Tax Planning
Mastering India’s New Tax Code: Planning Under the Income-tax Act, 2025
India has officially repealed the Income-tax Act of 1961 and enacted the Income-tax Act, 2025. Here’s what this means for taxpayers—how the transition works, what stays, what changes, and how to plan now.
By NomadicTax Research Team • 5-8 min read • August 27, 2026
## Overview of the Change
India’s old tax law—**Income-tax Act, 1961**—was officially repealed on **April 1, 2026**. The **Income-tax Act, 2025** replaces it, bringing changes to structure, compliance, and clarity. However, many existing cases and arrangements continue under the older law until fully resolved. ([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/objective-and-scope-new-act-faq?utm_source=openai))
## Key Transitional Rules That Affect You
| Transition Area | What’s New | Action Items / Implications |
|---|---|---|
| Tax years beginning **before 1 April 2026** | Still governed by the 1961 Act (old rules) | If you’re filing for AY 2026-27 but income period is before 1 April 2026, use old forms and old rules—**no surprises** ([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/objective-and-scope-new-act-faq?utm_source=openai)) |
| Tax years **from 1 April 2026 onward** | Fully under the new Act | New filings, advance tax, assessment, etc., follow the Income-tax Act, 2025 - align your accounting, deductions, and disclosures accordingly ([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/objective-and-scope-new-act-faq?utm_source=openai)) |
| Old tax regime vs new regime for individuals and HUFs | What was Section 115BAC under the 1961 Act is now **Section 202** in the 2025 Act. The new regime remains the default. | If you opted into the old regime previously and plan to continue or switch — read the equivalent provisions carefully. No need to opt again if already done under old Act—it’s treated as opted under Section 202 of the new Act. ([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/objective-and-scope-new-act-faq?utm_source=openai)) |
## Taxpayer Obligations & Compliance
- **Forms and utilities**: All ITR-1 to ITR-7 forms for AY 2026-27 are available both online and offline. ITR-6 is available via Excel utility. ([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/?CategoryID=6&utm_source=openai))
- **Statutory forms under new rules**: A second set of 13 quarterly/statutory forms are now live under the Income-tax Rules, 2026. ([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/?mobile-app=1&utm_source=openai))
- **Payment module integration**: Payments under both the old Act (for dues until FY 2025-26) and under the new Act (from Tax Year 2026-27) are now consolidated in a single interface on the e-filing portal for ease of use. ([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/?mobile-app=1&utm_source=openai))
- **Nudge campaigns and reminders**: The tax authority is using SMS, e-mail, and portal notices to remind taxpayers about filing deadlines, foreign asset schedule requirements, etc. Zero tax liabilities don’t exempt you from filing if your income exceeds basic exemption limit. ([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/e-Campaigns/sms?mobile-app=1%2Fe-Campaigns%2Fe-mail%2Fhelp%2Fhow-to-perform-rectificationhelp%2Fhow-to-change-e-filing-password%2Fe-Campaigns%2Fe-mail&utm_source=openai))
## Practical Tax Planning Strategies
1. **Review eligibility for the new versus old regime** early. If your deductions and exemptions are historically high, calculate which regime saves you more under new rules (Section 202).
2. **Make advance tax payments**: For income from June 2026 onward, advance tax must follow the new Act. Budget and cash flow should account for possibly altered rates or reduced deduction ceilings. ([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/objective-and-scope-new-act-faq?utm_source=openai))
3. **Foreign assets/disclosure**: If you hold foreign assets or overseas income, don’t use ITR-1 or ITR-4; you’ll need schedules like FSI, TR, FA in other forms. Submit correct forms to avoid penalties. ([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/nudge?utm_source=openai))
4. **Plan your timing**: Especially if you were considering taking certain investments, business expenses, or realizing gains, timing under new regime may affect benefits.
## Case Example
Let’s say you are an individual with salaried income + some freelancing + overseas investment income. Under the old regime, you may have claimed significant deductions (80C, 80D etc.). Under the new regime, options and default settings may shift. By evaluating your income in FY 2026-27: if freelancing income + overseas income triggers disclosure schedules, instead of opting old regime, staying with new regime and reorganizing deductions may lead to less compliance cost and similar tax liability.
## Bottom-line
- The **new Act is designed for simplicity**—less ambiguous language, modern structure, taxpayer-friendly rules. ([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/objective-and-scope-new-act-faq?utm_source=openai))
- But transition matters: don’t assume old freedoms continue. Use correct forms, follow the new default rules.
- Plan early. Make projections, use new rates, norms under Section 202. Seek advice where needed.