# Income Tax Act 2025: Which Rules Apply to Your India Return?

> Understand the April 2026 transition, the difference between AY 2026-27 and Tax Year 2026-27, and which Act to select for tax payments.

Author: Tax CoPilot Editorial. Updated: 2026-11-14T02:32:57.20172+00:00.

**Rules checked: 14 November 2026.** This guide separates two periods that sound similar but are not interchangeable. It covers individual taxpayers and is general information, not a professional opinion on your return.

## The short answer
Income earned from 1 April 2025 to 31 March 2026 belongs to FY 2025-26. Its return is for **AY 2026-27 under the Income-tax Act, 1961**, even when you submit it after 1 April 2026. Income earned from 1 April 2026 to 31 March 2027 belongs to **Tax Year 2026-27 under the Income-tax Act, 2025**. The Department explains this distinction in its [transition FAQs](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/%20income%20tax%20returns-faq?mobile-app=1).

## Assessment year is not the new tax year
Under the 1961 Act, the financial year is the earning period and the assessment year follows it. Under the 2025 Act, the term Tax Year refers to the twelve-month period beginning on 1 April; there is no separate assessment-year concept. Do not replace every AY label with Tax Year: older-period returns, payments and proceedings still need their correct period. See the Department’s [General Questions FAQs](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/General%20Questions-faqs?mobile-app=1).

## Which Act should you select when paying?
- **Self-assessment tax for AY 2026-27:** select the Income-tax Act, 1961 and the correct assessment year.
- **Advance tax for Tax Year 2026-27:** select the Income-tax Act, 2025 and the correct tax year.
- **Earlier-year demands or corrections:** use the period to which the payment relates, not simply the date you are making the payment.
The official [payment FAQs](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/General%20Questions-faqs?mobile-app=1) confirm the first two choices. Check the payment type, PAN and period before paying, and retain the challan.

## Do you need two returns immediately?
No. The Department says the return obligation for Tax Year 2026-27 arises after that tax year ends. Filing an AY 2026-27 return during the transition does not mean a second return for unfinished Tax Year 2026-27 is due at the same time. The new Act brings original, belated, revised and updated-return provisions together in Section 263; it does not mean everyone automatically needs all four kinds of return. [Official return FAQs](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/%20income%20tax%20returns-faq?mobile-app=1).

## A practical preparation checklist
1. Separate documents by earning period. For AY 2026-27, collect salary and interest records covering FY 2025-26.
2. Compare Form 16 or Form 16A with AIS, TIS and Form 26AS; investigate differences rather than adding the same income twice.
3. Match tax-payment challans to the appropriate Act and year.
4. Check the currently notified return form, applicable filing deadline and any extension on the official portal before submission.
5. Keep evidence of deductions and tax credits, and verify the submitted return using the official process.

## What Tax CoPilot can help you prepare
The India preparation workflow currently supports ordinary-income estimates for AY 2026-27 within its stated limits. It does not implement every provision of the new Act or submit an official return. Do not use an AY 2026-27 estimate as a Tax Year 2026-27 filing calculation. [Start an India preparation draft](/case/new), or read [FY 2025-26 new-regime rules](/resources/new-tax-regime-fy-2025-26-rebate-guide). Business income, foreign assets, capital gains and other complex situations require an appropriately qualified adviser.

## Official sources
- [Income Tax Returns FAQs: transition between the Acts](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/%20income%20tax%20returns-faq?mobile-app=1)
- [General Questions FAQs: tax years and tax payments](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/General%20Questions-faqs?mobile-app=1)

This article does not assume that a Budget proposal is enacted law or that an ordinary filing date remains unchanged. Recheck the official portal for later notifications.