Income Tax Decoded
Practical insights on compliance, planning, and the latest tax developments
India's direct tax code was replaced on 1 April 2026, for the first time in over six decades. The Income-tax Act, 2025 (Act 30 of 2025) supersedes the Income-tax Act, 1961. The Finance Act, 2026 had already amended the new statute before it came into force.
The restructuring is extensive. The Income Tax Department records that the 1961 statute's 819 sections and 14 schedules have been consolidated into 536 sections across 23 chapters and 16 schedules. Explanations and provisos have been absorbed into the body of each section; tables and formulas displace narrative drafting; obsolete provisions have been removed; and cross-references have been rationalised. The associated Rules have been reduced from 511 rules and 399 forms to 333 rules and 190 forms.
Tax rates, regimes, definitions, offences and penalties have been carried forward largely unaltered, and the tax administration structure remains intact. The reform is structural rather than fiscal.
For practitioners and in-house tax teams, the first live compliance deadline under the new Act falls on 7 May 2026, when Tax Deducted at Source for April must be deposited. The TDS regime has been reorganised around Sections 392, 393 and 394 of the new Act, which now govern salary TDS, other deductions, and Tax Collected at Source respectively. Rates and thresholds are set out in structured tables by payee category and transaction type, replacing the scattered provisions of Sections 192 to 194T under the 1961 Act. Quarterly return forms have changed as well, with Form 24Q giving way to Form 138 and Form 26Q to Form 140. The rates and monetary thresholds themselves are substantially unchanged. Our detailed TDS guide for Tax Year 2026-27 walks through the section-by-section mapping, the first deposit cycle, and the applicable return forms.
For FY 2025-26, the Income-tax Act, 1961 remains the governing statute for filing. From FY 2026-27 onwards, the new Act governs computation, assessment, refunds, appeals and search proceedings.
This category collects our writing on India's direct tax regime through the transition. Articles cover compliance under the new Act, Tax Deducted at Source, capital gains, tax controversy and dispute resolution, transfer pricing, and cross-border taxation for residents, non-residents and businesses operating in India.
