Income Tax Act 2025: Complete Guide — Key Changes, New Section Numbers & What It Means for You

What is the Income Tax Act 2025?

The Income Tax Act 2025 is a full rewrite of India’s direct-tax law. The old Income-tax Act, 1961 had been amended close to 65 times over six decades. Every Budget added a proviso here, an Explanation there, a clause squeezed into an already-crowded section. The result was a law with 819 sections that even experienced chartered accountants found hard to read in one sitting.

Parliament tried this rewrite twice before. The first attempt, the Direct Taxes Code, was drafted in 2009 and tabled as a Bill in 2010, but it lapsed after a change of government, a delayed committee report, and criticism that the draft had become almost as complex as the Act it was meant to replace. The idea sat on the shelf for over a decade.

The second attempt succeeded. An Income-tax Bill came in February 2025 and went to a Select Committee, which returned 285 recommendations. Instead of amending it piecemeal, the government withdrew the Bill on 8 August 2025 and introduced a revised version folding in the Committee’s suggestions. That revised Bill passed the Lok Sabha on 11 August 2025, cleared the Rajya Sabha on 12 August 2025, and received the President’s assent on 21 August 2025 as Act 30 of 2025. It came into force on 1 April 2026. (Sources: iPleaders, taxguru, PIB) Note: this is no longer a Bill — it is the law, and it is in force.

What changed vs what stayed the same?

Almost every article mixing up the 2025 Act with other changes gets this backwards. Here is the clean split, verified against PIB, CBDT and multiple tax publishers.

CHANGED

• One “Tax Year” instead of two labels. The old “Previous Year + Assessment Year” pair is gone. A tax year runs 1 April to 31 March. The first tax year under the new Act is 2026-27. (taxguru, Ganak, virtualauditor)
• Every section number. All provisions were renumbered — see the mapping table below. Your old references (80C, 87A, 139, 44AB) still work for returns filed under the old Act, but from Tax Year 2026-27 you cite the new numbers.
• Plain language. About 1,200 provisos and 900 explanations were removed or absorbed into plain sentences. Long legal paragraphs were replaced with 39 tables and 40 formulas. (taxguru, TOI/PTI)
• TDS consolidated. Around 69 scattered TDS/TCS sections became three: Section 392 (TDS on salary), Section 393 (table-based TDS on everything else) and Section 394 (TCS). (Ganak)
• Taxpayer’s Charter as a statutory right. The charter is now written into the Act itself (Section 240), spelling out what the department must do for taxpayers. (noticereply)
• Wider digital-asset search powers. During tax-evasion investigations, officers have expanded access to emails, social media accounts and trading platforms. This has drawn some privacy concern. (taxguru)
• Faceless assessment gets a statutory basis rather than living only in scheme notifications. (taxguru)

STAYED

• Tax rates, slabs, surcharge and cess — all unchanged. The Act is revenue neutral. The nil-tax limit of ₹12 lakh, the 87A rebate of ₹60,000, the new-regime slabs, the 30% top rate — none of these changed in the Act itself. (PIB: “without altering the underlying tax policy”; Ganak; TOI: “no new taxes introduced”)
• Old-vs-new regime framework unchanged. The new regime stays the default; business-income taxpayers still file Form 10-IEA to opt out; salaried taxpayers without business income can still switch every year.
• Deduction limits unchanged. ₹1.5 lakh for 80C items, ₹25,000/₹50,000 for 80D, no cap on 80E, the 80G buckets — identical amounts, new numbers only.

The rule of thumb: if a rate or limit changed recently, that change came from a Finance Act (2024 or 2025), not from the Income Tax Act 2025. The 2025 Act only renumbered and rewrote.

New-regime slabs (unchanged by the Act)

For quick reference — these slabs are exactly as before:

87A rebate of ₹60,000 makes income up to ₹12 lakh effectively tax-free. Read our new-regime slabs guide and the 87A rebate guide for the full maths.

Transition rules: which Act applies to you?

The Act did not ask anyone to redo past returns. The rule is simple and was confirmed by PIB and multiple publishers:

• FY 2025-26 (AY 2026-27): returns filed for this year — including the ones you file in July 2026 — and all pending assessments, appeals and notices stay under the Income-tax Act, 1961. You keep citing old section numbers for them.
• Tax Year 2026-27 onward (income from 1 April 2026): the Income Tax Act 2025 applies. ITR forms for this year use the new section numbers.

Brought-forward losses and depreciation migrate into the new system. Business losses, unabsorbed depreciation and capital losses recorded under the 1961 Act carry forward into the new Act and can be set off against future income under the same rules as before. (virtualauditor, taxguru)

Practical example. Ritu, a salaried employee, files her FY 2025-26 return in July 2026. She uses the old numbering (80C, 87A, 139). When she plans tax saving from April 2026 for the next year, she starts using Section 123 (80C), Section 156 (87A) and Section 263 (139). The ₹12,000 rebate she gets at ₹11 lakh income works exactly the same — only the labels move.

What are the new section numbers?

This is the mapping everyone needs. Every entry below is verified against ClearTax’s published mapping or the enacted Act via multiple sources. Benefits, limits and eligibility are exactly the same — only the reference numbers changed.

Warning: many small blogs publish conflicting mappings (we found wrong numbers for 80D, 80E, 24(b) and standard deduction on three different sites while researching). Treat our verified conflict-resolved section table as the reference — each mapping above was cross-checked against at least two sources.

How will the changes affect me?

If you are salaried

1. Standard deduction: still ₹75,000 under the new regime and ₹50,000 under the old regime — it now sits under Section 19 instead of 16(ia).
2. HRA: same lowest-of-three calculation, now referenced as Section 11. The ₹1-lakh-plus rent-to-family disclosure (Form 124) applies from Tax Year 2026-27.
3. Salary TDS: your employer deducts under Section 392 now (old 192). The average-rate formula and Form 130 TDS certificate (old Form 16) flow from this.
4. Use the CBDT mapping tool on the e-filing portal’s “What’s New” section when you are unsure which new number matches an old one.

If you are a freelancer or professional

1. 44ADA → Section 58: 50% deemed profit, ₹50 lakh limit (₹75 lakh if 95%+ receipts are digital) — unchanged.
2. Client TDS on your fees moves from the 194J bucket into Section 393 tables. The 10% rate and ₹50,000 threshold stay.
3. Advance tax dates (15 Jun / 15 Sep / 15 Dec / 15 Mar) and percentages are unchanged; only the notices cite the new “Tax Year”.

If you run a business

1. 44AD → Section 57; tax audit → Section 63. The ₹1 crore / ₹10 crore (5% cash test) limits are unchanged.
2. Carry-forward losses recorded under the 1961 Act move into the new books; set-off rules continue.
3. Update your contracts and compliance checklists — any document citing old sections (loan agreements, inter-company invoices, audit engagement letters) should be updated to the new numbering.

How did we get here? (short history)

2009–2010: the first rewrite attempt, the Direct Taxes Code, lapsed after a change of government and criticism that the draft was almost as complex as the Act it replaced. February 2025: a fresh Income-tax Bill was introduced and sent to a Select Committee, which returned 285 recommendations. The government withdrew the original Bill on 8 August 2025 and brought back a revised version folding in the Committee’s suggestions. It passed both Houses on 11–12 August 2025, got Presidential assent on 21 August 2025 (Act 30 of 2025), and the Income-tax Rules, 2026 were notified on 20 March 2026. (Sources: iPleaders, PIB)

Frequently asked questions

When did the Income Tax Act 2025 come into force?

It came into force on 1 April 2026. Income earned on or after that date falls under the new Act. The Bill was passed by Parliament on 12 August 2025 and received Presidential assent on 21 August 2025.

What is the difference between the old and new Income Tax Act?

The new Act rewrites the old one in plain language — 819 → 536 sections, 47 → 23 chapters — renumbers every section, and replaces “Previous Year + Assessment Year” with a single “Tax Year”. Rates, slabs and deduction limits are unchanged.

What is a “tax year” under the new Act?

A tax year is the twelve-month period from 1 April to 31 March in which income is earned. It replaces the confusing dual system where income earned in a “Previous Year” was assessed in a separate “Assessment Year”. The first tax year under the new Act is 2026-27.

How many sections and chapters does the 2025 Act have?

The Act has 536 sections, 23 chapters and 16 schedules, down from 819 sections and 47 chapters in the heavily-amended 1961 Act. It also adds 39 tables and 40 formulas to replace dense legal prose. (PIB, TOI/PTI)

From which tax year does the 2025 Act apply?

From Tax Year 2026-27 — income earned between 1 April 2026 and 31 March 2027. Income for FY 2025-26 (the return you file in 2026) stays under the 1961 Act because that year falls before the commencement date.

Will my tax rates or slabs change under the new Act?

No. The Act is revenue neutral — no rates, slabs, surcharge or cess changed. The ₹12 lakh nil-tax threshold and ₹60,000 rebate under 87A (now Section 156) are exactly as before.

I am filing ITR in July 2026 for FY 2025-26 — which Act applies?

The Income-tax Act, 1961. Your income belongs to FY 2025-26 (AY 2026-27), which is before the new Act’s commencement. Use the old section numbers (80C, 87A, 139) for that return.

What happens to my brought-forward losses and depreciation?

They migrate into the new system unchanged. Business losses, unabsorbed depreciation and capital losses recorded under the 1961 Act carry forward into the new Act and can be set off against future income under the same rules. Depreciation rates stay the same.

Is the new regime still the default?

Yes. The new regime applies by default under Section 202 (old 115BAC). If you have business or professional income and want the old regime, file Form 10-IEA on or before the return due date. Salaried taxpayers without business income can switch regimes every year.

Official sources

• Income Tax Department e-filing portal — CBDT’s section-mapping tool is under the “What’s New” section
• PIB press release: Income-tax Act, 2025 in force from 1 April 2026 (1 Apr 2026)
• India Code — text of the enacted Act 30 of 2025

Disclaimer: Tax laws are subject to change. Always verify the latest provisions on the official portals or consult a qualified tax professional before filing.

Rohan Mehta

Editorial byline for eircicai income tax guides — covering the Income Tax Act, 2025, section renumbering, regime comparison, and deductions. Content is reviewed by Asuthod Rathod, CA.