Key Procedural Changes under the Income-tax Act, 2025
India’s Act 2025 came into force starting 1 April 2026, replacing the old Income-tax Act, 1961. While many tax rates and thresholds are consistent, the terminology, section numbering, Forms, and procedures have shifted. These include changes in:
- TDS/TCS provisioning: All withholding obligations now refer to Section 393 (for TDS) and Section 394 (for TCS), replacing various sections like 194C, 194J etc. (incometax.gov.in)
- Forms 15G/15H are replaced by declarations under Section 393(6) using Form No. 121. (incometax.gov.in)
- Unified Payment Tile for Remittances/Deductions: Form 141 (Challan-cum-Statement) under Section 393(1) consolidates PAN-based payment forms into one interface. (incometax.gov.in)
Non-Resident & Residency Rules: What’s Unchanged and What’s Retained
- Primary residence test (182 days, or 60 + 365 days in preceding four) remains the same under Section 6 of the new Act. (incometax.gov.in)
- Deemed resident status (for Indian citizens exceeding ₹15 lakh income and lacking tax liability abroad) under section 6(7) mirrors old section 6(1A) of the 1961 Act. (incometax.gov.in)
Forms & Filings: What Businesses and Individuals Need to Know
- Form 121: To furnish nil or lower deduction declarations under Section 393(6) (i.e., replacing 15G/15H). Must include all required fields, and from AY 2026-27, submitted via the e-filing portal. (incometax.gov.in)
- Form 141: Used for making TDS payments/challan-cum-statement under Section 393(1). Now consolidated and pan-based. (incometax.gov.in)
- ITR Forms Changes: New rules include ITR-BN for some cases (search, requisition), updates to Rule 332. Amended rules effective from 1 April 2026. (incometax.gov.in)
Common Pitfalls & How to Avoid Them
| Mistake | Consequence | Fix |
|---|---|---|
| Continuing to quote old section numbers (e.g. 194J) after 1-Apr-2026 | Errors in e-filing, notices from assessing officer | Update all TDS/TCS references to 393/394; inform accounting teams and payroll vendors |
| Using old forms or declarations (15G/15H under old IDs) | Non-acceptance of declaration; wrong withholding | Submit under new format (Form 121) for relevant years |
| Non-resident or foreign income not reported under new Act timing | Misassessment or double taxation risks | Examine whether income is assessable before or after effective date; guard against treaty misfiling |
Action Items for 2026-27 Compliance
- Train finance teams on new section numbers and references.
- Review & update software: TDS/TCS modules, payroll, vendor payments.
- Audit past declarations: Any Form 15G/H submitted in old form for income arising after 1 April 2026 needs replacement.
- Check status of PAN-Aadhaar linkage, as some PANs may be inactive, affecting ability to file new forms.
Why This Matters for Diaspora & Cross-Border Filers
- Non-residents and diaspora with Indian source income should confirm whether their income arises before or after April 2026 to apply correct law.
- Already familiar rules for residency/stay thresholds make it easier to manage cross-border work and remote income flows.
Read Time: 6 min
TaxHome: India
Category: Compliance
Author: NomadicTax Research Team
Published: true