year 2026-27. Forms 16, 16A, 3CD, 3CB and all CBDT forms will be revised under the new rules — await CBDT notifications for final form numbers.
Frequently Asked Questions
This is an informational reference — not legal advice. Section references verified from Income Tax Act 2025 and Income Tax Act 1961 PDFs. Always consult a qualified CA for your specific situation. Book a consultation →