E-Filing Portal Will Support Old And New Tax Laws During Transition: I-T Dept
· Free Press Journal
New Delhi, Mar 23: The Income Tax Department on Monday said its e-filing portal will facilitate compliance under both the old and Income Tax Acts, and all assessments, appeals, and other proceedings relating to earlier years will continue to be conducted under the old Act until their final resolution.
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In a set of FAQs issued days before the implementation of the new Income Tax Act, 2025, the I-T Department said taxpayers filing returns for AY 2026–27 (pertaining to the period governed by the old Act) in July 2026 will do so using the forms prescribed under the old Act.
At the same time, advance tax payments for Tax Year 2026–27, commencing from June 2026, will be made in accordance with the new Act.
New tax law to take effect from April 1, 2026
The new Income Tax Act, 2025, which replaces the six-decade-old law, will come into effect from April 1, 2026. The revenue-neutral legislation simplifies tax rules, reduces litigation, introduces a single tax-year system, and eases compliance through redesigned return forms.
The FAQ said effective April 1, 2026, the 1961 Act will be repealed. However, its provisions will continue to govern all tax years beginning before April 1, 2026.
Parallel operation of old and new Acts
"The Income-tax Department's e-filing portal will facilitate compliance under both the old and the new Acts concurrently. All assessments, appeals, and other proceedings relating to earlier years will continue to be conducted under the old Act until their final resolution," it added.
The government is implementing necessary measures to ensure that both legislative frameworks operate seamlessly and simultaneously on the income tax portal, the FAQ added.
Simplified tax framework introduced
The Income Tax Act, 2025, simplifies the tax timeline by doing away with the distinction between the assessment year and the previous year, replacing it with a single "tax year" framework. It also allows taxpayers to claim TDS refunds even when ITRs are filed after deadlines, without any penal charges.
The FAQ also said that if the assessing officer initiated assessment of a taxpayer's income for assessment year 2024–25 before the new Act comes into force, that entire assessment and other proceedings will be completed under the provisions of the old Act.
Transition provisions and continuity
It also said that compliances, such as TDS, TCS, advance tax payments, etc., which occur within the financial year, and others, such as return filing, assessments, reassessments, appeals, penalties, and refunds, often extend well beyond the year, sometimes for many years in select cases.
"Therefore, when a new tax law comes into force, the old and new laws must coexist for a transitional period. The Income Tax Act, 2025, acknowledges this practical reality and handles the transition through Section 536, the repeal and savings clause," the FAQ said.
Section 536 of the Income Tax Act, 2025, contains 22 sub-clauses addressing various transitional situations and ensures the old tax framework continues to apply to earlier years. It also aligns terminology between the two Acts and allows the law to be modernised without unsettling established positions.
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The I-T Department's FAQ further said that there is no missing year or overlap due to the shift from 'Assessment Year' to 'Tax Year'.
Income earned during FY 2025–26 will be governed by the Income-tax Act, 1961, and assessed in AY 2026–27. Income earned from April 1, 2026, onwards will be governed by the Income Tax Act, 2025 and assessed for Tax Year 2026–27 and onwards.
(Disclaimer: Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)