Income Tax Act 2025:
What Changes in Forms,
Compliance & Procedures?

After more than six decades, the Income-tax Act, 1961 stands repealed and replaced by the Income-tax Act, 2025, effective 1 April 2026. No new taxes. No new burden. But a sweeping rationalisation of forms, section numbers, and compliance timelines that every taxpayer, deductor, and professional must understand before the transition date.

1. The Big Picture — What Changed & What Did Not

The new Act is a restructuring, not a reimagination. Tax policy, rates, thresholds, and the fundamental framework stay intact. What changed is the language, structure, numbering, and forms.

2. Complete Form Mapping — Old vs New

This is the most operationally critical section. Forms filed on or after 1 April 2026 for Tax Year 2026-27 onwards must use new form numbers. Returns for AY 2026-27 and earlier continue on old forms.

PAN / TAN Applications

Existing PAN/TAN numbers remain fully valid. New forms apply only to fresh applications after 1 April 2026.

TDS / Declaration Forms

Foreign Remittance Forms

Tax Audit Reports

Form 26 consolidates all three erstwhile audit forms into one smart, structured report with separate schedules for Losses, Depreciation, Deductions, Prior Period items, and Computation of income/expenses.

Charitable Trust Registration

3. TDS Provisions — Consolidated & Renumbered

All TDS sections (192 to 194T of ITA 1961) are now consolidated under two sections in ITA 2025:

• Section 392 — TDS on Salaries (replaces Section 192)
• Section 393 — TDS on all other payments (replaces Sections 193–194T) in a structured tabular format across three categories: Residents, Non-Residents, and Any Person
• Section 394 — TCS provisions (replaces Sections 206C onwards)

TDS Return Forms — New Names

TDS Certificate Forms

4. Income Tax Return Filing During Transition

Revised Time Limits for Returns Under ITA 2025

* As proposed in Finance Bill 2026.

5. The Golden Rules of Transition (Section 536)

Section 536 of ITA 2025 is the "repeal and savings" provision with 22 sub-clauses. Here are the rules every practitioner must memorise:

• Rule 1 — Pending proceedings continue under ITA 1961. Any assessment, appeal, reassessment, rectification, or revision pending on 1 April 2026 continues under the old Act.
• Rule 2 — Fresh proceedings for pre-2026 years still under ITA 1961. A notice issued in July 2027 for AY 2023-24 is still governed by ITA 1961.
• Rule 3 — Rights and liabilities survive repeal. Refund entitlements, tax demands, and carry-forward losses under the old Act are fully preserved.
• Rule 4 — Old circulars and notifications remain valid unless inconsistent with ITA 2025.
• Rule 5 — Expired limitation cannot be revived. If your appeal window under ITA 1961 had closed before 1 April 2026, ITA 2025 cannot reopen it.
• Rule 6 — Carry-forward losses retain original character. Business loss, capital loss, speculation loss — reclassified nowhere; carried forward as-is under corresponding provisions.
• Rule 7 — Options/elections exercised under ITA 1961 are deemed exercised under ITA 2025 (only where a corresponding provision exists).
• Rule 8 — Condition violations after 1 April 2026 are taxed under ITA 2025. E.g., selling a Section 54-exempt asset within lock-in after 1 April 2026 → taxed under ITA 2025.

6. TDS Transition — The "Earlier of Credit or Payment" Rule

This is the single most important operational rule for deductors in FY 2026-27:

Practical Scenarios

7. What Has Not Changed

• TDS/TCS rates and monetary thresholds
• Advance tax instalment dates (15 June, 15 Sept, 15 Dec, 15 March) and percentages
• Advance tax threshold — Rs. 10,000
• Interest for delayed TDS deposit — 1%/month (non-deduction) and 1.5%/month (non-deposit)
• Interest for advance tax shortfall — 1% per month (Sec. 424/425)
• Late filing fee — Rs. 1,000 (income ≤ 5 lakh) / Rs. 5,000 (others)
• Tax audit thresholds — Rs. 1 crore (business), Rs. 10 crore (digital), Rs. 50 lakh (profession)
• Carry-forward periods — 8 years (business/capital loss), 4 years (speculation/race horse)
• PAN, TAN numbers, faceless assessment scheme, AIS (up to AY 2026-27)
• GAAR provisions — thresholds, approval mechanisms, and procedural safeguards unchanged
• Appellate hierarchy — AO → JCIT(A)/CIT(A) → ITAT → HC → SC (unchanged)
• Residency rules for individuals, HUF, and companies
• NRI concessional tax regime (Sections 115C–115I → Sections 212–218)

8. Transition Action Checklist for Practitioners

The Bottom Line

The Income Tax Act 2025 is India's most significant tax legislation in six decades — but its genius lies in what it preserves. Rights, liabilities, proceedings, registrations, and carry-forwards under ITA 1961 all survive the transition, protected by Section 536's savings framework.

For taxpayers: you don't need to re-file, re-register, or re-elect anything for pre-April 2026 periods. For deductors and professionals: the critical action is updating systems to use new section references and form numbers for transactions from 1 April 2026.