The Act that changed

A note on this whole subject before anything else. Rates, slabs, thresholds and exemptions change with every Finance Act, and this site does not restate numbers it has not read first-hand. What follows is the structure of Indian income tax, which is durable. For any figure you are about to act on, the Income Tax Department's own site is the authority and your chartered accountant is the second opinion.

What happened

The Income-tax Act, 1961 governed Indian income tax for sixty-four years. It stands repealed on 1 April 2026, and the Income-tax Act, 2025 takes effect the same date.

From the Department's own description of the new Act's objective:

Provide a streamlined, simplified, and modern tax code with reduced compliance burden, consolidated provisions, and clear definitions.

The scale of the rewrite:

	1961 Act	2025 Act
Sections	819	536
Schedules	14	16
Rules	511	333
Forms	399	190

What it did not do

The most important sentence in this chapter, and it is why the rest of the subject is still largely valid:

It imposes no new taxes. The Department describes the Act as streamlining language, improving structural clarity, reducing interpretational disputes and aligning with modern legislative standards — "without imposing new taxes".

So this is a restructuring, not a reform of what you owe. The heads of income survive. Capital gains work the way they worked. The filing cycle is recognisable.

What it did do

Renamed the year. "Previous year" is replaced by "tax year", aligned with the financial year from 1 April to 31 March.

This sounds cosmetic and removes a genuine source of confusion. Under the old Act you earned income in a "previous year" and were assessed in an "assessment year", so every conversation carried two years and people routinely used the wrong one. One term now does the work.

Condensed the law. 819 sections to 536, with obsolete provisions removed and the language made more accessible.

Cut the compliance surface. Forms from 399 to 190 is the change an ordinary taxpayer is most likely to notice.

Why this matters for everything you read

Here is the practical consequence, and it affects a great deal of material still in circulation.

Section numbers from the 1961 Act no longer refer to live provisions. Decades of articles, calculators, templates and advice are written around "Section 80C", "Section 54", "Section 194A" and the rest. The substance behind most of them survived; the citations did not.

So when you read tax guidance:

Check which Act it cites. Anything citing the 1961 Act is describing a repealed statute, however recently it was published.

Treat the substance as probably still true and the section number as probably stale, then verify both.

Be especially careful with anything automated. Calculators and spreadsheets built around old section numbers will keep producing numbers, and numbers do not announce that their basis has changed.

This subject names heads of income and mechanisms rather than section numbers, for exactly that reason. A head of income is a concept that survived the rewrite. A section number is a label that did not.

The 1961 Act is not entirely gone

One transitional point worth knowing.

The old Act continues to govern assessments, appeals and disputes relating to income earned up to the last tax year under it. So if you have an open matter from an earlier year, that matter is still decided under the law as it was.

Current income, from the first tax year under the new Act onwards, is computed, taxed and reported under the 2025 Act.

What this subject covers

Nine chapters on structure.

Chapters 2 to 4: the five heads of income, where investment income lands, and how capital gains work as a concept.

Chapters 5 to 7: the mechanisms — TDS and advance tax, the filing cycle, and tax-advantaged vehicles.

Chapters 8 and 9: what tax does to your real return, and a plan.

None of it quotes a rate. All of it tells you which questions to ask and where the answers live.

The point

The Income-tax Act 1961 was repealed on 1 April 2026 and replaced by the Income-tax Act 2025 — 536 sections against 819, "previous year" renamed "tax year", and no new taxes imposed. The substance largely survived; the section numbers did not, so any guidance citing the old Act is describing a repealed statute even if its economics still hold.