When does the Income-tax Act, 2025 apply?
The Income-tax Act, 2025 applies from 1 April 2026. The Lok Sabha passed the Income-tax (No. 2) Bill, 2025 on 11 August 2025, and that Bill became the Act. Income of the year that began on 1 April 2025 is still assessed under the Income-tax Act, 1961.
Which year does the new Act cover?
The new Act uses one tax year, beginning on 1 April. It does not keep a previous year and a later assessment year. A return, a notice, or a demand for a year that started before 1 April 2026 stays on the 1961 Act. Passing the Bill in August 2025 did not move that earlier year onto the new Act.
Did the Bill change the rates?
The individual bands written into the Bill are the new-regime bands already set for the year that began on 1 April 2025. Tax is nil up to ₹4 lakh, then 5, 10, 15, 20, and 25 percent through the bands up to ₹24 lakh, and 30 percent above ₹24 lakh. A rebate can still leave tax at nil on income up to ₹12 lakh that is taxed at those normal rates. The rebate, and what it does not cover, is on the Budget 2025 page. The Bill was not a second rate cut.
What did the text change?
The government presented the new Act as a shorter restatement of the law. House-property computation, including municipal taxes and the spread of pre-construction interest, was carried into that text. It was not announced as a new deduction. Digital assessment, which was already in use, continues. The Act does not, by itself, change GST, and it does not replace a company’s Registrar filings.
Frequently asked questions
Four questions cover past years, the rate table, the tax year, and faceless assessment.
Is the 1961 Act repealed for every past year?
No. Income of a year that began before 1 April 2026 is still dealt with under the Income-tax Act, 1961. The new Act applies from 1 April 2026.
Did the Bill cut the rates below the 2025 Budget?
No. The individual bands in the Bill are the new-regime bands already set for the year that began on 1 April 2025. Those bands, and the rebate up to ₹12 lakh, are on the Budget page.
Does the new Act still use an assessment year?
No. From 1 April 2026 the new Act uses one tax year. A previous year and a separate assessment year are the 1961 Act’s pair.
Is faceless assessment new in this Act?
No. Digital assessment was already in use under the 1961 Act. The new Act continues that way of working. It does not open a new paper filing.
Sources
The Lok Sabha passed the Income-tax (No. 2) Bill, 2025 on 11 August 2025. The Act applies from 1 April 2026. The rates for the preceding year are the Budget 2025 new regime.