Taxpayers in India will continue to have their income for the current year assessed under the existing tax framework, even though a new income tax law is scheduled to take effect from April 1, 2026. According to official clarification, any income earned before March 31, 2026 will be evaluated under the provisions of the Income-tax Act, 1961, and not under the forthcoming legislation.

Key Highlights

• Income earned up to March 31, 2026 will continue to be assessed under existing tax provisions.
• The new Income-tax Act will apply only to income earned from April 1, 2026 onward.

This means that for the financial year 2025–26, which spans April 1, 2025 to March 31, 2026, tax returns filed in 2026–27 will follow the old rules, even though the new law has been enacted. Government officials have emphasised that this transitional period is designed to avoid any confusion or overlap between the old and new legal regimes, ensuring that taxpayers do not face double taxation or changes in liability for the current year.

Under the updated system, the Income-tax Act, 2025 will only apply to income earned from April 1, 2026 onwards, so that assessments and compliance procedures align with the new statutory framework from that date forward. Experts have clarified that this transition reflects a focus on simplifying the law’s language and structure rather than altering the timeline of when income is taxed.

Also Read: Budget 2026 Highlights: New Income Tax Act, FPI Hike & STT Changes

Tax professionals advise individuals and businesses to continue planning their filings and liabilities under the familiar provisions of the 1961 Act for the current assessment year while preparing for eventual changes once the new law comes fully into force.