New Income-tax Act 2025 Is in Force: What “Tax Year” Means and What Stays the Same
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. “Tax Year” replaces FY and AY; slabs, the ₹12 lakh rebate and standard deduction stay. Plain-English guide.
In short: the Income-tax Act, 2025 came into force on 1 April 2026 and replaced the Income-tax Act, 1961. It was passed by Parliament in August 2025. The aim is simpler language and structure — the tax rates and slabs did not change because of the new Act.
Biggest visible change: one “Tax Year”
The old law used two terms — previous year (when you earn) and assessment year (when it is assessed). The new Act uses a single Tax Year: the financial year from 1 April to 31 March in which you earn the income.
| Income earned | Old wording | New wording |
|---|---|---|
| 1 Apr 2025 – 31 Mar 2026 | FY 2025-26 / AY 2026-27 | Taxed under the 1961 Act |
| 1 Apr 2026 – 31 Mar 2027 | FY 2026-27 / AY 2027-28 | Tax Year 2026-27 (2025 Act) |
What stays the same for most salaried people
- New regime is still the default. Slabs: up to ₹4 lakh nil, ₹4–8 lakh 5%, ₹8–12 lakh 10%, ₹12–16 lakh 15%, ₹16–20 lakh 20%, ₹20–24 lakh 25%, above ₹24 lakh 30%.
- No tax up to ₹12 lakh of taxable income in the new regime thanks to the rebate (₹12.75 lakh salary with the ₹75,000 standard deduction).
- The old regime with deductions such as 80C, 80D and HRA is still available if you choose it.
- Section numbers are renumbered in the new Act, so forms and notices may quote different section numbers for the same benefit.
Check your tax under both regimes with the income tax calculator.
Sources
Updated 2 October 2026. General information, not tax advice.
Frequently asked questions
What is a tax year under the Income-tax Act 2025?
It is the financial year from 1 April to 31 March in which you earn the income. It replaces the separate “previous year” and “assessment year”.
Did tax slabs change with the new Act?
No. The new Act changed the structure and wording, not the rates. The new-regime slabs and the ₹12 lakh rebate continue.
Which law applies to my income for 2025-26?
Income earned up to 31 March 2026 is taxed under the Income-tax Act, 1961.
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