Income Tax Act, 2025: 10 Common Mistakes Practitioners Are Still Making

The Income-tax Act, 2025 has been in force since 1 April 2026. It has 536 sections in 23 chapters and 16 schedules, and it replaces the 1961 Act. Six months in, the same slips keep appearing in notices, replies and client emails. Here are ten of them.

1. FY 2025-26 is under the new Act

It isn't. Income before 1 April 2026 stays under the 1961 Act. AY 2026-27 returns and the tax audit extended to 21 October 2026 are all old-law territory.

2. It's a new tax regime

It's a restructuring, not a rate change. Rates, slabs and regimes didn't change because of the Act itself.

3. Assessment Year is gone

Only for new periods. You'll use both vocabularies for years, and the portal runs both in parallel.

4. I'll just cite the section I know

With 819 sections compressed into 536, old numbers don't map. For old years, cite the 1961 Act. For Tax Year 2026-27 onwards, cite the 2025 Act. Mixing them in a reply or opinion costs credibility.

5. Rules and forms are unchanged

The Income-tax Rules, 2026 (notified 20 March 2026) replace the 1962 Rules with roughly 333 rules. Forms are renumbered, so keep CBDT's mapping guidance open when filing.

6. Budget 2026 changes are part of the new Act

They're a separate layer riding on the same date. TCS on LRS remittances for education and medical treatment fell from 5% to 2%. Overseas tour packages moved to a flat 2%. Liquor, scrap and minerals rose from 1% to 2%. Update your payroll and vendor-payment configurations.

7. Buybacks are still deemed dividends

From 1 April 2026, buyback proceeds are taxed as capital gains, per Budget 2026 commentary. That changes who bears the tax and when, so review any live buyback plan.

8. All SGB redemptions are exempt

The capital gains exemption on maturity now applies only to those who bought at original issue. Secondary-market buyers are taxed.

9. Updated and revised returns work as before

The updated-return window for FY 2020-21 has closed. Additional fees for later years have gone up, and the revised-return deadline now falls on 31 March.

10. Perquisite and HRA numbers are the same

The Rules recalibrate them. Meal vouchers are exempt up to ₹200 a day, and the HRA metro list has been widened.

What to do this week

• Tag every open file as old Act or new Act.
• Keep a section-correspondence table where drafters can see it.
• Train the team on the renumbered forms.
• Re-check TCS and TDS settings in your systems.