India’s new income-tax law did not erase earlier years. From April 2026, taxpayers and advisers must operate two legal timelines without mixing their forms, terminology or proceedings.
Quick View
1 April 2026
Tax Year
AY 2026–27
Old years continue
What Matters Now
The Income-tax Act, 2025 applies to income earned from 1 April 2026 onward, described through the Tax Year concept. Income for FY 2026–27 is Tax Year 2026–27. The former assessment-year terminology is discontinued for income governed by the new Act.
Earlier periods do not migrate automatically. Returns for FY 2025–26, including AY 2026–27 filings made after April 2026, remain governed by the Income-tax Act, 1961 and the forms prescribed for that period. Assessments, appeals, refunds and other proceedings for earlier years continue under the savings provisions.
Businesses therefore need a dual-law calendar. June 2026 advance tax for Tax Year 2026–27 follows the new Act, while a July 2026 return for FY 2025–26 follows the old Act.
How It Works
| Stage | What happens | Control |
|---|---|---|
| Income period | Identify when the income arose. | Use 1961 Act for periods beginning before 1 April 2026. |
| Compliance type | Separate return filing from current-year TDS or advance tax. | Do not choose law only by filing date. |
| Proceedings | Earlier-year notices and appeals stay under the old framework. | Tag every matter by relevant year. |
| References | Map old sections, circulars and approvals to transition rules. | Retain the legal basis used. |
Decision Framework
Start with the exact decision being made. A payment choice, credit facility, investment, policy, remittance or compliance step should not be judged only by convenience or headline return. For Income-tax Act 2025: Which Law Applies Now?, the four useful lenses are new law start: 1 April 2026; new term: Tax Year; old return example: AY 2026–27; transition rule: Old years continue.
Next, identify the downside before considering the expected benefit. Ask how much money can be lost or delayed, which obligation becomes fixed, who controls the data or asset, what happens when the provider fails, and which official complaint or appeal route remains available. This converts a marketing claim into a testable decision.
Finally, define the review trigger. A rule change, missed payment, benefit revision, sharp market move, data incident, unresolved reconciliation or change in personal cash flow should reopen the decision. Evidence should be collected when the transaction occurs, not reconstructed after a dispute.
- Income period: Use 1961 Act for periods beginning before 1 April 2026.
- Compliance type: Do not choose law only by filing date.
- Proceedings: Tag every matter by relevant year.
- References: Retain the legal basis used.
Who Bears the Risk
| Participant | Primary responsibility | Failure to avoid |
|---|---|---|
| User or customer | Read the terms, authorise deliberately, preserve records and act within personal cash-flow or risk limits. | Selecting the law based only on payment date. |
| Provider or intermediary | Make accurate disclosures, operate the agreed process, protect data or assets and maintain a usable grievance route. | Calling AY 2026–27 a new-Act return. |
| Adviser or finance team | Apply the current rule to the actual facts, separate assumptions from evidence and explain material downside clearly. | Updating section numbers without checking substance. |
Regulation can allocate duties, but it cannot remove commercial or market risk. The safest operating approach is to know which participant owns each step and to escalate an exception before money, data or legal rights become difficult to recover.
Practical Example
Action Checklist
- Tag files by income period and governing Act.
- Update tax calendars for Tax Year terminology.
- Keep old-year forms and section references separate.
- Map TDS codes and certificates to the new framework.
- Train finance teams on parallel compliance.
- Review transitional elections, approvals and litigation.
Evidence to Keep
- Year-wise tax computation.
- Return form and acknowledgement.
- Advance-tax and TDS records.
- Notice and proceeding chronology.
- Section-mapping and legal position memo.
Warning Signs
- Selecting the law based only on payment date.
- Calling AY 2026–27 a new-Act return.
- Updating section numbers without checking substance.
- Closing old litigation because the Act was repealed.
- Combining old and new year calculations in one unsupported worksheet.
Common Questions
Which law covers income earned in FY 2025–26?
The Income-tax Act, 1961 continues to govern that period, including the corresponding AY 2026–27 return.
What is Tax Year 2026–27?
It is the year from 1 April 2026 to 31 March 2027 under the Income-tax Act, 2025.
Do old notices become invalid after April 2026?
No. The savings provisions preserve proceedings relating to earlier years.
Does accounting year change?
No. The Tax Year remains aligned with the financial year.
Official Sources
Rules, rates, product terms and portal processes can change. Use the latest official text and transaction-specific facts before acting.