Employers will feel the Income-tax Act, 2025 through payroll declarations, proof collection, TDS logic, employee FAQs and year-end certificates. A clean transition needs HR, payroll, finance and tax to work from the same calendar.
The Income-tax Act, 2025 comes into force from 1 April 2026, and the Department’s transition FAQ confirms repeal of the 1961 Act with savings for old/pending matters. Employers should therefore separate “current payroll under the 2025 Act” from “old-year corrections or disputes under the 1961 Act”.
| Workstream | Control |
|---|---|
| Payroll master | Update deduction and exemption labels to new statutory references where required. |
| Employee declarations | Use clear old-regime/new-regime language and keep employee acknowledgements. |
| Proof collection | Map old section labels to new Act references using official comparison utility. |
| TDS testing | Run parallel testing before first payroll close under the 2025 Act. |
| Employee communication | Explain that many changes are renumbering/reorganisation, not automatic benefit removal. |
Common mistakes include using old section references in new-year documents without explanation, changing payroll logic without testing, and not preserving employee options/declarations from the old Act where transitional rules require continuity.
This article is built only from official Income Tax Department and e-filing portal sources. Always verify the live Act, Rules, forms and tax calendar before filing.