Does the new Income-tax Act change how much tax I pay?

No. The 2025 Act kept the slabs, rates, rebate and standard deduction. Budget 2026 did not change them either, so tax for 2026-27 works out the same as for 2025-26 on the same income.

No. The deduction is now section 123 of the 2025 Act, with the same ₹1,50,000 limit, and it is still available only in the old regime.

Which section numbers do I use for my 2025-26 return?

The old ones. Income of financial year 2025-26 is taxed under the 1961 Act, so that return uses 80C, 80D and so on. New numbers apply from tax year 2026-27.

Is the old tax regime still available under the new Act?

Yes. The new regime (section 202) is the default, and individuals can still choose the old regime with its deductions.

Home › Learn › Income tax › Income-tax Act, 2025: what changed and what did not

Income-tax Act, 2025: what changed and what did not

Updated 11 October 2026

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026, so tax year 2026-27 is the first year taxed under it. It rewrites the law in simpler language, renumbers almost every section and replaces "previous year" and "assessment year" with one "tax year". It does not change tax rates, slabs, the rebate or the main deduction limits.

The new Act at a glance

Passed by Parliament in August 2025 and received the President's assent on 21 August 2025.
In force from 1 April 2026.
About 536 sections in 23 chapters and 16 schedules, down from more than 800 sections in the 1961 Act. Many rules that were scattered through provisos and explanations are now set out in tables.
The Income-tax Rules, 1962 have been replaced by the Income-tax Rules, 2026, notified by CBDT in March 2026, with new form numbers.

You can read the Act and the rules on the Income Tax Department's website.

One "tax year" instead of two years

Under the 1961 Act, income earned in the previous year (say 2025-26) was assessed in the following assessment year (2026-27). This confused many people. The 2025 Act uses just the tax year: the 12 months from 1 April to 31 March in which you earn the income. Income earned from April 2026 to March 2027 belongs to tax year 2026-27, and you file its return in 2027. See tax year vs assessment year for the overlap that trips people up.

Old and new section numbers

The sections salaried people know best have new numbers. The benefits behind them are the same.

What it covers	1961 Act	2025 Act
Standard deduction, professional tax	16(ia), 16(iii)	19
Gratuity, commuted pension, leave encashment exemptions	10(10), 10(10A), 10(10AA)	19
HRA exemption	10(13A)	11, read with the Schedules and Rule 279 of the 2026 Rules
Home loan interest	24(b)	22(1)(b)
PF, PPF, ELSS, life insurance (₹1.5 lakh)	80C	123
Your own NPS contribution, within the ₹1.5 lakh limit	80CCD(1)	123, with 80C items (Schedule XV)
Extra ₹50,000 for your own NPS contribution	80CCD(1B)	124(3)
Employer's NPS contribution	80CCD(2)	124(1)
Health insurance	80D	126
Education loan interest	80E	129
Donations	80G	133
Rent paid without HRA	80GG	134
Savings and deposit interest	80TTA, 80TTB	153
Disability deduction	80U	154
Rebate	87A	156
Relief on salary arrears	89	157
New tax regime	115BAC	202
TDS on salary	192	392

Many people will keep saying "80C" for years, and that is fine. Investment proofs, Form 130 and the return will use the new numbers for tax year 2026-27 onwards.

New form numbers

Form 16 becomes Form 130: the salary TDS certificate, due by 15 June after the tax year. See Form 16 and Form 130.
Form 12BB becomes Form 124: the declaration of rent, investments and loans you give your employer for TDS.
Form 24Q becomes Form 138: the employer's quarterly TDS statement for salary.

One real change: HRA in eight cities

Alongside the Act, Rule 279 of the Income-tax Rules, 2026 widened the higher HRA limit. From tax year 2026-27, the 50% of salary limit applies in Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Earlier only the first four qualified and everyone else got 40%. This matters only in the old regime, since the new regime allows no HRA exemption.

Worked example. Karan works in Pune with basic salary of ₹6,00,000, HRA of ₹3,00,000 and rent of ₹4,20,000 a year. HRA exemption is the least of: actual HRA ₹3,00,000; rent minus 10% of salary = ₹4,20,000 − ₹60,000 = ₹3,60,000; and the city limit.
Until 2025-26, Pune's limit was 40% of ₹6,00,000 = ₹2,40,000, so the exemption was ₹2,40,000.
From 2026-27 the limit is 50% = ₹3,00,000, so the exemption is ₹3,00,000.
Extra exemption = ₹60,000. At the 30% slab, that saves ₹18,000 + 4% cess = ₹18,720 a year.

Work out your own figure with the HRA exemption calculator or read the HRA exemption guide.

What did not change

Slabs and rates in both regimes, the 4% cess and the surcharge rates.
The rebate (₹60,000 new, ₹12,500 old) and the standard deduction (₹75,000 new, ₹50,000 old).
Deduction limits such as ₹1.5 lakh for section 80C (now 123) and ₹2 lakh for home loan interest.
Your choice between the new regime (default) and the old regime.
The five heads of income, your PAN, and filing on the e-filing portal.

Which Act applies to which year

Income earned up to 31 March 2026 (financial year 2025-26, assessment year 2026-27) stays under the 1961 Act. The return for that year, filed in 2026, uses the old section numbers, and employers issued Form 16 for it. Notices and assessments for old years also continue under the old law. Everything from 1 April 2026 falls under the 2025 Act.