After 64 years, India’s Income Tax Act, 1961 is being replaced. The New Income Tax Act, 2025 received Presidential assent on August 21, 2025, and comes into force on April 1, 2026. While no tax rates or deduction limits have changed, the new Act is a ground-up rewrite — cutting 819+ sections down to 536, eliminating confusing provisos and explanations, and replacing the dual Previous Year/Assessment Year system with a single “Tax Year” concept. This article provides a complete, section-by-section comparison for taxpayers, businesses, and professionals.
Structural Comparison: Old Act vs New Act
| Parameter | Income Tax Act, 1961 | New Income Tax Act, 2025 |
|---|---|---|
| Total Sections | 819+ | 536 |
| Chapters | 47 | 23 |
| Total Pages | ~823 pages | ~622 pages |
| Provisos | ~1,200 | Removed — absorbed into plain language |
| Explanations | ~900 | Removed — integrated into section text |
| Section Numbering | Alphabetic suffixes (80C, 80CCD, 194DA) | Clean sequential numbering |
| Overall Volume Reduction | — | ~40% reduction |
The “Tax Year” Concept — Biggest Conceptual Change
Under the old Act, income earned in a Previous Year was taxed in the following Assessment Year — a dual framework that confused taxpayers for decades. For example, income earned in FY 2024–25 was assessed in AY 2025–26.
The new Act (Section 3) introduces a single “Tax Year” — defined as the 12-month financial year starting April 1. There is no separate Assessment Year. You earn and are assessed in the same Tax Year. This is a simpler, globally aligned approach.
Complete Section Mapping: Old vs New
Below is a verified mapping of the most important sections. Note that all deduction limits remain unchanged — only section numbers have changed.
Deductions and Exemptions
| Description | Old Section | New Section | Limit |
|---|---|---|---|
| Savings and Investments (LIC, PPF, ELSS) | 80C | 123 | Rs 1,50,000 (unchanged) |
| NPS Contributions | 80CCD | 124 | Same as before |
| Health Insurance Premium | 80D | 126 | Rs 25,000 / Rs 50,000 (unchanged) |
| Medical Treatment (Specified Diseases) | 80DDB | 128 | Same |
| Education Loan Interest | 80E | 129 | Full interest (unchanged) |
| Home Loan Interest (Additional) | 80EE / 80EEA | 130 / 131 | Same |
| Electric Vehicle Loan Interest | 80EEB | 132 | Rs 1,50,000 (unchanged) |
| Donations to Specified Funds | 80G | 133 | Same |
| Income Exempt from Tax | 10 | 11 | Same |
Capital Gains
| Description | Old Section | New Section |
|---|---|---|
| Capital Gains Definition | Implied / scattered | 67 (clear definition) |
| STCG on Listed Equity | 111A | 196 |
| LTCG on Non-Equity Assets | 112 | 197 |
| LTCG on Listed Equity | 112A | 198 |
| Capital Gains Exemptions | 54, 54EC, 54F | 85 to 88 |
Capital Gains Tax Rates (Updated from July 2024 Budget)
| Type | Old Rate | Current Rate |
|---|---|---|
| STCG on Listed Equity / Equity MF | 15% | 20% |
| LTCG on Listed Equity / Equity MF | 10% (above Rs 1 lakh exemption) | 12.5% (above Rs 1.25 lakh exemption) |
| LTCG on Immovable Property | 20% with indexation | 12.5% without indexation |
TDS, TCS and Other Key Sections
| Description | Old Section | New Section |
|---|---|---|
| Salary TDS | 192 | 392 |
| All Other TDS (Residents and Non-Residents) | 193 to 194T (60+ sections) | 393 (single section with tables) |
| TCS | Scattered across multiple sections | 394 |
| New Tax Regime | 115BAC | 202 |
| House Property — Standard Deduction | 24(a) | Preserved |
| Faceless Administration | Scheme-based (executive orders) | 532 (statutory provision) |
TDS Consolidation — A Major Simplification
The TDS overhaul is perhaps the most impactful change for businesses and professionals. Under the old Act, there were 60+ separate TDS sections (Sections 192 to 194T), each with its own threshold, rate, and format. The new Act collapses all of this into just 3 sections:
- Section 392 — TDS on Salary
- Section 393 — TDS on all other payments (residents and non-residents), organized through structured tables within one section
- Section 394 — Tax Collected at Source (TCS)
This dramatically reduces the compliance burden for businesses that previously had to navigate dozens of separate sections to determine the correct TDS treatment.
Tax Slabs — No Change Under the New Act
An important clarification: tax rates and slabs are determined by the annual Finance Act, not by the Income Tax Act. The New Income Tax Act, 2025 does not change any tax rates. The current slabs (from Finance Act 2025) continue to apply.
New Tax Regime (Default) — Finance Act 2025
| Income Slab | Tax Rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 to Rs 8,00,000 | 5% |
| Rs 8,00,001 to Rs 12,00,000 | 10% |
| Rs 12,00,001 to Rs 16,00,000 | 15% |
| Rs 16,00,001 to Rs 20,00,000 | 20% |
| Rs 20,00,001 to Rs 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
Standard Deduction: Rs 75,000 for salaried employees. Rebate u/s 87A: Income up to Rs 12,00,000 is effectively tax-free under the new regime.
Old Tax Regime — Unchanged
| Income Slab | Tax Rate |
|---|---|
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 to Rs 5,00,000 | 5% |
| Rs 5,00,001 to Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
What Stays the Same
- Tax rates and slabs — determined by Finance Acts, not changed by the new Act
- All deduction limits — amounts unchanged, only section numbers changed
- Five heads of income — Salary, House Property, Business/Profession, Capital Gains, Other Sources
- Filing due dates — July 31 for individuals, October 31 for audit cases
- Residential status criteria — unchanged
- Penalties structure — 50% for under-reporting, 200% for misreporting
- Transfer pricing provisions — unchanged
- GAAR provisions — unchanged
Impact on Different Taxpayers
Salaried Individuals
No change in tax liability. The benefit is easier compliance and a simpler Tax Year concept. Section numbers for deductions change, but your tax computation remains identical.
Businesses and Professionals
TDS compliance is significantly simplified with the consolidation from 60+ sections to just 3. The presumptive taxation threshold remains at Rs 10 crore (now under Section 63). Overall compliance burden is expected to reduce.
NRIs
Residency rules remain unchanged. A notable improvement: TDS refunds are now available on belated returns, addressing a long-standing pain point for non-residents who often miss filing deadlines.
Chartered Accountants and Tax Professionals
The primary task is learning the new section numbers. The Income Tax Department has launched an online section comparison tool to assist with the transition. The simplified structure should reduce interpretation disputes over time.
Timeline of the New Income Tax Act, 2025
| Date | Milestone |
|---|---|
| February 13, 2025 | Bill introduced in Lok Sabha |
| August 11, 2025 | Revised bill tabled in Parliament |
| August 21, 2025 | Presidential assent received |
| April 1, 2026 | New Act comes into force |
| July 2027 | First ITR filing under the new Act |
Transition rule: Any proceedings, assessments, or matters relating to periods up to March 31, 2026 will continue to be governed by the Income Tax Act, 1961.
Need Help Navigating the Transition?
AeTx is an AI-powered, 100% virtual chartered accountant firm based in Gurgaon, specializing in India company setup, international tax, monthly compliance, annual audit, and NRI advisory. Whether you are a salaried professional trying to understand the new section numbers, a business owner looking to streamline TDS compliance, or an NRI needing guidance on cross-border tax matters — our team of chartered accountants in Gurgaon is ready to assist. Reach out to us on WhatsApp: +91 9810 555 783 or visit aetx.com to get started.