The Income-tax Act, 2025, notified on 28 March 2025 and effective from 1 April 2026, is the most significant overhaul of India's direct tax framework since 1961. For Chartered Accountants, this is not just a name change. The entire section numbering, chapter structure, and cross-referencing logic has been rewritten.
Why Did We Need a New Act?
The IT Act 1961 had accumulated 298 sections (many with sub-sections running into double-digit letters), 23 chapters, and thousands of provisos added over six decades. The Finance Bill amendments alone ran to hundreds of pages each year. The 2025 Act aims to simplify this by:
- Reducing total sections from 298 to 536 (more sections, but each is shorter and self-contained)
- Eliminating provisos: every exception is now a separate sub-section
- Reorganising chapters into a more logical flow: Income → Deductions → Tax Computation → Collection → Assessment → Appeals
Key Structural Changes
New Section Numbering: Every section number has changed. For example, the old Section 80C (deductions) is now covered under Sections 123-128 of the 2025 Act. The old Section 194C (TDS on contracts) maps to Section 393. CAs who have memorised section numbers over decades will need to rebuild that muscle memory.
Chapter Reorganisation: The 2025 Act has 23 Parts (replacing the old Chapters). Part IV covers "Computation of Total Income" with separate sub-parts for each head of income. Part X covers "Tax Deduction and Collection at Source," consolidating what was scattered across Chapter XVII-B and XVII-BB.
Simplified Language: Provisos have been replaced with standalone sub-sections. The old Section 10 had 47 clauses with nested provisos. The equivalent provisions in the 2025 Act are spread across Sections 11 through 59, each dealing with a specific exemption.
Tax Year Terminology: The "Previous Year" concept is replaced by "Tax Year." Assessment Year remains, but the Act now uses "tax year 2025-26" instead of "previous year relevant to assessment year 2026-27."
What CAs Should Watch for in AY 2026-27
Cross-referencing: For AY 2026-27 (tax year 2025-26), the transitional provisions are critical. Section 536 (the savings clause) preserves the validity of actions taken under the old Act. But new notices, proceedings, and orders issued after 1 April 2026 will cite 2025 Act sections.
Return Forms: The ITR forms for AY 2026-27 are expected to reference the new section numbers. CAs filing returns will need to map old deductions (80C, 80D, 80G) to their 2025 Act equivalents.
Client Communication: Clients will be confused. They know "80C" and "HRA exemption under 10(13A)." CAs will need to translate between old and new references for at least 2-3 years.
Notice Responses: Any notice issued after 1 April 2026, even for earlier assessment years, will use 2025 Act section numbers. The response must cite the correct Act based on which law was in force during the relevant tax year.
The Old-to-New Mapping Problem
This is where most CAs will struggle. There is no one-to-one mapping for every provision. Some old sections have been split into multiple new sections. Some have been merged. And a few concepts (like the old Section 14A disallowance) have been restructured entirely.
CBDT has published a concordance table, but it covers only the major sections. For less common provisions (international taxation, trust taxation, cooperative societies), CAs will need to read the new Act carefully.
Our Take
The 2025 Act is a welcome simplification in structure. But the transition period (AY 2026-27 through AY 2028-29) will be painful. CAs who invest time now in understanding the new numbering will have a significant advantage over those who try to learn on the fly during filing season.
At TaxMarg, we have indexed the complete IT Act 2025 alongside the old 1961 Act, with cross-references mapped at the section level. When you search for an old section number, we show you the equivalent 2025 provision automatically.