India enacts Income Tax Act, 2025
Change
India brought a new income-tax law into force effective April 1, 2026, replacing the 1961 statute, instituting a single 'tax year' timeline and directing that advance-tax payments for Tax Year 2026–27 follow the new framework from June 2026.
Why it matters
The change forces taxpayers and payroll systems to shift to a single tax-year calendar, altering filing and payment schedules and centralizing timing rules. The government's e-filing platform will run both the legacy and the new regimes during the transition while assessments, appeals and ongoing proceedings for earlier years remain governed by the prior law; the law also allows TDS refunds even when returns are filed late without penal charges.
Implications
- • Corporate tax departments and chief financial officers must recalculate withholding and advance-tax schedules to comply with the new tax-year framework beginning June 2026.
- • Tax practitioners preparing returns for AY2026-27 must use the forms prescribed under the prior law when filing in July 2026.
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