What actually happened
The Income-tax Act, 2025 came into force on 1 April 2026, replacing the Income-tax Act, 1961. It is the first full rewrite of Indian direct tax law in 65 years.
The important thing to understand is what it is not. It is not a new tax policy. Slabs, rates, the rebate, the standard deduction, capital gains rules — the substance carried over almost intact. What changed is the structure: 819 sections became roughly 536, grouped into 23 chapters, written in plainer English with provisos folded into the main text instead of trailing after it.
One rename you will actually meet: the Act scraps “previous year” and “assessment year” for a single term, the tax year. Income earned between April 2026 and March 2027 is simply “tax year 2026-27” — no more filing for “AY 2027-28”, except on older forms that still say it.
For most salaried people, the practical effect this year is close to zero rupees and a lot of renumbering.
The renumbering, for the sections you actually use
This is the part that will trip you up in conversation. Your CA, your parents and every document written before 2026 will keep saying the old numbers, because that is what everyone learned.
| What it does | Old number | New number |
|---|---|---|
| The ₹1.5 lakh deduction — PPF, EPF, ELSS, life premium | Section 80C | Section 123 |
| Employer's NPS contribution | Section 80CCD(2) | Section 124 |
| Health insurance premiums | Section 80D | Section 126 |
| Education loan interest | Section 80E | Section 129 |
| The rebate that makes tax nil up to ₹12 lakh | Section 87A | Section 156 |
| Home loan interest | Section 24(b) | Section 22 |
| Long-term capital gains on listed equity | Section 112A | Section 198 |
| Crypto and other virtual digital assets | Section 115BBH | Section 194 |
What this does not change
Your assessment for any year before 2026-27 stays under the old Act. A completed assessment for AY 2023-24 remains valid; the repeal does not reopen it.
The new regime is still the default. The ₹12 lakh rebate threshold, the ₹75,000 standard deduction for salaried people, and the marginal relief just above ₹12 lakh all continue.
Old-regime deductions still exist and are still old-regime only. Renaming section 80C to section 123 does not make it available under the new regime.
What to do about it
Nothing urgent. When you file for FY 2026-27, the forms will use the new numbering and the portal will guide you.
The one habit worth building now is to stop memorising section numbers and start understanding what each deduction is for. A number that changed once can change again; the underlying idea — that the government subsidises long-term saving, health cover and education debt — has been stable for decades.