The new Income-tax Act from 1 April 2026: what changes for a company
What a private company's accounts and tax team must change under the Income-tax Act, 2025: tax year, section numbers, return due dates, TDS in section 393 and carry-over of old losses.
CA Harun Raaj
pvtltd.co
The Income-tax Act, 1961 has been repealed. The Income-tax Act, 2025 came into force on 1 April 2026. For a company, that does not mean everything is new. It means your accounts team now works with two Acts at the same time, and each one governs a different period.
This article covers the changes a private company must act on, using the Income-tax Act, 2025 as amended by the Finance Act 2026, and the Income-tax Rules, 2026.
Which Act applies to which year
Start with the dividing line. The Income-tax Act, 2025 says it "shall come into force on the 1st April, 2026" (section 1(3), Income-tax Act 2025). The 1961 Act is repealed by section 536(1) of the 2025 Act.
But the repeal is not a clean cut. Section 536(2)(c) of the 2025 Act keeps the 1961 Act alive for proceedings "in respect of any tax year beginning before the 1st April, 2026". That covers notices, assessment, re-assessment, recomputation, rectification, penalty, reference, revision and appeals. Section 536(2)(d) says a penalty for such a year may be imposed under the 1961 Act "as if this Act had not been enacted".
In plain words: income up to the year ended 31 March 2026 is taxed, assessed and litigated under the 1961 Act, as amended by the Finance Act 2026; income from 1 April 2026 is under the 2025 Act; a notice received tomorrow for an old year still runs on 1961 Act procedure.
Your tax team needs both Acts open: the 1961 Act for tax years beginning before 1 April 2026, the 2025 Act after. Name the Act next to every section number in notes, replies and computations.
"Previous year" and "assessment year" are gone: it is now the "tax year"
The 2025 Act has one concept in place of "previous year" and "assessment year": "tax year" means "the twelve months period of the financial year commencing on the 1st April" (section 3(1), Income-tax Act 2025). Tax is charged on the total income of the tax year (section 4(1) and (2)).
The official 1961-to-2025 mapping shows the effect. Section 3 of the 1961 Act ("Previous year" defined) maps to section 3 of the 2025 Act ("Definition of 'Tax year'"). The definitions of "assessment year" (section 2(9), 1961 Act) and "previous year" (section 2(34), 1961 Act) have no counterpart in the 2025 Act.
For a company with a 1 April to 31 March financial year this changes labels, not dates: the year ended 31 March 2027 is "tax year 2026-27". Update return working papers, TDS and advance tax trackers and notice trackers. A newly set-up business has a tax year that starts on the date it is set up (section 3(2), Income-tax Act 2025).
Section numbers: where the familiar sections went
The Income Tax Department's official utility maps each 1961 Act provision to the 2025 Act. These are the pairs a company's team meets most, checked against section titles in the 2025 Act:
The mapping is often one-to-many (section 139 of the 1961 Act appears against sections 263 and 349 of the 2025 Act, among others), so pick the row by subject and read the 2025 section before you cite it. The mapping is a finding aid; the Act text is the authority.
A practical step: build one internal lookup sheet from the official mapping for the sections your company uses, with a column for the Act.
Return of income: who files, by when
A company must furnish a return for every tax year "regardless of income or loss" (section 263(1)(a) and (b), Income-tax Act 2025).
The due date is set by the Table in section 263(1)(c), which the Finance Act 2026 substituted. For a company, the due date is 31st October of the financial year following the tax year. The 30th November date applies instead where the section 172 report applies, that is, a report from an accountant by persons entering into international transactions or specified domestic transactions (section 263(1)(c), Table Sl. No. 1, Income-tax Act 2025, as substituted by section 66 of the Finance Act 2026; section 172, Income-tax Act 2025).
For tax year 2026-27 (year ending 31 March 2027), that means 31 October 2027, or 30 November 2027 if the section 172 report applies. The Finance Act 2026 also sets 31st August for business-income assessees not required to be audited and 31st July for others; those matter to directors and partners filing their own returns.
Other points in section 263 of the 2025 Act:
- Belated return: within "nine months from the end of the relevant tax year, or before the completion of the assessment, whichever is earlier" (section 263(4)).
- Revised return: the Finance Act 2026 substituted section 263(5): within "twelve months from the end of the relevant tax year, or before the completion of the assessment, whichever is earlier", subject to section 428(b) (section 66(b), Finance Act 2026).
- Late filing: interest at 1% a month under section 423 ("I = 1% x A x T"). The 1961 Act equivalent for earlier years is section 234A.
Tax audit: the report is due earlier than the return
If your company is audited under section 63 of the 2025 Act (the old section 44AB), note the "specified date". Section 63(5) defines it as "the date one month prior to the due date for furnishing the return of income under section 263(1)". With a due date of 31 October, the audit-report date is one month earlier, which is 30 September. Plan the close so the auditor has final accounts well before that date.
Read sections 63 and 263 before you set the year's calendar.
TDS and TCS: sections 192 to 194 are now inside section 393
The biggest day-to-day change for the accounts payable team is that resident TDS has been brought into one section. Section 393(1) of the 2025 Act contains a Table with columns for the nature of payment, the payer, and the rate and threshold. Section 392 covers salary.
The rows a private company meets most:
- Contractors, row 6(i): a company is a "designated person" (section 402(11)(d)). Rate 1% for an individual or Hindu undivided family contractor and 2% otherwise; threshold ₹30,000 a sum and ₹1,00,000 in aggregate.
- Professional and technical fees, royalty, director's commission, row 6(iii): a company is a "specified person" (section 402(37)(a)). Rate 2% for technical-services fees (not professional), cinematographic film royalty and call-centre payees, 10% otherwise; threshold ₹50,000, nil for director's commission or fees.
- Dividend, row 7: a domestic company deducts 10% with a nil threshold, "before making any distribution or payment of dividend".
(All from section 393(1), Table, Income-tax Act 2025.) Tax is deducted at the earlier of credit to the payee's account and payment (section 393(1)(c)).
Rebuild your TDS master from the Table itself, row by row, against the vendor master. Two related provisions now sit in section 397: if the payee gives no valid PAN, tax is deducted at the higher of the stated rate, the rate in force, or 20% in other cases (section 397(2)(b)); and a deductor needs a TAN and must deliver a statement after paying the tax (section 397(1) and (3)).
Quarterly statements and forms
The Income-tax Rules, 2026 prescribe the forms (rule 219). Salary TDS goes in Form 138 (section 392, other than section 392(7)). Deductions under section 393(1) go in Form 140, except for a non-resident deductee who is not a company or foreign company (or a resident but not ordinarily resident), for whom Form 144 is used. Tax collected at source under section 394(1) goes in Form 143 (rule 219(1), Table, Income-tax Rules 2026). A few rows have their own form, such as row 8(iii), which uses Form 138.
The due dates for the quarter are 31 July (quarter ended 30 June), 31 October (30 September), 31 January (31 December) and 31 May of the next year (31 March) (rule 219(4), Table, Income-tax Rules 2026).
If TDS is missed
A person who fails to deduct or pay is "deemed to be an assessee in default" (section 398(1)). Interest is 1% a month or part of a month from the date tax was deductible to deduction, and 1.5% from deduction to payment (section 398(3)(a)). For earlier tax years, section 201 of the 1961 Act still governs (section 536(2)(c)).
The 22% tax option, MAT, and old credits
A domestic company that wants the 22% rate uses section 200 of the 2025 Act (the old section 115BAA). Income is computed without Chapter VIII deductions other than sections 146 or 148 and without the deductions in section 205(1)(a) to (g) (section 200(1)(a)). The option must be exercised on or before the section 263(1) due date, applies to later tax years, and cannot be withdrawn (section 200(5) and (6)).
Section 536(2)(f) deems an option in force before commencement to be made under the corresponding 2025 Act provision. Confirm the 2025 conditions are met.
For minimum alternate tax, section 206 of the 2025 Act applies. The Finance Act 2026 reduced the rate for companies other than International Financial Services Centre units from 15% to 14% of book profit (section 206(1)(b)(ii), Income-tax Act 2025, as amended by section 59(a)(i) of the Finance Act 2026).
A domestic company on the section 200(5) or 201(2) option can set off section 115JAA credit brought forward at 31 March 2026 up to 25% of each year's tax; the balance carries forward, but not beyond the fifteenth tax year after the credit first became allowable (section 206(3), Income-tax Act 2025, as substituted by section 59(b) of the Finance Act 2026; section 536(2)(l)).
Losses, depreciation and other brought-forward balances
The savings section protects what you have already earned. Section 536(2)(m) lets business, speculation and house property losses brought forward from before 1 April 2026 be set off against 2025 Act income "in the manner provided in the respective section of the repealed Income-tax Act". Section 536(2)(n) carries forward capital losses up to eight financial years from the year first computed. Depreciation and capital allowances carried forward under section 32(2) and section 35(4) of the 1961 Act are folded into the 2025 Act's capital allowances for the tax year beginning 1 April 2026 (section 536(2)(r), Income-tax Act 2025). Deductions under 1961 Act sections 35D, 35DD, 35DDA and 35E continue to be allowed under the 2025 Act as deferred revenue expenditure allowance (section 536(2)(s), Income-tax Act 2025).
Reconcile the closing balances of losses, depreciation, MAT credit and deferred revenue expenditure at 31 March 2026 to what you carry into the 2025 Act computation.
What not to do
- Do not cite a 1961 section for income from 1 April 2026, or drop the Act name from a reply to a notice on an old year.
- Do not translate section numbers from memory. Use the official mapping, then read the 2025 section.
- Do not miss the 22% option date: it is the section 263(1) due date for the return in which you first rely on it.
What to do now
- Next step: update the tax calendar and provision workings for tax year 2026-27 to the 2025 Act (sections 3 and 263(1)(c)).
- Deadlines: return 31 October of the year after the tax year (30 November with the section 172 report); tax audit report one month earlier (section 63(5)); TDS statements 31 July, 31 October, 31 January and 31 May (rule 219(4), Income-tax Rules 2026).
- Consequence: interest of 1% a month on a late return (section 423) and 1% then 1.5% a month on missed TDS (section 398(3)), Income-tax Act 2025.
Have a CA review your facts before you act or file.
Frequently asked questions
Which Act applies to my return for the year ended 31 March 2026?
The 1961 Act, as amended by the Finance Act 2026. The 2025 Act applies from tax year 2026-27 (section 536(2)(c), Income-tax Act 2025).
Has a company's return due date changed?
It remains 31 October of the year after the tax year, or 30 November where the section 172 report applies (section 263(1)(c), Income-tax Act 2025).
Where did my TDS sections go?
Resident TDS sits in the Table in section 393(1), with salary in section 392 (Income-tax Act 2025).
Do my old losses and MAT credit survive?
Yes, as set out in section 536(2)(l) and (m) of the 2025 Act.
Has the CBDT issued transition FAQs?
This article does not rely on any. Check the Income Tax Department website for current circulars and FAQs before you finalise your calendar.
---
See Also
Next steps on annual compliance
See what applies to your company, then check it with a free tool.