New IT Act 2025 Is Live — Your ITR Is Still the Old Law
Quick Answer
The Income-tax Act, 2025 took effect on 1 April 2026, but your ITR for FY 2025-26 (AY 2026-27) is still filed under the OLD Income-tax Act, 1961. You file only ONE return, on the same 31 July 2026 deadline for salaried taxpayers. The new Act first applies to income earned from 1 April 2026, with that return due in 2027.
Why the Confusion Exists
When the Income-tax Act, 2025 came into force on 1 April 2026, it formally replaced the Income-tax Act, 1961 as India's primary income-tax law. For anyone filing a return in July 2026, that timing creates a reasonable question: if the new law took effect before the filing deadline, does the new law govern the return?
It does not — and the reason is a principle that governs every tax-law transition. Income is assessed under the law in force during the year it is earned, not the year the return is filed. The return you are submitting this July covers FY 2025-26 — income received between 1 April 2025 and 31 March 2026. That income predates the new Act entirely. It is assessed under the Income-tax Act, 1961, and the 2025 Act has no bearing on computing your liability for it.
The CBDT released a comprehensive FAQ document — reported to be approximately 99 pages, titled FAQs on Interplay and Transition from the Income-tax Act, 1961 to the Income-tax Act, 2025 — to address exactly this confusion. Its core message is simple: filing season 2026 is old-Act business as usual.
Old Act vs New Act: What Applies When
| Item | AY 2026-27 — This Filing Season (Old Act) | Tax Year 2026-27 — From 2027 (New Act) |
|---|---|---|
| Income covered | FY 2025-26: 1 Apr 2025 – 31 Mar 2026 | FY 2026-27: 1 Apr 2026 – 31 Mar 2027 |
| Governing law | Income-tax Act, 1961 | Income-tax Act, 2025 |
| Terminology | Assessment Year (AY) | Tax Year (TY) |
| Deadline (salaried ITR-1/2) | 31 July 2026 | To be announced (2027) |
| Tax slabs and deductions | 1961 Act rules apply in full | New Act rules apply |
| Carry-forward losses | 1961 Act conditions govern | Preserved into new Act |
| MAT / AMT credits | 1961 Act provisions | Preserved, available for set-off |
| PAN / TAN | Unchanged — no new application needed | Unchanged — no new application needed |
Your Questions, Answered
Did the new Act change my tax slab or deductions for FY 2025-26?
No. Your FY 2025-26 income is assessed entirely under the Income-tax Act, 1961 as it stood for that year. Tax slabs, standard deduction, Section 80C, Section 80D (Old Regime), HRA, Section 24(b) — all provisions applicable to AY 2026-27 are drawn from the 1961 Act. The new Act's structure applies from FY 2026-27 income onward, not to income already earned before it commenced.
Do I need to file two returns — one under each law?
No. You file exactly one return this season: for FY 2025-26, under the Income-tax Act, 1961. The transition from one law to the other creates no dual-filing obligation. There is no missing year and no overlap. The CBDT FAQ addresses this explicitly — one return, one deadline, one governing law.
Has my PAN changed, or do I need a new TAN?
No. The CBDT confirmed that no fresh Permanent Account Number or Tax Deduction Account Number application is required. Existing PAN and TAN numbers remain valid under the Income-tax Act, 2025 without any action from the taxpayer or deductor.
What happens to my carry-forward losses from earlier years?
They are preserved. Business losses and capital losses determined under the Income-tax Act, 1961 continue to be carried forward and set off under the new Act, subject to the same existing conditions. The transition does not extinguish carry-forwards that were validly determined under the old law.
I have a pending TDS refund claim from a prior year. Will it still be processed?
Yes. Pending refund claims under the Income-tax Act, 1961 continue to be processed within the prescribed time limits. The commencement of the new Act does not interrupt or extinguish refund proceedings already initiated under the old law.
The Deadline You Must Not Confuse
The single most consequential thing to get right this filing season has nothing to do with which Act governs your return. It is your deadline.
Salaried Filers — ITR-1 and ITR-2
Your deadline is 31 July 2026. Not 31 August. The new Income-tax Act, 2025 did not extend or alter this date. If you have salary income with TDS deducted and Form 16 issued, your deadline is 31 July — the same as it has always been.
The 31 August date applies to a separate category of filers. Confusing the two is the highest-harm error possible on this topic, as it could cause a salaried taxpayer to miss a deadline that costs them interest under Section 234A and the ability to carry forward certain losses.
| ITR Form | Filer Category | Deadline |
|---|---|---|
| ITR-1, ITR-2 | Salaried / pensioner, no audit requirement | 31 July 2026 |
| ITR-3, ITR-4 | Non-audit business / professional | 31 August 2026 (non-audit only) |
| All forms | Accounts requiring audit (Tax Audit) | 31 October 2026 |
| Belated return | Filed after the original deadline | 31 December 2026 |
| Revised return | Filed to correct errors in an on-time return | 31 March 2027 |
For a full walkthrough of ITR-1 vs ITR-2 eligibility, the AIS reconciliation step, and Schedule CG, see ITR Filing AY 2026-27: Salaried Step-by-Step Guide.
What the Saving Clause Does
Section 536 of the Income-tax Act, 2025 — the "Repeal and Savings" provision — is the legal mechanism that explains why the transition does not disturb pending proceedings, past assessments, or validly accrued carry-forwards. It preserves the continuity of rights, obligations, and proceedings under the 1961 Act for income years preceding 1 April 2026.
In practical terms: assessments for FY 2025-26 will be completed under the Income-tax Act, 1961 even if they happen after 1 April 2026. The legal basis for appeals, refunds, and carry-forward claims related to that income is not disturbed by the repeal. The old Act, for these purposes, continues to apply as if it had not been repealed.
The same saving mechanism governs self-assessment and advance tax. Self-assessment tax for FY 2025-26 is paid against AY 2026-27 under the 1961 Act. Advance tax on FY 2026-27 income is the first payment that falls under the new-Act cycle — see Advance Tax 1st Installment: Do You Owe? for how the installment schedule works.
When Does the New Act First Apply to Your Return?
The first return you will file under the Income-tax Act, 2025 covers income earned from 1 April 2026 to 31 March 2027. The new Act calls this period Tax Year 2026-27 (TY 2026-27) — replacing the familiar "Assessment Year" label. That return is due in 2027; specific timelines and ITR form specifications for it have not yet been announced.
The terminology shift matters when reading news coverage. If you see Tax Year 2026-27, it refers to income earned from 1 April 2026 — which is the new-Act period, with the return due in 2027. If you see Assessment Year 2026-27, it refers to the return due on 31 July 2026, under the old Act. The two phrases refer to different income years under different laws.
Your advance tax installments for FY 2026-27 income are already being paid — those payments are the first real-world entry into the new-Act cycle. For the installment schedule and thresholds, see Advance Tax 1st Installment. The return filing itself is approximately a year away.
Bottom Line
Your ITR this July is the same return you have always filed. Old Act, old slabs, old deductions, same 31 July deadline. The Income-tax Act, 2025 is in force — but it has no effect on your FY 2025-26 return. The first time the new Act touches your filing obligation is in 2027, for income earned from 1 April 2026.
Frequently Asked Questions
Does the Income-tax Act, 2025 apply to my ITR for AY 2026-27?
No. Your ITR for AY 2026-27 — covering income earned in FY 2025-26 — is assessed entirely under the Income-tax Act, 1961. The new Act came into force on 1 April 2026 but applies only to income earned from that date onward. That income falls into Tax Year 2026-27 under the new Act, and that return is due in 2027, not this year.
Do I need to file two returns this year — one under each Act?
No. You file exactly one return this season: for FY 2025-26, under the Income-tax Act, 1961. There is no missing year, no overlap, and no second return under the new Act. The CBDT FAQ document addresses this directly: one return, one deadline, one governing law.
What is the filing deadline for salaried taxpayers for AY 2026-27?
31 July 2026. This applies to ITR-1 and ITR-2 filers — salaried employees and pensioners without business income. The separate 31 August deadline applies only to non-audit business and professional taxpayers filing ITR-3 or ITR-4. Salaried filers should not count on 31 August.
What happens to my carry-forward losses and MAT/AMT credits under the new Act?
They are preserved. Business losses and capital losses determined under the Income-tax Act, 1961 continue to be carried forward into the new Act, subject to existing conditions. Unutilised MAT and AMT credits remain available for set-off under the new Act. The CBDT FAQ confirms this continuity across the transition.
When will I file my first return under the Income-tax Act, 2025?
For income earned from 1 April 2026 onward, which the new Act calls Tax Year 2026-27 (TY 2026-27). That return will be due in 2027. Your advance tax installments for FY 2026-27 are already being paid into the new-Act cycle, but the actual return filing is still about a year away.
Sources
1. CBDT, FAQs on Interplay and Transition from the Income-tax Act, 1961 to the Income-tax Act, 2025 (~99 pages). Primary PDF: https://www.incometaxindia.gov.in/documents/81799/11848482/FAQs-on-Interplay-and-Transition.pdf | Updated version: https://www.incometaxindia.gov.in/documents/81799/11848482/Updated-FQAs-on-Interplay&Transitions.pdf
2. Income-tax Act, 2025, Section 536 ("Repeal and Savings").
3. Business Standard, "ITR 2026-27: Confused about new Income Tax Act? CBDT answers biggest questions" (8 Jul 2026) — secondary framing only.
4. Outlook Money, "CBDT Releases 99-Page FAQ Guide On New Income Tax Act 2025 Transition" — secondary framing only.
5. BusinessToday, "Income Tax Act 2025: No need to reapply for PAN; existing PANs remain valid, CBDT clarifies" (29 Jun 2026) — PAN continuity confirmation.
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