Income Tax Act 2025

Apr 23, 2026

Income Tax Act 2025

Key Changes for Individuals

01. Key Procedural Changes — 1961 vs 2025

Category 1961 Act 2025 Act
Yearly Cycle Split: Previous Year + Assessment Year Single Tax Year (e.g., TY 2026–27)
Update Window 2 years to file updated returns 4 years (48 months) to update returns
Revised Return Due by 31 December Extended to 31 March
ITR-3/4 Deadline Due 31 July Extended to 31 August
Language Complex legal provisos and jargon Plain English; formulas replace long text

02. Old Regime Allowances — 1961 vs 2025

Allowance / Deduction 1961 Act Limit 2025 Act Limit
Children's Education ₹100 / month per child ₹3,000 / month per child
Hostel Expenditure ₹300 / month per child ₹9,000 / month per child
Festival Gift Exemption ₹5,000 per year ₹15,000 per year
Office Meal Exemption ₹50 per meal ₹200 per meal
Senior Citizen Interest (80TTB) ₹50,000 deduction ₹1,00,000 deduction
Interest-Free Loans ₹20,000 aggregate ₹2,00,000 aggregate

03. Renumbered Forms Directory

Purpose Old Number New Number
Annual Tax Statement Form 26AS Form 168
Salary TDS Certificate Form 16 Form 130
Salary TDS Return Form 24Q Form 138
Non-Salary TDS Return Form 26Q Form 140
Foreign Remittance Form 15CA Form 145
Tax Audit Report 3CA / 3CB / 3CD Form 26 (Unified)

04. New Regime Tax Slabs (2025 Act)

Default regime · Standard deduction ₹75,000

Income Slab Scale Rate
Up to ₹4 Lakh NIL
₹4L – ₹8L 5%
₹8L – ₹12L 10%
₹12L – ₹16L 15%
₹16L – ₹20L 20%
₹20L – ₹24L 25%
Above ₹24L 30%

Zero Tax up to ₹12.75 Lakh — New Regime (Effective April 2026)

With the ₹60,000 rebate + ₹75,000 standard deduction, resident individuals earning up to ₹12.75 Lakh pay zero income tax under the New Regime. Tax slab rates and Old vs New Regime choices remain unchanged.

What Stays the Same

  • Income tax slab rates & structure retained
  • Old Regime vs New Regime — both continue
  • Section 80C deductions (up to ₹1.5L) — Old Regime
  • HRA, LTA and salary exemptions — Old Regime
  • Standard deduction of ₹75,000 unchanged
  • TDS/TCS rates on salary, rent, interest
  • Capital gains rates (LTCG, STCG) unchanged
  • Loss carry-forward provisions continue

Your April 2026 Action Checklist

  • Note new 'Tax Year' — replaces FY/AY from April 2026
  • Update form refs: Form 16 → Form 130
  • Plan ITR filing by 31 August (non-audit cases)
  • Revised return now due 31 March (not Dec)
  • Verify tax credits on Form 168 (was Form 26AS)
  • Use 48-month window for prior-year corrections
  • Crypto / VDA holders: strengthen record-keeping
  • Consult your CA for transition-period advice

FOR INFORMATIONAL PURPOSES ONLY · CONSULT A QUALIFIED TAX PROFESSIONAL BEFORE FILING

Income Tax Act 2025

Business & Corporate Edition

01. Key Corporate & Procedural Changes — 1961 vs 2025

Category 1961 Act 2025 Act
Yearly Cycle Dual: Previous Year (PY) Assessment Year (AY) Single Tax Year (12 months from 1 April)
MAT Status Credit-generating mechanism at 15% Final Tax at 14% — no new credits going forward
Update Window 24 months to file updated returns 48 months to file updated returns
ICDS Standards Separate ICDS compliance required Abolished; integrated into IndAS (from 2027–28)
Revised Returns Due by 31 December Extended to 31 March
Digital Access Physical / specified asset searches only Access to Cloud, Social Media Email servers

02. Renumbered Forms — Payroll & TDS Impact

Purpose Old Number New Number
Annual Tax Statement Form 26AS Form 168
Salary TDS Certificate Form 16 Form 130
Non-Salary TDS Certificate Form 16A Form 131
Salary TDS Return Form 24Q From 138
Non-Salary TDS Return Form 26Q Form 140
Foreign Remittance Form 15CA Form 145
Tax Audit Report 3CA / 3CB / 3CD Form 26 (Unified)

03. Payroll Update — Increased Allowances (Old Regime)

HR & Payroll must update TDS calculations for employees on Old Regime

Allowance / Deduction 1961 Act Limit 2025 Act Limit
Children's Education ₹100 / month per child ₹3,000 / month per child
Hostel Expenditure ₹300 / month per child ₹9,000 / month per child
Festival Gift Exemption ₹5,000 per year ₹15,000 per year
Office Meal Exemption ₹50 per meal ₹200 per meal
Interest-Free Loans ₹20,000 aggregate ₹2,00,000 aggregate
Senior Citizen Interest (80TTB) ₹50,000 deduction ₹1,00,000 deduction

What Stays the Same

  • Corporate tax rate structure — unchanged
  • Dividend distribution treatment — unchanged
  • Capital gains tax rates (LTCG, STCG)
  • TDS/TCS rates on all payment categories
  • Section 80C and deductions under Old Regime
  • Carry forward of business losses and depreciation
  • Old Regime vs New Regime choice for eligible entities

04 Virtual Digital Assets (VDA)

  • Tax rate on VDA remains at 30% — no rate change
  • Broader definition: now captures NFTs, tokens and other digital assets
  • Tax authorities authorised to access crypto wallets and trading accounts during investigations
  • Businesses dealing in VDA must upgrade record-keeping systems

MAT Spotlight — Transition to Final Tax from 1 April 2026

Minimum Alternate Tax transitions from a credit-generating mechanism (15%) to a final tax at 14%. This eliminates complex credit tracking for future years. MAT credits accumulated up to 31 March 2026 remain available for set-off against future liability.

Action: Quantify all MAT credit balances before 31 March 2026.

05 Corporate Action Checklist for April 2026

Action Why It Matters
✓ Quantify MAT Credits Identify and document all MAT credit balances by 31 March 2026 for optimal future set-off before the transition.
✓ Prepare for ICDS Transition Begin aligning tax accounting with IndAS before the FY 2027–28 ICDS abolition. Early preparation avoids disruption.
✓ Audit PAN / AIS Data Flows Ensure PAN-linked transactions are accurate — automated AIS reconciliation leaves little room for error.
✓ Upgrade VDA Compliance If your business holds or deals in digital assets, strengthen reporting systems for the expanded VDA framework.
✓ Update Internal Form References Update finance and payroll systems: Form 16 → 130, Form 16A → 131, Form 26AS → 168. Ensure smooth TDS processing.
✓ Review Updated Return Opportunities Use the 48-month window to correct any under-reported income before the additional tax sliding scale increases.
✓ Engage Your CA / Tax Team Transition provisions are complex. Involve qualified professionals for planning under the new Act.
✓ Monitor CBDT Notifications Draft Income Tax Rules, 2026 are being finalised. Watch for rule changes that affect compliance procedures.

FOR INFORMATIONAL PURPOSES ONLY · CONSULT A QUALIFIED TAX PROFESSIONAL BEFORE FILING

Disclaimer:

“The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received, or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation.”

Author:
Shruthi

Prepared On:
23/04/26



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