Quick Summary
The Central Board of Direct Taxes (CBDT) has issued a detailed set of FAQs to guide taxpayers on the transition from the Income-tax Act, 1961 to the Income Tax Act, 2025, which comes into effect from April 1, 2026. The document clarifies key compliance, procedural and legal issues during the shift to the new tax regime.
Key Highlights from the FAQs
- No New Taxes Introduced: The new Act focuses on simplification and clarity without increasing tax burden.
- Old & New Laws to Run Parallel: The 1961 Act will continue to apply to earlier years, while the 2025 Act governs income from FY 2026-27 onwards.
- Pending Cases to Continue Under Old Law: Ongoing assessments, appeals, and reassessments will be completed under the old Act to ensure continuity.
- No 'Missing Year' in Transition: Income up to March 31, 2026 will be taxed under the old Act, while income from April 1, 2026 falls under the new regime.
- ITR Filing Rules Largely Unchanged: Return filing obligations, due dates, and categories of taxpayers remain broadly the same.
- TDS & Tax Payments Split Between Two Acts: Transactions before April 2026 follow the old law, while those after will be governed by the new Act.
- Rights & Refunds Protected: Taxpayer rights, refunds, and liabilities under the old Act will continue even after the new law comes into force.
- Carry Forward of Losses Allowed: Losses and deductions from earlier years will continue seamlessly under the new regime.
Also Read: CBDT Notifies Income Tax Rules 2026: Key Changes to Take Effect from 1st April
What Taxpayers Should Do
Taxpayers are advised to:
- Maintain separate records for FY 2025-26 and FY 2026-27
- Ensure correct selection of AY (old) vs Tax Year (new)
- Reconcile TDS and AIS carefully during transition
Conclusion
The CBDT's FAQs aim to ensure a smooth and confusion-free transition to the Income Tax Act, 2025 by addressing practical issues faced by taxpayers, professionals, and businesses.
The Income Tax Act 2025 comes into effect from April 1, 2026.
No, the new Act focuses on simplification and clarity and does not introduce any new taxes.
The Income-tax Act, 1961 will continue to apply to income earned in earlier years, while the Income Tax Act, 2025 will govern income from the financial year 2026-27 onwards.
Pending assessments, appeals, and reassessments will be completed under the old Income-tax Act, 1961 to ensure continuity.
Yes, taxpayer rights, refunds, and liabilities accrued under the old Act will continue to be honoured even after the new law comes into force.
Taxpayers should maintain separate records for FY 2025-26 and FY 2026-27, ensure they select the correct assessment year (old) versus tax year (new), and reconcile TDS and AIS carefully.
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