Category: Income Tax & TDS Updates

New Tax Regime 2026: Slabs, the ₹60,000 Rebate and When the Old Regime Still Makes Sense

The new tax regime is now the default for individuals, and with the new tax regime rebate 87A of up to ₹60,000, resident individuals with taxable income up to ₹12 lakh pay no income tax. For many salaried people, that means a nil tax bill up to a salary of ₹12.75 lakh after the standard deduction.

Still, the old regime has not disappeared. For people with large deductions such as home loan interest, HRA and full 80C investments, it can sometimes work out cheaper. This guide sets out the slabs, how the rebate and marginal relief work, and a simple way to decide which regime suits you.

Key takeaways

New regime slabs: nil up to ₹4 lakh, then 5% to 30% in ₹4 lakh steps, with 30% above ₹24 lakh.
The rebate removes tax up to ₹60,000 where total income is up to ₹12 lakh; under the Income-tax Act 2025 this rebate is in section 156.
Salaried taxpayers get a ₹75,000 standard deduction under the new regime.
Marginal relief ensures that tax just above ₹12 lakh does not exceed the income above ₹12 lakh.
The old regime can still be better where total deductions are large, roughly ₹7–8 lakh or more at middle-income levels.

New tax regime slabs

These slabs have applied from FY 2025-26 and continue for tax year 2026-27 under the Income-tax Act 2025.

Taxable income	Rate
Up to ₹4,00,000	Nil
₹4,00,001 – ₹8,00,000	5%
₹8,00,001 – ₹12,00,000	10%
₹12,00,001 – ₹16,00,000	15%
₹16,00,001 – ₹20,00,000	20%
₹20,00,001 – ₹24,00,000	25%
Above ₹24,00,000	30%

A 4% health and education cess applies on tax plus surcharge. Surcharge for high incomes is capped at 25% under the new regime.

How the rebate works

The rebate is available to resident individuals. If total income does not exceed ₹12 lakh, the rebate equals the tax payable or ₹60,000, whichever is lower. The tax at exactly ₹12 lakh is ₹60,000 (₹20,000 on the 5% slab and ₹40,000 on the 10% slab), so it is fully covered.

A few points to keep in mind:

The rebate is not available to non-residents, HUFs or firms.
It does not cover tax on income taxed at special rates, such as certain capital gains, even if total income is below ₹12 lakh.
For FY 2025-26 returns filed under the 1961 Act, the same rebate is in section 87A.

Worked example: salary of ₹12.75 lakh

Gross salary: ₹12,75,000
Less standard deduction: ₹75,000
Taxable income: ₹12,00,000
Tax: ₹60,000; rebate: ₹60,000; tax payable: nil

Marginal relief just above ₹12 lakh

Without relief, crossing ₹12 lakh by a small amount would create a large jump in tax. Marginal relief limits the tax to the amount by which income exceeds ₹12 lakh.

Example: taxable income of ₹12,10,000.

Normal tax: ₹20,000 + ₹40,000 + 15% of ₹10,000 = ₹61,500
Income above ₹12 lakh: ₹10,000
Tax limited to ₹10,000, plus cess

Relief tapers off as income rises, and at roughly ₹12.7 lakh of taxable income it ceases to matter.

What you give up in the new regime

The new regime trades most deductions for lower rates. Generally, you cannot claim:

80C investments (PPF, ELSS, life insurance, home loan principal) and 80D health insurance;
HRA and leave travel concession exemptions;
interest on a home loan for a self-occupied house.

Deductions that remain available include the standard deduction for salaried employees and pensioners, the employer’s contribution to NPS within the prescribed limit, and a few others. Under the 2025 Act, the section numbers have changed (for example, the old 80C is now section 123), but the concepts are the same. Our guide to key changes in the Income-tax Act 2025 explains the new structure.

When the old regime still makes sense

A quick comparison for a salaried person with a gross salary of ₹18 lakh:

Scenario	New regime tax (incl. cess)	Old regime tax (incl. cess)
Deductions of ₹2.5 lakh (80C, 80D, standard deduction)	₹1,50,800	₹2,88,600
Deductions of ₹6.25 lakh (adds HRA and home loan interest)	₹1,50,800	₹1,71,600
Deductions of ₹8 lakh	₹1,50,800	₹1,17,000

Under the new regime, taxable income is ₹17.25 lakh after the ₹75,000 standard deduction. Under the old regime, the deductions above include its ₹50,000 standard deduction. As the table shows, the old regime starts winning only when deductions are substantial. People with a large home loan on a self-occupied house, significant HRA and full use of 80C and 80D are the typical candidates.

Choosing and switching

Salaried and other individuals without business income can choose the regime each year at the time of filing the return. Tell your employer your preferred regime at the start of the year so TDS is deducted accordingly.
Individuals with business or professional income who opt out of the new regime must do so by the due date in the prescribed form, and switching back is restricted, so the choice needs more care.
Run both computations every year. Changes in salary structure, a new home loan or a change in rent can alter the answer.

Frequently asked questions

Is income up to ₹12 lakh tax-free under the new regime?

Yes, for resident individuals, because the rebate of up to ₹60,000 wipes out the tax. It does not cover tax on special-rate income such as certain capital gains.

What is the tax-free salary limit under the new regime?

With the ₹75,000 standard deduction, a salary of up to ₹12.75 lakh results in nil tax, if there is no other income.

Can I switch between regimes every year?

Individuals without business income can choose each year while filing. Those with business income face restrictions on switching back after opting out.

Is the old regime still available in 2026-27?

Yes. It is optional and can be chosen where it results in lower tax, usually when deductions are large.

If you would like a quick side-by-side computation of the new and old regimes for your income, our tax team will be happy to help you choose with confidence.

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This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.

October 19, 2026

Income Tax Refund Delayed? Common Reasons and How to Track and Fix It

An income tax refund delay is one of the most common concerns after the filing season. You have filed your return, the refund is shown in your computation, and yet nothing has reached the bank. In most cases the cause is a simple, fixable issue such as verification, bank details or a pending communication from the Centralised Processing Centre (CPC).

This guide covers the usual reasons refunds get held up, how to read the refund status on the portal, and the practical steps to get things moving. It applies to returns for FY 2025-26 (AY 2026-27), which continue to be processed under the Income-tax Act 1961.

Key takeaways

Refunds are issued only after the return is e-verified and processed by CPC.
The refund is paid only to a pre-validated bank account linked to your PAN, and your PAN must be operative.
Mismatches between your return and TDS/AIS data often lead to adjustments or a pending proposal that needs your response.
A refund may be set off against an older demand, after prior intimation.
Where a refund is due, interest is generally payable at 0.5% per month under section 244A, subject to conditions.

First, check where your refund stands

Log in to the e-filing portal and go to e-File > Income Tax Returns > View Filed Returns. Each return shows its life cycle: filed, verified, processed, refund issued or refund failed. You can also check the refund status for a year through the refund status service linked from the portal.

Understanding the status tells you what to do next:

Status	What it means	What to do
Return filed, not verified	Processing has not started	E-verify within the time allowed
Verified, under processing	CPC is processing	Wait; check email and pending actions
Processed with refund determined	Refund sent to the bank	Allow some days for credit
Processed with adjustment	Refund reduced or nil	Read the intimation; rectify if wrong
Refund failed	Bank credit did not go through	Fix bank details and request a reissue
Response pending	CPC has raised a query	Respond in Pending Actions or Worklist

Common reasons for an income tax refund delay

1. Return not e-verified

A return is not treated as valid until it is verified. Verification through Aadhaar OTP, net banking or a digital signature is instant; a physical ITR-V takes longer. Returns verified late may also be treated as filed on the verification date.

2. Bank account not pre-validated

Refunds are credited only to a bank account that is pre-validated on the portal and linked to your PAN. A closed account, an IFSC change after a bank merger, or a name mismatch can cause a refund to fail. Check My Profile > My Bank Account and re-validate if needed.

3. PAN inoperative

If PAN is not linked with Aadhaar, it can become inoperative, and refunds are not issued while it remains so. Once linked and operative again, the refund can be processed.

4. Mismatch with TDS, AIS or Form 26AS

If you claim TDS that does not appear in the tax credit statement, or report income lower than the AIS, CPC may propose an adjustment. The refund then waits until you respond or the return is processed with the adjustment. Our guide to section 143(1) intimations explains these adjustments.

5. Defective return notice

If the return has a technical or data defect, a notice under section 139(9) is issued, and the refund waits until you correct it. See our guide to defective return notices.

6. Adjustment against an outstanding demand

If an earlier year shows a demand, CPC may adjust the refund against it after giving you prior intimation. Responding promptly, especially where the old demand is already paid or reduced, helps release the refund. Our guide on outstanding tax demand covers how to respond.

7. Additional review

Some returns are picked for further verification based on risk parameters or large refund claims. In such cases, keep an eye on your email and the portal for any request for information or clarification.

How to fix a failed refund: refund reissue

If the status shows refund failed, the portal allows a refund reissue request:

Go to Services > Refund Reissue and create a request.
Select the relevant return and a pre-validated bank account.
E-verify the request through Aadhaar OTP, EVC or a digital signature.
Track the status; the refund is re-sent to the selected account.

Before raising the request, make sure the account is active, the name matches your PAN records, and the account is enabled for electronic credit.

Interest on delayed refunds

Where a refund arises from excess TDS, TCS or advance tax, interest under section 244A is generally payable at 0.5% per month or part of a month, usually from 1 April of the assessment year (or the date of filing, if the return was filed late) to the date the refund is granted. Interest is not paid if the refund is less than 10% of the tax determined, and any delay attributable to the taxpayer is excluded. Interest on refund is taxable in the year it is received.

A quick checklist to avoid refund delays next year

File early and e-verify immediately.
Keep one primary bank account pre-validated and EVC-enabled.
Confirm PAN-Aadhaar linkage well before the filing season.
Match income and TDS with AIS and the tax credit statement before filing.
Clear or respond to any old demands shown on the portal.
Check your registered email and mobile regularly during processing.

Frequently asked questions

How long does an income tax refund take?

Straightforward returns are often processed within a few weeks of e-verification. The legal time limit for processing is nine months from the end of the financial year in which the return was filed.

Why does my refund show as failed?

Usually because of bank account issues such as a closed account, IFSC change, name mismatch or an account that is not pre-validated. Fix the details and file a refund reissue request.

Will I get interest if my refund is delayed?

Generally yes, at 0.5% per month under section 244A, subject to conditions such as the refund being at least 10% of the tax determined.

Can the department adjust my refund against old dues?

Yes, after giving prior intimation. Respond with reasons if the old demand is already paid, reduced or under appeal.

If your income tax refund is stuck or has been adjusted incorrectly, our team will be glad to review the status and help you with the right response.

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This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.

October 17, 2026

TDS on Salary: Old vs New Tax Regime in Brief (Tax Year 2026-27)

Your employer deducts TDS from your salary every month, and how much depends on one choice: old tax regime or new tax regime. From 1 April 2026, salary TDS falls under section 392 of the Income-tax Act, 2025 (earlier section 192). Here is a quick comparison for Tax Year 2026-27.

In brief

New regime is the default. Say nothing to your employer and TDS is deducted under it.
Income up to ₹12 lakh is tax-free under the new regime (₹60,000 rebate), so a gross salary of about ₹12.75 lakh attracts nil TDS.
The old regime wins only if your total deductions are large, roughly ₹7.5 lakh or more at higher salaries.
Your choice with the employer is only for TDS. Without business income, you can still switch regimes when filing your ITR.

Tax slabs: Tax Year 2026-27

Income slab	New regime	Old regime (below 60)
Up to ₹2.5 lakh	Nil	Nil
₹2.5 – 4 lakh	Nil	5%
₹4 – 5 lakh	5%	5%
₹5 – 8 lakh	5%	20%
₹8 – 10 lakh	10%	20%
₹10 – 12 lakh	10%	30%
₹12 – 16 lakh	15%	30%
₹16 – 20 lakh	20%	30%
₹20 – 24 lakh	25%	30%
Above ₹24 lakh	30%	30%

4% health and education cess applies on top in both regimes.

What each regime allows

Item	New regime	Old regime
Standard deduction	₹75,000	₹50,000
Rebate	Up to ₹60,000 (income ≤ ₹12 lakh)	Up to ₹12,500 (income ≤ ₹5 lakh)
HRA / LTA exemption	✗	✓
80C-type investments (PPF, ELSS, EPF, LIC)	✗	✓ up to ₹1.5 lakh
Health insurance (80D-type)	✗	✓
Home loan interest (self-occupied)	✗	✓ up to ₹2 lakh
Employer NPS contribution	✓ up to 14% of basic + DA	✓ up to 10% of basic + DA
Professional tax	✗	✓

Annual tax at different salary levels

The table compares the new regime with the old regime at two levels of deductions: ₹2.25 lakh (standard deduction + ₹1.5 lakh 80C + ₹25,000 health insurance) and ₹8 lakh (adding HRA, home loan interest and NPS). Figures include 4% cess.

Gross salary	New regime	Old (₹2.25L deductions)	Old (₹8L deductions)	Better choice
₹8 lakh	Nil	₹28,600	Nil	New
₹10 lakh	Nil	₹70,200	Nil	New
₹12.75 lakh	Nil	₹1,32,600	Nil	New
₹15 lakh	₹97,500	₹2,02,800	₹54,600	Old (if deductions ≈ ₹8L)
₹20 lakh	₹1,92,400	₹3,58,800	₹1,79,400	Old (if deductions ≈ ₹8L)
₹25 lakh	₹3,19,800	₹5,14,800	₹3,35,400	New
₹30 lakh	₹4,75,800	₹6,70,800	₹4,91,400	New

Annual tax payable (including cess) under each regime

Two things stand out. With ordinary deductions, the new regime is cheaper at every salary level. With very heavy deductions, the old regime edges ahead only in a narrow band, from just above ₹12.75 lakh to around ₹20 lakh; above that, the new regime’s lower slabs win again.

Monthly TDS at ₹20 lakh salary

Monthly salary TDS (annual tax ÷ 12) at a gross salary of ₹20 lakh

How to declare your choice

Step	What to do
Start of year (April)	Tell your employer if you want the old regime (Form 122 under the Income-tax Rules, 2026). If you do nothing, the new regime applies.
During the year	Submit investment declarations (old regime only). Employers generally do not reopen months already processed.
Jan – March	Submit proofs. Unproved deductions are dropped and TDS goes up in the last months.
After year end	Employer issues Form 130 (earlier Form 16) by 15 June 2027.
ITR filing	Compare both regimes again and pick the cheaper one (if you have no business income).

Bottom line

If your salary is up to about ₹12.75 lakh, choose the new regime: your TDS is nil. Above that, stay with the new regime unless your HRA, home loan interest and investments together come close to ₹8 lakh. Run both numbers before April, and again before you file.

For general information only, based on the position for Tax Year 2026-27. Section and form references under the Income-tax Act, 2025 and Rules, 2026 should be checked for your specific case.

Need help choosing a regime or setting up payroll TDS? Virevon Global Advisory LLP assists salaried individuals and employers with tax planning, TDS compliance and ITR filing. Talk to our team.

October 7, 2026

New Income Tax Form Numbers from 2026: Form 16, 26AS, 12BB and More Mapped

The new income tax forms 2026 are one of the most practical changes that came with the Income-tax Act 2025. Along with the new Act, the Income-tax Rules, 2026 took effect from 1 April 2026 and renumbered almost every form. The familiar Form 16 is now Form 130, Form 26AS is Form 168, and the employee investment declaration Form 12BB is Form 124.

The purpose of most forms has not changed, so this is mainly about knowing which number now means what, and which set applies to which year. This article maps the most commonly used forms, explains the transition and lists what employers, deductors and individuals should update.

Key takeaways

The Income-tax Rules, 2026 contain 333 rules and 190 forms, down from 511 rules and 399 forms, according to the Income Tax Department.
Form 16 is now Form 130, Form 16A is Form 131, and Form 26AS is Form 168.
Forms 15G and 15H are combined into a single Form 121.
The tax audit report in Forms 3CA, 3CB and 3CD is replaced by Form 26 for new-Act years.
Returns, certificates and audits for FY 2025-26 still use the old form numbers.

Why the forms were renumbered

The old Income-tax Rules, 1962 had grown over decades, with forms numbered in the order they were added: Form 10-IE, Form 3CEB, Form 26QB and so on. Some forms overlapped, and a few had become obsolete. The rewrite grouped forms by subject, merged similar ones and removed those no longer needed. The result is a shorter, more logical set, but one that requires everyone to relearn familiar numbers.

The new income tax forms 2026: old to new map

Purpose	Old form (1962 Rules)	New form (2026 Rules)
TDS certificate for salary	Form 16	Form 130
TDS certificate for other payments	Form 16A	Form 131
TCS certificate	Form 27D	Form 133
Quarterly TDS statement, salary	Form 24Q	Form 138
Quarterly TDS statement, other resident payments	Form 26Q	Form 140
TDS on property purchase and certain rent	Forms 26QB, 26QC	Form 141
Quarterly TDS statement, non-residents	Form 27Q	Form 144
Annual tax statement	Form 26AS	Form 168
Declaration for no TDS (individuals, senior citizens)	Forms 15G, 15H	Form 121
Employee claims for HRA, LTA, deductions	Form 12BB	Form 124
Application for lower or nil TDS	Form 13	Form 128
Foreign remittance information and certificate	Forms 15CA, 15CB	Forms 145, 146
Relief for salary arrears	Form 10E	Form 39
Foreign tax credit statement	Form 67	Form 44
Tax audit report	Forms 3CA, 3CB, 3CD	Form 26

For any form not listed here, use the mapping utility on the Income Tax Department’s website rather than guessing. Some forms were merged, so a single new number may replace more than one old form.

Which numbers apply to which year?

The new forms follow the new law, which applies from tax year 2026-27. The old forms continue for earlier years.

Salary for FY 2025-26: employers issued Form 16 in mid-2026 under the old rules. That is correct and does not need to be reissued.
Returns for FY 2025-26 (AY 2026-27): filed on the old ITR forms, with the tax audit report in Forms 3CA/3CB and 3CD. See our tax audit guide for FY 2025-26.
Deductions made from 1 April 2026: TDS certificates and quarterly statements relating to tax year 2026-27 use the new numbers, such as Form 130 and Form 138 for salary.
Corrections to old quarters: correction statements for periods before 1 April 2026 continue in the old format.

Example: a salaried employee in 2026-27

Priya works for a Noida-based company. In April 2026 she submits her proof of rent and investments using Form 124 instead of Form 12BB. Her employer deducts TDS on salary and reports it each quarter in Form 138. After March 2027, she receives Form 130 as her salary TDS certificate and checks her tax credits in Form 168 before filing her return for tax year 2026-27. In June 2026, she also received a Form 16 for FY 2025-26, which she used for her return filed in 2026.

What to update now

Employers and payroll teams

Replace Form 12BB templates with Form 124 in employee portals.
Update payroll software to generate Form 130 and file Form 138.
Revise employee communication and FAQs so staff know Form 16 is now Form 130.

Businesses that deduct or collect tax

Map each TDS return to its new form: Form 140 for resident non-salary payments and Form 144 for non-residents.
Issue Form 131 and Form 133 certificates for tax year 2026-27.
Update vendor onboarding checklists to request Form 121 where individuals claim no deduction.

Individuals

Submit Form 121 to banks instead of Form 15G or 15H where eligible.
Use Form 168 to check tax credits before filing returns for tax year 2026-27.
For foreign tax credit or salary arrears relief, note the new Forms 44 and 39.

Practical tips for the transition

Keep old and new forms in separate folders, labelled by year and law.
When a bank, employer or client asks for Form 16 or 15G, confirm which year they need; the answer decides the form.
Update standard contracts and engagement letters that quote form numbers.
Check that your accounting or ERP system prints the correct form number on certificates generated for each period; many systems allow year-specific templates.
Brief your finance and HR teams with a one-page mapping sheet. Most questions in the first year come from staff who search for an old number and cannot find it on the portal.
Read our explainers on the tax year concept and the Income-tax Act 2025 key changes for the wider context.

Frequently asked questions

What is the new number for Form 16?

Under the Income-tax Rules, 2026, the salary TDS certificate is Form 130. Form 16 continues only for FY 2025-26 and earlier years.

Is Form 26AS still available?

The annual tax statement continues as Form 168 for tax year 2026-27 onwards. Statements for earlier years remain available under the old name.

What replaces Forms 15G and 15H?

Both are replaced by a single Form 121 for declarations that tax need not be deducted on specified income.

Do I need to redo forms already filed for FY 2025-26?

No. Forms, certificates and returns for FY 2025-26 were correctly filed under the old rules and remain valid.

If you would like help updating your payroll, TDS processes or personal tax filings for the new income tax forms, our team is happy to assist.

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This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.

October 5, 2026

The ‘Tax Year’ Concept under the Income-tax Act 2025: Goodbye Previous Year and Assessment Year

For more than sixty years, Indian taxpayers had to juggle two years at once: income was earned in the “previous year” and taxed in the following “assessment year”. The tax year Income-tax Act 2025 concept replaces both with a single, intuitive term. From 1 April 2026, the year in which you earn income is simply your tax year.

It is a small change in wording with a big benefit in clarity. First-time filers no longer need to be told that income of 2026-27 is “assessed in 2027-28”, and businesses dealing with foreign group companies can use a term that sounds familiar. This article explains what the tax year means, how it works for new businesses, and how to handle the transition period when both old and new terms will be in use.

Key takeaways

Section 3 of the Income-tax Act, 2025 defines the tax year as the twelve-month financial year beginning on 1 April.
For a new business, profession or source of income, the first tax year runs from the date it begins until 31 March of that financial year.
Income earned from 1 April 2026 to 31 March 2027 is income of tax year 2026-27; the terms “previous year” and “assessment year” are not used under the new Act.
FY 2025-26 and earlier years continue to be described using previous year and assessment year, because the 1961 Act still governs them.
Update internal templates, contracts and communication so that the right term is used for the right period.

What the tax year means under the Income-tax Act 2025

Under the new Act, the tax year is the period of twelve months of the financial year starting on 1 April. The year in which income is earned and the year used to describe it are now the same. Returns, advance tax, TDS certificates and assessments all refer to the tax year.

Old terms and new terms side by side

Period of earning income	Old description (1961 Act)	New description (2025 Act)
1 April 2025 to 31 March 2026	Previous year 2025-26, assessment year 2026-27	Continues under the 1961 Act
1 April 2026 to 31 March 2027	Not applicable	Tax year 2026-27
1 April 2027 to 31 March 2028	Not applicable	Tax year 2027-28

So the return for income earned in 2026-27, which will be filed in 2027, is the return for tax year 2026-27. There is no separate assessment year label.

New businesses and new sources of income

The old law had a similar rule for new businesses, and the new Act keeps it in simpler words. If a business or profession is set up, or a new source of income comes into existence, during a financial year, the first tax year starts on that date and ends on 31 March of the same financial year.

Example: A private limited company is incorporated and commences business on 15 November 2026. Its first tax year runs from 15 November 2026 to 31 March 2027, and every subsequent tax year is a full financial year. The company does not need to prepare a separate longer period; its first set of tax computations covers four and a half months.

The same applies to an individual who begins freelancing, or who starts earning rental income from a newly acquired property, midway through the year. The income from that new source is computed from its start date within that tax year.

Special situations

The 1961 Act contained certain exceptions where income was assessed in the same year it was earned, for example in the case of persons leaving India permanently, discontinued businesses and some shipping income of non-residents. The new Act continues to deal with such cases through specific provisions, now described with reference to the tax year. If any of these situations applies to you, check the relevant provision of the 2025 Act rather than relying on older practice.

The transition: two sets of terms for a while

The Income-tax Act, 2025 applies to income of tax year 2026-27 onwards. The 1961 Act continues for earlier years through transition provisions. In practice, this means:

The return for FY 2025-26 is filed for assessment year 2026-27 under the 1961 Act. The same applies to the tax audit for FY 2025-26.
Notices for earlier years, such as scrutiny or reassessment, will continue to refer to assessment years.
Advance tax, TDS and TCS for 2026-27 are dealt with under the new Act and refer to tax year 2026-27.
New forms under the Income-tax Rules, 2026, such as Form 130 for salary TDS certificates, use the tax year.

For a broader overview of what else changed, see our guide to the Income-tax Act 2025.

Practical steps for businesses and individuals

Update document templates. Salary certificates, investment declaration requests, vendor TDS communications and board notes should refer to the tax year for 2026-27 onwards.
Label files carefully. In your records, keep folders for “AY 2026-27 (FY 2025-26)” and “Tax year 2026-27” distinct, so that nobody mixes up the governing law.
Review contracts. Agreements that refer to “assessment year” or “previous year” in tax clauses may need a simple update, particularly for multi-year arrangements.
Configure software. Accounting, payroll and TDS software should label periods correctly; most providers have released updates.
Brief your team. A short note explaining which term applies to which period avoids confusion in client and vendor communication.
Keep old references for old years. When replying to a notice for an earlier year, continue to use the assessment year and the 1961 Act sections quoted in it.

Why the change is helpful

The dual-year system was a regular source of errors: taxpayers selected the wrong assessment year while paying challans, or confused the year of a notice. Using a single tax year aligns India with the approach of many other countries, simplifies explanations for non-resident investors and should reduce such avoidable mistakes over time.

Frequently asked questions

What is a tax year under the Income-tax Act 2025?

It is the twelve-month financial year beginning on 1 April. For a new business or a new source of income, the first tax year starts on the date it begins and ends on the following 31 March.

Is assessment year 2027-28 the same as tax year 2026-27?

The period of income is the same, 1 April 2026 to 31 March 2027. However, the new Act uses only the term tax year 2026-27; the assessment year label is not used for this period.

Which year do I select for my FY 2025-26 return?

Assessment year 2026-27, since that year is still governed by the Income-tax Act, 1961.

Does the tax year change due dates for returns or advance tax?

The concept itself only changes terminology. Due dates are set by the Act and rules for each compliance, so check the dates notified for tax year 2026-27.

If you would like help moving your tax records and processes to the new tax year framework, our team is here to help.

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This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.

October 3, 2026

Taxation and Other Laws (Amendment) Act 2026: Key Income Tax Changes Explained

The Taxation and Other Laws Amendment Act 2026 received Presidential assent on 17 August 2026. It is the first significant set of amendments to the Income-tax Act, 2025 since the new law came into force on 1 April 2026, and it also amends the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007.

The Act replaces the Income-tax (Amendment) Ordinance promulgated on 5 June 2026 and adds further changes. Its focus is on investment, manufacturing and financial markets rather than on individual tax slabs, so most salaried taxpayers will see no change in their tax. Businesses with foreign investors, fund managers, REIT and InvIT structures, and electronics or data centre operations should read on.

Key takeaways

The Act received assent on 17 August 2026, after being passed by the Lok Sabha on 6 August and the Rajya Sabha on 10 August 2026.
Foreign institutional investors and the Bank for International Settlements are exempt from tax on interest and capital gains from government securities, with effect from 1 April 2026, subject to conditions.
The safe harbour for offshore funds managed from India has been simplified by removing four conditions.
Special purpose vehicles of business trusts face a higher surcharge of 25%, while unitholders receive an exemption on dividends from such SPVs.
New or extended exemptions support electronics manufacturing, bonded warehousing of components, rough diamond sales in notified zones and data centre services.

Background: from ordinance to Act

In June 2026, the Government issued an ordinance to exempt certain foreign investors’ income from government securities, with the aim of deepening the bond market and supporting inflows. An ordinance must be approved by Parliament to continue, so the Taxation and Other Laws (Amendment) Bill, 2026 was introduced in the Lok Sabha in August. The Bill carried the ordinance’s provisions forward and added a wider set of amendments. With the Act now in place, the ordinance stands repealed, and actions taken under it are protected.

Key changes in the Taxation and Other Laws Amendment Act 2026

Area	What changed	Effective from
FIIs and BIS in government securities	Exemption on interest and capital gains	1 April 2026
Offshore fund safe harbour	Four eligibility conditions removed	1 April 2026
Business trust SPVs	Surcharge increased to 25%; dividends exempt for unitholders	1 April 2026
Electronics capital goods	Exemption for foreign suppliers extended to tax year 2040-41	Extension of existing relief
Bonded warehouse components	New exemption for foreign companies	1 October 2026 to 31 March 2041
Rough diamonds in notified zones	New exemption for foreign sellers	1 October 2026 to 31 March 2041
Data centre services	Wider exemption, fewer approvals	1 April 2026
Payment modes	Updated reference for zero-charge electronic payment modes	On publication

1. Exemption for FIIs and BIS on government securities

Foreign institutional investors and the Bank for International Settlements are now exempt from income tax on interest and on capital gains arising from investment in government securities, with effect from 1 April 2026. The exemption depends on furnishing the prescribed information in the prescribed form and manner. For Indian businesses, the indirect benefit is a deeper and more liquid bond market.

2. Simpler safe harbour for fund management from India

The Income-tax Act offers a safe harbour so that an offshore fund managed by a fund manager in India does not create a taxable presence merely because of that management. The Act removes four conditions that fund managers had found difficult: a minimum of 25 members, a 10% cap on participation by a single investor, a minimum corpus of ₹100 crore, and a 25% limit on investment in a single entity. Other safeguards, such as limits on participation by Indian residents and conditions on the fund manager, continue.

3. Business trusts and their SPVs

REITs and InvITs hold assets through special purpose vehicles. The amendments raise the surcharge on SPVs of business trusts to 25%, and give unitholders an exemption on dividend income arising from such SPVs. The practical effect is a more uniform treatment of dividends at the unitholder level. Trust managers should revisit distribution models and investor communication for the current tax year.

4. Support for electronics manufacturing

Foreign companies that supply capital goods, equipment or tooling to contract manufacturers of specified electronic goods, such as mobile phones, laptops, tablets and servers, already enjoyed an exemption. The Act extends it to tax year 2040-41. A new exemption also covers foreign companies that store components in bonded warehouses for supply to Indian contract manufacturers, from 1 October 2026 to 31 March 2041.

5. Rough diamonds and data centres

Foreign mining companies and similar sellers of rough diamonds in notified special zones receive an exemption on income from such sales, for the same period from 1 October 2026. For data centres, the Act widens the exemption available to foreign companies procuring data centre services from India, including facilities leased and operated by an Indian company, and removes the need for individual notification.

6. Payment and Settlement Systems Act

The 1961 Act required certain businesses to offer prescribed electronic payment modes without charging a fee. With the new Act in force, the reference in the Payment and Settlement Systems Act has been updated so that the Government can notify such payment modes going forward.

Who should review these changes?

Businesses with foreign portfolio investors or those raising debt from overseas investors.
Fund managers running or planning offshore funds from India, including from GIFT City.
REIT and InvIT sponsors, managers and SPVs.
Electronics manufacturers and their foreign suppliers, including logistics partners operating bonded warehouses.
Data centre operators providing services to foreign customers.

For most individuals and small businesses, the amendments do not change tax rates, slabs or deductions. It remains important, however, to follow the new Act’s structure, which we explain in our guide to the Income-tax Act 2025.

Practical next steps

Map the changes to your structure: identify which provisions touch your investors, entities or supply chain.
Check the effective dates: some provisions apply from 1 April 2026, others only from 1 October 2026.
Review contracts and offer documents: tax clauses and investor disclosures may need updating.
Plan documentation: several exemptions depend on prescribed information or conditions being met.
Monitor rules and notifications: the details of forms and procedures will follow through rules published by the CBDT on the Income Tax Department website.

Frequently asked questions

When did the Taxation and Other Laws (Amendment) Act 2026 come into force?

It received Presidential assent on 17 August 2026. Several provisions apply retrospectively from 1 April 2026, while others take effect from 1 October 2026 or from publication.

Does the Act change income tax slabs for individuals?

No. The amendments focus on investment, business trusts, manufacturing and related areas. Individual slab rates are unchanged by this Act.

What happened to the June 2026 ordinance?

The Act replaces the Income-tax (Amendment) Ordinance, 2026. Its provisions for FIIs and BIS continue through the Act, and the ordinance itself stands repealed.

Which law does the Act amend?

Mainly the Income-tax Act, 2025, together with the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007.

If you would like to understand how the Taxation and Other Laws (Amendment) Act 2026 applies to your business or investors, we would be happy to talk it through.

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This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.

October 2, 2026

Income-tax Act 2025: Key Changes Every Taxpayer Should Know

The Income-tax Act 2025 came into force on 1 April 2026, replacing the Income-tax Act, 1961 after more than six decades. Parliament passed the new law in August 2025, it received Presidential assent on 21 August 2025, and the Income-tax Rules, 2026 were notified on 20 March 2026 to put it into operation.

For most taxpayers, the headline message is reassuring: the new Act is primarily a rewrite for clarity, not a new tax policy. Rates, the broad treatment of income and familiar systems such as PAN, TAN and faceless assessment continue. What changes is the language, the numbering and some of the concepts you will see on forms and notices. Here is what every taxpayer and business should know.

Key takeaways

The Income-tax Act 2025 applies from 1 April 2026, so income earned in the tax year 2026-27 onwards is governed by it.
The Act has 536 sections and 16 schedules, compared with over 800 sections in the 1961 Act, with provisos and explanations folded into the main text and many rules shown as tables.
“Previous year” and “assessment year” are replaced by a single “tax year”.
Section and form numbers have changed, so documents such as Form 16 and Form 26AS now carry new numbers.
Returns, audits and proceedings for FY 2025-26 and earlier years continue under the 1961 Act through transition provisions.

Why a new Income-tax Act 2025?

Over the years the 1961 Act grew through hundreds of amendments. Sections such as 80-IA or 80-IB sat alongside provisions numbered with multiple letters, and a single sentence could run across several provisos. That made the law harder to read and increased the room for disputes.

The Government’s stated aim was a simpler, modern code with a reduced compliance burden. According to the Income Tax Department, rules have been reduced from 511 to 333 and forms from 399 to 190. The drafting uses shorter sentences, tables and formulas, and removes provisions that had become obsolete.

The main changes at a glance

1. A single “tax year”

Under the old law, income earned in a “previous year” was assessed in the following “assessment year”. This was a common source of confusion, especially for first-time filers. The new Act uses one term, the tax year, which is the financial year from 1 April to 31 March. Income earned from 1 April 2026 to 31 March 2027 is income of tax year 2026-27. Our upcoming guide on the tax year concept explains this in more detail.

2. New section numbers

Almost every provision has moved. A few commonly used examples are shown below. Always check the official mapping before quoting a section in a return or reply.

Provision	Income-tax Act, 1961	Income-tax Act, 2025
Exempt incomes	Section 10	Section 11
New tax regime	Section 115BAC	Section 202
Rebate for resident individuals	Section 87A	Section 156
Return of income	Section 139	Section 263
TDS provisions	Sections 192 to 194T	Consolidated in section 393

3. TDS and TCS in tables

TDS provisions that were spread across dozens of sections are now largely consolidated, with the nature of payment, threshold and rate set out in tables. For deductors, this means updating accounting software, deduction masters and vendor communication to refer to the new provisions.

4. New form numbers

The Income-tax Rules, 2026 renumber most forms. For example, the salary TDS certificate earlier called Form 16 is now Form 130, Form 16A is Form 131, the employee declaration in Form 12BB is Form 124, and the annual tax statement earlier known as Form 26AS is Form 168.

5. What has not changed

Tax rates and slabs: the new Act did not itself change the slab rates, which continue as set by the Finance Act.
Heads of income: salary, house property, business or profession, capital gains and other sources remain.
Core deductions: popular deductions continue, although under new section numbers.
Administration: PAN, TAN, e-filing and the faceless assessment framework continue.

What happens to earlier years?

This is the question we hear most often. The transition provisions ensure that the old law continues to apply to periods before 1 April 2026. In practice:

The return for FY 2025-26 (assessment year 2026-27) is filed under the 1961 Act.
A tax audit for FY 2025-26 is conducted under section 44AB, with Form 3CD. See our guide to the tax audit for FY 2025-26.
Pending assessments, appeals and reassessments relating to earlier years continue, and registrations and approvals granted under the old Act generally remain valid where consistent with the new law.

This means that for the next few years, many businesses will work with both Acts in parallel.

A practical checklist for businesses

Update your accounting and payroll systems so that TDS sections, forms and certificates reflect the new numbering from tax year 2026-27.
Revise templates for invoices, vendor declarations, investment proof collection and salary certificates that quote old section numbers.
Brief your finance team on the tax year concept and on which Act applies to which period.
Keep a mapping sheet of the sections you use regularly, cross-checked with the official comparison published by the Department.
Review agreements that refer to specific sections of the 1961 Act, such as tax clauses in contracts, and consider whether updates are needed.
Watch for guidance in the form of FAQs, circulars and amendments. The Taxation and Other Laws (Amendment) Act 2026 has already made further changes.

Tips for individual taxpayers

For salaried individuals, the change will be visible mainly in paperwork. Your employer will issue the TDS certificate in Form 130 for tax year 2026-27, and you will submit investment details to your employer in Form 124. When you check your tax credits, look for Form 168. If an older notice or document refers to a 1961 Act section, that is normal, as long as it relates to a year before 1 April 2026.

Frequently asked questions

When did the Income-tax Act 2025 come into force?

It came into force on 1 April 2026. It received Presidential assent on 21 August 2025, and the Income-tax Rules, 2026 were notified on 20 March 2026.

Have income tax rates changed under the new Act?

The new Act is mainly a simplification. It did not itself change the tax rates or slabs; these continue to be set through the annual Finance Act.

Which law applies to my return for FY 2025-26?

The Income-tax Act, 1961. The new Act applies to income of tax year 2026-27 onwards, and the transition provisions keep earlier years under the old law.

Do I need to learn the new section numbers?

It helps to know the ones you use often. For everything else, the Department’s comparison tables are the safest reference.

If you would like help understanding how the Income-tax Act 2025 affects your business or personal taxes, our team is here to help.

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This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.

October 1, 2026

Tax Audit for FY 2025-26: Due Date, Applicability and Preparation Checklist

The tax audit due date 2026 for FY 2025-26 (assessment year 2026-27) has moved. On 28 September 2026 the Central Board of Direct Taxes (CBDT) announced that the tax audit report, originally due on 30 September 2026, can now be furnished by 21 October 2026, and the related income tax return by 21 November 2026.

This is welcome breathing space, but three weeks passes quickly when books still need closing, confirmations are pending and the audit itself has to be completed. This guide explains who needs a tax audit for FY 2025-26, the dates that now apply, and a practical checklist to help your business hand over clean, well-organised records.

Key takeaways

The tax audit report for FY 2025-26 is now due by 21 October 2026, and the ITR for audited taxpayers by 21 November 2026, as announced by the CBDT on 28 September 2026.
FY 2025-26 is still governed by the Income-tax Act, 1961, so the audit is under section 44AB and reported in Form 3CA or 3CB with Form 3CD.
Businesses generally need an audit above ₹1 crore turnover, or above ₹10 crore where cash receipts and cash payments are each within 5% of the total.
Transfer pricing cases (Form 3CEB) follow their own timeline and are not covered by this extension, so check separately.
Starting preparation now, with a reconciled trial balance and supporting schedules, keeps the process smooth and reduces last-minute queries.

Tax audit due date 2026: what changed

The normal timeline for taxpayers requiring an audit is a report by 30 September and a return by 31 October. After requests from taxpayers and professional bodies, the CBDT extended both dates for assessment year 2026-27.

Compliance for FY 2025-26	Original due date	Revised due date
Tax audit report (Form 3CA/3CB with Form 3CD)	30 September 2026	21 October 2026
ITR for taxpayers requiring a tax audit	31 October 2026	21 November 2026
Transfer pricing cases (Form 3CEB)	Separate timeline	Not covered by this extension

The relief applies to taxpayers covered by clause (a) of Explanation 2 to section 139(1), which includes companies and assessees whose accounts must be audited. If your case involves international or specified domestic transactions, or you are unsure which category you fall into, confirm the applicable dates on the Income Tax Department portal before planning around them.

A note on the new Act

The Income-tax Act, 2025 came into force on 1 April 2026 and replaces “previous year” and “assessment year” with a single “tax year”. That regime applies to income earned from 1 April 2026 onwards. The accounts for FY 2025-26, and the audit you are completing now, remain under the 1961 Act, its sections and its forms.

Who needs a tax audit for FY 2025-26

Section 44AB sets out the thresholds. In simple terms:

Businesses: turnover or gross receipts above ₹1 crore. The limit rises to ₹10 crore where aggregate cash receipts and aggregate cash payments are each not more than 5% of the respective totals.
Professionals: gross receipts above ₹50 lakh.
Presumptive taxation cases: a business opting for section 44AD, or a professional under section 44ADA, who declares profit below the presumptive rate and whose income exceeds the basic exemption limit may need an audit.
Businesses that opted out of 44AD: where the five-year lock-in rules apply, audit may be required even at lower turnover levels.

A private limited company or LLP whose accounts are already audited under another law still needs a separate tax audit report if it crosses these thresholds. In that case, the report is given in Form 3CA; otherwise it is Form 3CB. Both are accompanied by Form 3CD, the detailed statement of particulars.

What the tax audit report covers

Form 3CD is detailed, and much of the effort goes into gathering evidence for its clauses. Some of the areas that typically take the most time are:

Turnover and GST reconciliation: matching books with GSTR-1, GSTR-3B and, where applicable, the annual return.
Payments to MSME suppliers: identifying amounts payable to micro and small enterprises beyond the permitted period under section 43B(h).
TDS and TCS compliance: deductions made, deposited and reported, plus any short or late deductions.
Cash transactions: loans and deposits taken or repaid, and receipts that may attract sections 269SS, 269ST or 269T.
Related-party payments and disallowances: under sections 40A(2)(b), 40(a) and 43B.
Depreciation schedule: additions, deletions and put-to-use dates as per the Act.
Quantitative details: for manufacturing and trading businesses, opening stock, purchases, sales and closing stock by quantity.

Tax audit preparation checklist

Use this as a working list for the next few weeks. Assigning an owner and a date to each item helps the whole team move at the same pace.

Finalise the books: close all entries for FY 2025-26, pass year-end provisions and lock the period.
Reconcile bank and loan accounts: every account, including closed or dormant ones, should tie to statements as of 31 March 2026.
Prepare party-wise ledgers: debtors, creditors, advances and loans, with balance confirmations where possible.
Match GST data: turnover per books versus GST returns, and input tax credit per books versus GSTR-2B.
Compile the TDS workbook: section-wise deductions with challans and quarterly return acknowledgements.
Tag MSME vendors: keep Udyam registration details and payment dates ready for the 43B(h) review.
Update the fixed asset register: invoices and dates for additions, and sale proceeds for disposals.
Stock records: closing inventory valuation method, stock statements given to banks, and quantitative reconciliation.
Collect statutory documents: PF and ESI challans, loan agreements, partnership deed or MOA, and any earlier tax orders.
Review the AIS and Form 26AS: check that income reported by others matches your books before the ITR is filed.

Penalty for missing the deadline

If a taxpayer required to get accounts audited fails to furnish the report by the due date, section 271B allows a penalty of 0.5% of turnover or gross receipts, subject to a maximum of ₹1,50,000. Section 273B provides that no penalty is levied where there was a reasonable cause for the failure, but it is far better not to rely on that. A late or incomplete report can also make the related return defective and invite further queries during scrutiny.

The practical answer is simple: plan your timeline back from 21 October and give yourself a buffer for the report upload and acceptance on the portal.

After the audit: filing the return

Once the report is uploaded and accepted by the taxpayer on the e-filing portal, the ITR can be finalised using figures consistent with the audited accounts and Form 3CD. Keep the audit working papers and supporting schedules organised, because they are the first thing you will need if you later receive a notice. Our guide on replying to a scrutiny notice under section 143(2) explains why good documentation at this stage saves time later. For indirect tax developments that may affect your reconciliations, see our note on the 57th GST Council meeting.

Frequently asked questions

What is the tax audit due date for FY 2025-26?

Following the CBDT announcement of 28 September 2026, the tax audit report for FY 2025-26 (AY 2026-27) is due by 21 October 2026, and the related ITR by 21 November 2026.

Does the extension apply to transfer pricing cases?

No. Taxpayers who must furnish Form 3CEB for international or specified domestic transactions follow a separate timeline. Check the dates applicable to your case on the official portal.

Is the tax audit for FY 2025-26 under the new Income-tax Act 2025?

No. The Income-tax Act, 2025 applies from 1 April 2026. FY 2025-26 accounts are audited under section 44AB of the Income-tax Act, 1961 using Forms 3CA/3CB and 3CD.

What is the turnover limit for tax audit?

For a business, ₹1 crore, rising to ₹10 crore where cash receipts and cash payments are each within 5% of the totals. For professionals, gross receipts above ₹50 lakh. Presumptive taxation cases have their own conditions.

If you would like help organising your records, reconciliations and schedules for the tax audit, our team is happy to support you.

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This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.

September 30, 2026