Overview
Taxpayers need to be aware of how tax payments, collection, and refunds will be managed throughout the transition period from the Income-tax Act of 1961 to the Income-tax Act of 2025. The government has simplified the way the provisions are presented while maintaining compliance.
1. TDS (Tax Deducted at Source) Transition Provisions
The date of payment or credit determines whether TDS is applicable, but the procedure is unchanged:
The Old Act is applicable if payment or credit is made by March 31, 2026, at the latest.
The New Act is applicable if it is made on or after April 1st, 2026.
2. Transitional Advance Tax Provisions
Advance tax regulations are essentially unchanged:
If the amount of tax due surpasses ₹10,000, liability results.
Due dates and installments are still the same.
However, applicability is where the main distinction is found:
The old Act governs advance tax for FY 2025–2026 (paid prior to April 1, 2026); the new Act governs advance tax for FY 2026–2027.
“Tax Year” has taken the place of “Assessment Year,” however the payment schedule is still the same.
3. Self-Evaluation and Consistent Tax Payments
The year in which income is earned, not the date of payment, still governs self-assessment tax.
For instance:
The previous Act will continue apply to taxes paid in July 2026 for FY 2025–2026.
To guarantee correct credit reflection, taxpayers must carefully choose the appropriate year (AY or Tax Year) while making payments.
4. The New Regime’s Refund Claims
Refund clauses guarantee the protection of taxpayers’ rights:
Refunds pertaining to the previous Act will still be handled in accordance with such legislation.
Refunds for excess TDS or taxes paid prior to April 1, 2026, are still available.
The two-year time limit for submitting refund claims is still in effect.
All outstanding refunds, entitlements, and claims from previous years will continue to be legitimate and enforceable even after the new Act takes effect.
In conclusion
The Income-tax Act of 2025 guarantees continuity without upsetting the current tax structures. Despite the structure’s simplicity, taxpayers still need to be mindful of deadlines, relevant regulations, and accurate reporting. A thorough comprehension of these transition regulations can guarantee seamless tax compliance and assist prevent mistakes and penalties.
TDS Clauses in the New Act
The basic requirement to pay taxes via advance tax, self-assessment tax, Tax Deducted at Source (TDS), or Tax Collected at Source (TCS) remains unchanged. Although the structure has been made simpler, the new Act has not altered the payment system. TDS provisions were previously dispersed among several sections (192 to 194T). They are now divided into two primary sections:
Section 392: Salary TDS
TDS on other payments under Section 393
In order to make compliance more organised and approachable, Section 393 further divides payees into residents, non-residents, and others. Crucially, TDS thresholds and rates have largely not altered.
