From 1 April 2026, income tax in India is governed by the Income-tax Act, 2025. It replaces the Income-tax Act, 1961 and simplifies how years and sections are named. For most people, the tax rates themselves have not changed.
One tax year instead of two
The old law used two terms: the previous year, when you earned income, and the assessment year, when it was taxed. The new Act uses one, the tax year. Income earned from 1 April 2026 to 31 March 2027 falls in tax year 2026-27.
What has not changed
- The new regime slabs, and nil tax up to ₹12 lakh of taxable income, apply to tax year 2026-27 as they did to 2025-26.
- Returns for income earned up to 31 March 2026 are still filed under the old Act, with the usual due dates in 2026.
- Capital gains rates: 20% on short-term gains from listed equity, and 12.5% on long-term gains, with ₹1.25 lakh a year exempt for listed equity.
New section numbers to know
| Topic | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| TDS on purchase of property | Section 194-IA | Section 393(1) |
| Tax audit | Section 44AB | Section 63 |
More cities qualify for 50% HRA
From tax year 2026-27, Bengaluru, Hyderabad, Pune and Ahmedabad join Delhi, Mumbai, Kolkata and Chennai as cities where the HRA exemption can be up to 50% of salary. Surat stays at 40%.
Due dates for tax year 2026-27
| Return | Due date |
|---|---|
| Individuals without business income | 31 July 2027 |
| Business or profession, no tax audit | 31 August 2027 |
| Tax audit cases | 31 October 2027 |
| Transfer pricing cases | 30 November 2027 |
Ask us how the change affects your return, or try the income tax calculator for both years.
Sources: Income-tax Act, 2025; Finance Act, 2026; Income Tax Department.