Income Tax Act 2025: Key Changes Every Business Must Know from April 2026

India's new Income Tax Act, 2025 came into force on 1 April 2026, replacing the Income-tax Act, 1961 for Financial Year 2026-27 onwards. The aim is a simpler, more readable law, but for businesses it also means new terms, new section numbers and new form names.

Here are the changes you are most likely to notice in day-to-day compliance.

1. "Tax Year" replaces FY and AY

The separate ideas of "Previous Year" / "Financial Year" and "Assessment Year" have been merged into a single term: the Tax Year. The tax year runs from 1 April to 31 March, which is the same period as before, but it is now referred to by one name.

2. TDS and TCS have been reorganised

• The long list of TDS sections (194A, 194C, 194J and so on) has been consolidated under Section 393.
• TCS provisions earlier under Section 206C are now set out in a table under Section 394.
• Some old sections have been split into more than one new provision, so each type of payment needs to be mapped to the correct new section in your accounting software.

For most payments, TDS rates have not changed. What has changed is how they are labelled and reported.

3. New names for familiar forms

• Form 24Q – Form 138 – Quarterly TDS return on salaries
• Form 26Q – Form 140 – Quarterly TDS return on other payments to residents
• Form 27Q – Form 144 – Quarterly TDS return on payments to non-residents
• Form 27EQ – Form 143 – Quarterly TCS return
• Form 16 – Form 130 – TDS certificate for salary
• Form 16A – Form 131 – TDS certificate for non-salary payments
• Form 26AS – Form 168 – Annual tax credit statement

4. Revised TCS rates

Several TCS rates were revised from 1 April 2026. For example, TCS on the sale of scrap, minerals such as coal and iron ore, and alcoholic liquor moved from 1% to 2%, while TCS on overseas tour packages and on LRS remittances for education and medical purposes moved to a flat 2%.

5. What stays the same

• Income tax slabs for the tax year 2026-27 are unchanged.
• Quarterly TDS return due dates follow the familiar pattern (for example, the July–September quarter return is due by 31 October).
• Your obligation to deduct, deposit and report TDS on time continues exactly as before.

What businesses should do now

1. Update your accounting or payroll software so TDS and TCS entries use the new sections and forms.
2. Review vendor and payment mappings, especially for sections that were split.
3. Use the new form numbers in TDS certificates and returns from FY 2026-27 onwards.
4. Brief your accounts team so old references don't creep into new filings.

Need help with the transition?

StartupMates helps businesses move smoothly to the new Act, from TDS mapping and quarterly returns to income tax filing. Book a free consultation with our team.

This article is a general overview for information only. The new Act and its rules are detailed, so please refer to the official text or consult a professional before acting on any point.