The Income-tax Act, 2025 is live. Your contracts still cite the old one.

On 1 April 2026, India retired a 65-year-old law. The Income-tax Act, 2025 — passed in August 2025, with Rules notified on 20 March 2026 — replaced the Income-tax Act, 1961 for tax years starting 1 April 2026.

No rates changed. That's exactly why most companies have done nothing — and why the transition problems are quietly accumulating in their paperwork.

What actually changed

One "tax year". The previous-year/assessment-year pair — a confusion generator for six decades — is now a single tax year running 1 April to 31 March. When someone says "Tax Year 2026-27", that's the year the income is earned and taxed. Simple, finally.

A much shorter Act. 536 sections instead of 819. 23 chapters instead of 47. Roughly half the words. Redundant provisions and archaic language are gone; tables and formulas replace walls of provisos.

Everything renumbered. This is the operational headache. Provisions you cite by muscle memory — TDS sections, disallowances, penalty clauses — have new numbers. Forms are renumbered too: 190 forms under the new law, rolled out in phases, with 54 critical ones live at launch.

A two-Act transition. Your FY 2025-26 return (AY 2026-27) is still filed under the 1961 Act. Transactions from 1 April 2026 fall under the 2025 Act. The e-filing portal runs both. Notices for old years cite old sections; new compliance cites new ones. Your finance team needs to be bilingual for a while.

Where companies are getting caught

Contracts and loan agreements. Tax gross-up clauses, withholding obligations, and indemnities in your agreements cite 1961 Act sections. Most have "or corresponding provision" language that saves them — check yours. The ones that don't are disputes waiting for a trigger. This belongs in the same clean-up pass as your group restructuring review.

TDS and payroll systems. Software mapped to old sections and old form numbers needs remapping to the new provisions, or your Q2/Q3 filings will throw validation errors at the worst possible time. Vendors are updating, but "the software handles it" is an assumption worth verifying once.

Board and policy documents. Tax policies, perquisite rules in HR manuals, and CSR/tax governance documents citing the old Act should be refreshed in the next board cycle. Auditors have started flagging stale references — and it's an easy observation for them to make. (Our secretarial audit guide covers how these small observations add up.)

What we'd do this quarter

Run a reference sweep: every document, system and template that cites an Income-tax Act section gets mapped to the new numbering using the official correspondence tables — never from memory or blog summaries. Brief finance and HR in one session: which filings this year run under which Act. And diarise the phased form rollouts, because "form not yet notified" is a deadline risk, not an excuse.

CorpCFO's tax practice does this sweep as a fixed-scope exercise for companies — document inventory, remapping, system checks, team briefing. It's unglamorous work that prevents very glamorous problems.