Does the Income-tax Act, 2025 Apply to the Return You Are Filing Now?
The Income-tax Act 2025 took effect on 1 April 2026, but it does not govern your AY 2026-27 return. Here is what applies when, and what actually changes from next year.
No.
The return you are filing right now, for FY 2025-26, is assessed entirely under the Income-tax Act, 1961. Every section you are used to still applies to it: 44AD, 44ADA, 44AB, 80C, 139, all of it.
The Income-tax Act, 2025 took effect on 1 April 2026. It governs income earned from that date onwards, which you will file next year. That is the whole answer. What follows is why it matters and what actually changes.
The two-year overlap
| Income earned | Governed by | You file it |
|---|---|---|
| FY 2025-26, being 1 Apr 2025 to 31 Mar 2026 | Income-tax Act, 1961 | Now, in AY 2026-27 |
| From 1 Apr 2026 onwards | Income-tax Act, 2025 | Next year |
The confusion is understandable. The new Act is in force. It just is not in force for the income you are currently reporting.
If a preparer tells you that Section 44AD no longer exists and therefore something about your current return has changed, they are applying next year law to this year income. That is wrong, and it is the kind of error that produces a defective return.
What actually changes from next year
The 2025 Act is largely a restructuring exercise, not a policy overhaul. Rates and thresholds carry forward. What changes is the architecture.
Presumptive taxation consolidates into one section
| Under the 1961 Act | Under the 2025 Act |
|---|---|
| Section 44AD, general business | Section 58, table entry |
| Section 44ADA, professionals | Section 58, table entry |
| Section 44AE, goods carriage | Section 58, table entry |
Thresholds and deemed-income rates carry forward: ₹2 crore for business, or ₹3 crore where cash receipts are within 5 per cent, at 8 per cent or 6 per cent on digital receipts; ₹50 lakh for professionals, or ₹75 lakh on the same cash condition, at 50 per cent. LLPs remain excluded from presumptive taxation. They always were.
Tax audit moves from 44AB to 63
Section 44AB becomes Section 63. Thresholds carry forward unchanged: ₹1 crore for business, ₹10 crore where cash is within 5 per cent, ₹50 lakh for professions, ₹75 lakh on the same condition.
One reported change of substance. Section 63 is said to add a standalone audit trigger where declared profit falls below the deemed rate, regardless of whether the taxpayer ever opted into presumptive taxation. Under the 1961 Act that trigger was tied to opting in and then exiting. If that reading is right, it widens who needs an audit. Confirm it against the Act text before relying on it, and do not let anyone tell you it applies to your current return, because it does not.
The audit forms change
Forms 3CA, 3CB and 3CD become Form 26.
The vocabulary changes
This one will cause the most day-to-day confusion.
| Old term | New term |
|---|---|
| Previous Year (PY) | Tax Year |
| Assessment Year (AY) | Tax Year |
Both are replaced by a single concept. "FY 2026-27" and "AY 2027-28" become "Tax Year 2026-27". It removes a genuine and long-standing source of confusion, but during the transition it creates a new one, because people will be using both vocabularies at once.
What has not changed
Rates. Slabs. The old-versus-new regime choice. The presumptive thresholds. The audit thresholds. Section 80C-type deductions in substance.
If you were expecting the new Act to change what you pay, it largely does not. It changes where things are written down.
What this means practically
- For your current return: nothing. File under the 1961 Act as normal.
- For your bookkeeping from April 2026: nothing structural, but expect your accountant references and your software labels to shift.
- For anything you read online: check the date. A great deal of content written in the first half of 2026 either applies the new Act too early or ignores it entirely. Both are wrong in different directions.
- For the next filing season: the section numbers on your documents will change, and "Tax Year" will replace two familiar terms. Nothing about your liability changes because of it.
The short version, again
The return you are filing now: 1961 Act. Income from 1 April 2026 onwards: 2025 Act. Rates and thresholds are the same either way. Anyone telling you otherwise about your current return is confusing the two.