New Income Tax Act 2025: Does It Apply to the ITR You're Filing Now? (Old Act vs New, Explained)

You've seen the headlines: the Income Tax Act, 1961 is gone, replaced by the new Income Tax Act, 2025 from April 1, 2026. And now you're filing your ITR in the middle of 2026, wondering: which law applies to my return? Old form or new form? "Assessment Year" or "Tax Year"? The short answer takes one sentence. The full answer — including the one genuinely confusing mapping everyone should bookmark — takes five minutes.

The one-sentence answer

The return you are filing right now — for income earned between April 2025 and March 2026 — is governed entirely by the old Income Tax Act, 1961, with the old forms and the old "Assessment Year 2026-27" wording. Nothing about it changes because of the new Act.

The new Act applies only to income you're earning from April 1, 2026 onwards — which you'll file in 2027. So for this filing season: same ITR-1/ITR-2 forms, same Form 16 from your employer, same Form 26AS, same July 31 deadline, same everything. If a website, video, or well-meaning uncle tells you the new law changes this year's filing, they're wrong.

Why the law-change happened (in 30 seconds)

The 1961 Act survived six decades of amendments and became famously unreadable. The 2025 Act is a full repeal-and-replace — the same tax system rewritten in cleaner language with a simpler structure. Crucially, it does not change tax rates, slabs, or the regime system by itself — the new regime stays the default, the ₹75,000 standard deduction continues, and the Section 87A rebate keeping income up to ₹12 lakh effectively tax-free (₹12.75 lakh for salaried) carries on. Rates remain the business of each year's Finance Act, exactly as before.

The change you'll actually notice: "Tax Year" replaces AY and PY

The old system's most hated feature was its dual labels: you earned income in "Previous Year 2025-26" but filed for "Assessment Year 2026-27" — two names for one pot of money, one year apart. Selecting the wrong AY on the portal has long been among the most common causes of defective returns and wrong-year filings.

The new Act kills both terms. From April 1, 2026, there is only the Tax Year — the financial year in which you earn the income, full stop. Money earned between April 2026 and March 2027 belongs to Tax Year 2026-27: you earn it in Tax Year 2026-27 and you file for Tax Year 2026-27. No mental gymnastics, no off-by-one year.

The bookmark-worthy part: mapping old labels to new

• Income earned Apr 2025 – Mar 2026 → old system → FY 2025-26 = AY 2026-27 (the return you're filing now, under the 1961 Act).
• Income earned Apr 2026 – Mar 2027 → new system → simply Tax Year 2026-27 (filed in 2027, under the 2025 Act).

Notice the trap: "AY 2026-27" and "Tax Year 2026-27" are NOT the same period. AY 2026-27 refers to income of FY 2025-26; Tax Year 2026-27 refers to income of FY 2026-27 — a full year apart. During this transition, documents, portals, and articles will use both conventions, and this is the single most likely source of wrong-year mistakes in 2026 and 2027. When in doubt, anchor on the months the income was earned, not the label.

What else changes from FY 2026-27 (a preview, not a to-do)

• New form numbering: the familiar form names (Form 16 and friends) get replaced by new numbers under the 2025 Act from next season — your FY 2026-27 TDS certificate will look different. This season's documents keep the old names.
• Section renumbering: every section moves (the department has published old-to-new mapping tools). Old circulars and rulings continue to apply to the corresponding new sections where the intent is unchanged.
• Both Acts run in parallel on the portal: the e-filing portal handles old-Act years and new-Act years concurrently, and anything pending from earlier years — assessments, appeals, rectifications, refunds — continues under the 1961 Act until finished. The repeal does not erase or reopen your past filings.
• Some genuinely new rules for FY 2026-27 arrived alongside the new Act via the 2026 rules and Budget — notably the 50% HRA exemption expanding beyond the four metros to include Bengaluru, Pune, Hyderabad and Ahmedabad, and a longer 12-month window for revised returns. These affect the income you're earning now, so they matter for planning — but not for the return due this July.

What you should actually do

• This season (by July 31, 2026): file your FY 2025-26 / AY 2026-27 return exactly as always, under the old Act. All our current guides — two Form 16s, severance tax, layoff-year filing — apply as written.
• This year (FY 2026-27, ongoing): if you're in one of the four newly added HRA cities and use the old regime, revisit your HRA math — the jump from 40% to 50% of salary in the exemption formula can be significant.
• Next season (2027): expect new form names, "Tax Year" wording everywhere, and a portal that asks for Tax Year 2026-27 instead of an AY. We'll publish the full walkthrough when the new forms are notified.

The 60-second version

The new Income Tax Act, 2025 took over on April 1, 2026 — but only for income earned from that date. The return due July 31, 2026 covers FY 2025-26 and stays fully under the old 1961 Act with old forms and "AY 2026-27" wording. From next season, "Tax Year" replaces the AY/PY pair — and beware: AY 2026-27 and Tax Year 2026-27 describe two different years' income. Rates, slabs, regimes, and deadlines don't change because of the new Act. File normally now; learn the new vocabulary before 2027.

This article is general information, current as of July 2026, based on the Income Tax Department's published transition guidance. Specific new-Act form numbers and ITR forms for Tax Year 2026-27 will be covered once officially notified.