--- title: "Income Tax Act 2025: What Actually Changes for You from April 2026" url: https://www.anukram.in/blog/income-tax-act-2025-what-changes-from-april-2026.html description: "The Income Tax Act 2025 replaces the 1961 Act from April 1, 2026. Tax Year replaces FY/AY, Section 80C becomes Section 123, and Hyderabad gets 50% HRA exemption. What changes, what doesn't — in plain language." updated: 2026-10-04 source: Anukram, Hyderabad (anukram.in) license: Free to read, quote and cite with a link to anukram.in. General information, not professional advice. --- [Home](https://www.anukram.in/) › [Blog](https://www.anukram.in/blog/) › Income Tax Act 2025 # Income Tax Act 2025: What Actually Changes for You from April 2026 By [Anurag](https://www.anukram.in/about.html) · Anukram, Hyderabad · Updated 18 July 2026 After 65 years, India has a new income tax law. The **Income Tax Act, 2025** replaced the Income-tax Act, 1961 with effect from **April 1, 2026**. The old Act's 819 sections across 23 chapters have been compressed into **536 sections** — same 23 chapters, far less clutter. Headlines have made it sound dramatic. For most taxpayers it isn't — *the law changed shape more than substance*. But a few changes genuinely matter, and one of them is a straight-up win for anyone renting in Hyderabad. Here's the honest breakdown. ## First, the most important clarification **The ITR you're filing right now (by July 31 / August 31, 2026) is still under the old 1961 Act.** It covers FY 2025-26. The new Act applies from Tax Year 2026-27 — the income you're earning *now*, which you'll report in the return you file in 2027. Don't let anyone confuse you this filing season. Full deadline calendar here: [ITR last dates AY 2026-27](https://www.anukram.in/blog/itr-filing-last-date-ay-2026-27.html). ## "Tax Year" replaces FY and AY — finally The single most useful change is vocabulary. The old law made everyone juggle two overlapping terms: Financial Year (when you earn) and Assessment Year (when you file). Endless confusion — wrong-AY challans, wrong-year filings. The new Act uses one term: **Tax Year** — the 12-month period starting April 1 in which you earn the income. You earn in Tax Year 2026-27, you file for Tax Year 2026-27. Done. ## Your favourite sections have new numbers The deductions survive — the numbers changed: | What it does | Old (1961 Act) | New (2025 Act) | | --- | --- | --- | | LIC, PPF, ELSS, tuition fees etc. (₹1.5L) | Section 80C | **Section 123** | | NPS contributions | Section 80CCD | **Section 124** | | Health insurance premium | Section 80D | **Section 126** | Expect payroll declaration forms, bank tax-saver FD receipts, and insurance ads to slowly switch numbering through 2026-27. Both numbering styles will float around for a while — now you know they're the same thing. ## The Hyderabad win: 50% HRA exemption Under the old rules, only Delhi, Mumbai, Chennai and Kolkata qualified as "metro" for the higher 50%-of-salary HRA exemption. Hyderabad renters — some paying Gachibowli and HITEC City rents higher than Kolkata's — were stuck at 40%. **From April 1, 2026, the 50% list expands to 8 cities: Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Pune, Ahmedabad — and Hyderabad.What it means:** if you claim HRA under the *old regime*, your exemption ceiling rises meaningfully from Tax Year 2026-27. Example: basic salary ₹50,000/month → the 50%-of-salary limb of the HRA formula rises from ₹2.4L to ₹3L per year. For high-rent tenants this can tip the old-vs-new regime decision back toward old. Run both sides in our [free tax calculator](https://www.anukram.in/tools/income-tax-calculator.html). ## What else changes - **Share buybacks → capital gains.** From April 1, 2026, amounts received on buyback are taxed as capital gains in your hands (the old buyback-tax-on-company + exempt-in-your-hands structure is gone). - **Cleaner drafting for TDS, salary, house property** — tables and formulas replace cross-referenced provisos. Same outcomes, easier reading. - **Digital-first administration** — faceless assessment and e-verification are baked into the new Act's structure rather than bolted on. ## What does NOT change - **Tax slabs and rates** — Budget 2026 changed nothing for FY 2026-27. New regime stays default. - **₹12 lakh effectively tax-free** — the Section 87A rebate (up to ₹60,000) continues in the new regime, plus ₹75,000 standard deduction for salaried. - **Old vs new regime choice** — both regimes continue exactly as before. - **Capital gains rates, TDS rates, advance tax schedule** — carried forward as-is. ### Confused between the old and new regime? Send us your salary structure on WhatsApp — we will work out your exact tax under both regimes, including the HRA change. ITR filing from ₹499. [WhatsApp us → +91 96315 26999](https://wa.me/919631526999?text=Hi+Anurag,+I+want+to+understand+the+new+tax+law.) ## Frequently asked questions ### Do I need to do anything for the new Act right now? No. For now, just file your FY 2025-26 ITR on time (under the old Act). The new Act applies to your 2026-27 income — that return is filed in 2027. ### Has the 80C limit changed? No — the deduction is the same (₹1.5 lakh); only the section number changed: it is now Section 123. Note: it is available only in the old regime. ### Can I claim Hyderabad's 50% HRA in this year's ITR? No — the 50% rate applies from Tax Year 2026-27 (salary earned after April 2026). In the return you are filing now (FY 2025-26), Hyderabad is still 40%. ### Does the new Act stop notices for old cases? No — assessments and notices for earlier years continue under the old Act. The new Act applies only to income from Tax Year 2026-27 onwards. This article is general information based on the Income Tax Act, 2025 and announcements up to 18 July 2026 — not professional advice for your specific situation. Confirm details on *incometax.gov.in*. Related: [ITR Filing](https://www.anukram.in/itr-filing.html) · [Salaried ITR](https://www.anukram.in/itr-individual.html) · [Income Tax Calculator](https://www.anukram.in/tools/income-tax-calculator.html) --- Page: https://www.anukram.in/blog/income-tax-act-2025-what-changes-from-april-2026.html Contact: WhatsApp +91 96315 26999 | hello@anukram.in | Hyderabad, Telangana, India