India replaces Income-tax Act, 1961 with Income-tax Act, 2025
Tax compliance teams must adopt the new 'tax year' rules from June 2026
Change
India brought the Income-tax Act, 2025 into force on April 1, 2026, replacing the 1961 Act and establishing a single "tax year" framework that removes the assessment-year distinction.
Why it matters
Tax assessments, appeals and other ongoing proceedings for earlier years continue to be conducted under the Income‑tax Act, 1961 until their final resolution. Advance tax payments for Tax Year 2026‑27, commencing June 2026, must be made in accordance with the Income‑tax Act, 2025, and the Income Tax Department's e‑filing portal will accept filings under both Acts during the transition period.
Implications
- — Corporate tax and compliance teams at Indian companies must reconfigure accounting periods and tax‑year reporting to the Income‑tax Act, 2025 before June 2026 — failure will result in incorrect advance‑tax payments and regulatory non‑compliance.
- — Tax‑filing system administrators at India's Income Tax Department must enable and verify e‑filing support for both the Income‑tax Act, 1961 and the Income‑tax Act, 2025 before July 2026 filings begin — failure risks blocked or rejected returns for AY 2026‑27.
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Source
View on Economic Times