Income Tax Act 2025 — Frequently Asked Questions

Yes — on 1 April 2026. We are currently in Tax Year 2026-27, and this year's income is governed by the new Act. However, the FY 2025-26 (AY 2026-27) return filed around July 2026 belongs entirely to the old Act 1961.

No. The 2025 Act is a rewrite of the statute — fewer sections (819→536), plainer language, fresh numbering. Slabs, deduction limits and rebates are the same, and rates will continue to come through the annual Finance Act (Budget) as always.

No! The FY 2025-26 (AY 2026-27) filing uses the old Act's forms and the old section numbers. New numbers apply from Tax Year 2026-27 — that is, from the July 2027 filing onwards.

Yes (in the new regime). If your taxable income is within ₹12L, the Section 156 (old 87A) rebate (up to ₹60,000) reduces your tax to zero. With the ₹75k standard deduction, salaried gross income of ₹12.75L pays nothing. Caveat: special-rate income (equity STCG, crypto, lottery) doesn't get this rebate. See the example.

The New Regime (Sec 202) is the default — do nothing and it's applied. To use the old regime, opt out while filing the ITR. Salaried taxpayers may switch every year; business income has switching restrictions (one return trip only). Decision guide.

The formula is the same — least of three. But the Income Tax Rules 2026 (Rule 279) added Bengaluru, Hyderabad, Pune and Ahmedabad to the 50% metro list (now 8 cities). And remember: the HRA exemption exists only in the old regime. See the calculation.

80C is now Section 123 — the ₹1.5L limit and the eligible investments are identical (PPF, ELSS, LIC, EPF, principal repayment, tuition...). Similarly 80D → 124, 80E → 125. No benefit was removed — only the address changed. These remain old-regime-only. Full list.

Profit attracts a flat 30% + 4% cess, with 1% TDS on every sell/transfer. No loss set-off (not even against other crypto profits), no carry-forward, and no ₹12L rebate. VDAs are now formally defined in the Act itself. See the example.

60+ sections became three: 392 (salary), 393 (everything else — with a payment-code table 1001–1067), and 394 (TCS). Rates and thresholds are unchanged. Rate chart.

Most notices are information requests or AIS mismatches, not charge sheets. Faceless proceedings are now statutory — everything is handled online. Log in, read the notice, respond within the deadline, and take a CA's help if needed. Ignoring it is the worst option.

Up to 48 months (4 years) from the end of the tax year — earlier it was 24 months. The later you file, the higher the additional tax (25%→70%). Correcting voluntarily before a notice is always cheaper. Details.

Form 16 is the TDS certificate your employer issues (Sec 392/old 192) — Part A shows tax deposited, Part B your salary and deduction breakup. It's not mandatory for filing if you have AIS/Form 168 + payslips. It now carries the 'Tax Year' label. Full guide.

Check in order: (1) return e-verified? (2) bank account pre-validated? (3) PAN–Aadhaar linked? (4) refund status on the portal — 'adjusted' means an old demand was set off; check the intimation. Eligible delayed refunds earn 0.5%/month interest. Step-by-step fixes.

₹97,500 in the new regime (incl. 4% cess) — taxable ₹14.25L after the ₹75k standard deduction. Monthly TDS ≈₹8,125; in-hand ≈₹1.09L. Full working.

Yes for salaried residents in the new regime: ₹12,75,000 minus ₹75,000 standard deduction = ₹12,00,000 taxable — exactly at the rebate line — so the Section 156 (old 87A) rebate makes tax zero. Proof.

ITR-2. Any capital gains, crypto (Schedule VDA), foreign assets or income above ₹50L disqualifies ITR-1; F&O/intraday trading needs ITR-3. Decision table.

Individual/HUF tenants deduct 2% under 194-IB when monthly rent exceeds ₹50,000 — no TAN needed; deposit via Form 26QC. Companies deduct 10% above ₹50,000/month under 194-I (raised from ₹2.4L/year by Budget 2025). Details.

File belated by 31 December (₹1,000/₹5,000 fee), revise a filed return by 31 March (free till 31 December), or file ITR-U within 48 months with graded extra tax. All deadlines.

First verify: submit feedback on genuinely wrong entries. For genuine misses, revise your return (till 31 March) or file ITR-U — voluntary correction before a notice is far cheaper. Mismatch guide.

No. This is an educational resource explaining the 2025 Act in plain English. For the authoritative text, refer to incometax.gov.in and CBDT circulars, and consult your CA before personal tax decisions.