Income-tax Act 2025: The 2026 Transition

Quick View

What the Issue Means

The Income-tax Act, 2025 uses the term Tax Year and discontinues the assessment-year concept for income governed by the new law. Income earned from 1 April 2026 to 31 March 2027 is Tax Year 2026–27.

Returns for FY 2025–26 filed during 2026 remain returns for AY 2026–27 under the Income-tax Act, 1961. Pending assessments, reassessments, appeals, refunds and rectifications for earlier periods continue under the old law through the repeal and savings provisions.

The department states that the new Act primarily reorganises and simplifies the law rather than introducing a separate tax burden merely because of redrafting. However, section numbers, forms and terminology change, so taxpayers should not copy an old section reference into a new-period computation without checking.

Action Steps

1. Identify the period in which the income arose.
2. Tag every return, payment and notice with its governing Act.
3. Use Tax Year terminology only for periods beginning on or after 1 April 2026.
4. Keep old-year proceedings in separate folders.
5. Update section references and forms for current-period compliance.
6. Check transition guidance before relying on an old circular.

Decision Table

Practical Example

Evidence to Keep

• Year-wise tax calendar.
• Return forms and acknowledgements.
• Advance-tax and TDS challans.
• Notice and proceeding register.
• Old-to-new section mapping.
• Transition memo for elections, approvals or losses.

Common Mistakes

Escalation Route

The e-filing portal is expected to support both laws during transition. Keep the period visible on every file name and working paper so that the correct form and section are used.

Where a position depends on an old approval, circular, option, carried-forward loss or pending litigation, review the specific savings provision. General summaries cannot resolve every transition issue.

Working Principle

The safest approach is to preserve the original record, use the official channel and explain the facts in chronological order. A portal acknowledgement, complaint number or filing receipt is part of the evidence and should be downloaded rather than assumed to remain available forever.

Rules and procedures can change, and the correct action depends on the exact transaction, policy, notice or account. Where money, limitation, criminal allegations, medical causation or a large tax position is involved, qualified professional advice should be obtained before taking an irreversible step.

Why Timing Matters

Tax problems become harder when the filing, notice or payment deadline passes. For this issue, the immediate control is: Identify the period in which the income arose. The response should identify the income period first because the applicable Act, return form, terminology and remedy can depend on when the income arose—not merely when the portal communication or payment occurred.

Keep a dated working paper that shows the original figure, the figure reported in the return or statement, the difference and the document that explains it. The minimum starting evidence is Year-wise tax calendar. When a number changes after feedback, source correction or a revised statement, preserve both versions so that the chronology remains visible.

Do not confuse a portal update with legal resolution. Acknowledgement of feedback, payment or upload proves submission, but the underlying tax credit, assessment or source report may still need correction. A recurring failure to avoid is Choosing the law based only on the date of filing. Review the final status separately and record the next statutory date.