Income-tax Act 2025 for Business Owners: What Changed and What It Means for Sellers

The Income Tax Act of 1961 is 64 years old. It was written before computers existed, before the internet existed, and long before a Meesho seller in Jaipur could run a ₹50L/year business from a smartphone. The law grew around its own inconsistencies for six decades — provisos added to provisos, explanations appended to explanations, until the Act ran to 4.5 lakh words, 298 sections, and 23 chapters of legal archaeology that even experienced CAs keep a reference guide open for.

Updated 21 September 2026. This post was first written when the rewrite was still a Bill. The Income-tax Act, 2025 is now in force from 1 April 2026. We have rewritten the status, timeline and TDS sections below. Your FY 2025-26 return is still filed under the 1961 Act.

The Act keeps tax rates identical but, as introduced, cut the word count to about 2.6 lakh and the sections to 536, and removed around 1,200 provisos. It came into force on 1 April 2026. Here is what it means for your business.

What the Act Changes (and What It Doesn't)

Start with what stays the same, because this is where most confusion begins.

Unchanged:

• All income tax slab rates and percentages
• The ₹12 lakh zero-tax threshold under the new regime
• The 0.1% TDS rate for marketplace sellers (now under Section 393(1))
• Capital gains tax rates and holding periods
• The GST system, which is a separate law and unaffected

Changed:

The Act rewrites the structure and language of income tax law, not the substance. Think of it less as a new tax and more as a translation of the old one, with contradictions resolved and dead wood removed. Section numbers, form numbers and a few terms are new.

Tax Year Replaces Previous Year and Assessment Year

Under the 1961 Act, income earned in the "previous year" (say FY 2025-26) is assessed in the "assessment year" (AY 2026-27). You file an ITR for AY 2026-27 to report income earned in FY 2025-26, and the portal, forms and notices all refer to the assessment year.

The new Act uses a single term: tax year. Income earned in tax year 2026-27 is reported for tax year 2026-27. It applies from FY 2026-27, so the first returns in this language are for income earned this year.

Do not mix the two. For FY 2025-26 you still use the assessment year AY 2026-27 and the 1961 Act's sections and forms.

Section 194O Is Now Section 393(1)

The Act consolidates all TDS and TCS provisions into one chapter. For marketplace sellers the change that matters is:

	Old	New
Section	194O	393(1), Table Sl. No. 8(v)
Rate	0.1% on gross	0.1% on gross (unchanged)
Threshold	₹5 lakh, individuals/HUFs with PAN/Aadhaar	Same

You still receive TDS certificates from Amazon, Flipkart and Meesho, and you still claim the credit in your ITR. The process is the same and only the section reference changes. People still search for "194O", so we keep using it in our guides alongside the new number. The full rate and threshold explanation is in the Section 194O guide.

Officially mapped by the Income Tax Department: Form 15G/15H is now Form 121 (a declaration under Section 393(6)), and presumptive taxation under Sections 44AD, 44ADA and 44AE is consolidated into Section 58. Form 16 to Form 130, Form 16A to Form 131 and Form 26AS to Form 168 (the Annual Information Statement) come from secondary sources, so check the portal before you rely on them. Our old-to-new cheat-sheet lists every row with its source.

The Audit Threshold: Confirm Before You Rely on It

The Bill as introduced was reported to make the 95% digital-receipts carve-out the standard baseline for the tax audit threshold. Under the 1961 Act the limit for such businesses is ₹10 crore, and it remains the number to plan around for FY 2025-26. We have not confirmed that any higher threshold made it into the enacted Act. Ask your CA partner what applies to FY 2026-27 before you assume you are exempt from an audit.

Which Law Applies to What

Item	Law	Notes
ITR for FY 2025-26 (AY 2026-27)	Income Tax Act 1961	Old forms, old section numbers
Notices and assessments for earlier years	Income Tax Act 1961
Income and TDS of FY 2026-27 onwards	Income-tax Act 2025	Tax year 2026-27, Section 393
GST	CGST/IGST Acts	Unaffected

What to Do Right Now

1. File your FY 2025-26 return correctly under the 1961 Act. Non-audit ITR-3/ITR-4 filers were due on 31 August, and audit cases are due on 31 October. If you missed the date, you can still file a belated or revised return, and your CA partner can confirm the current cut-off and late fee.

2. Check your PAN is correctly registered with every marketplace. A missing or wrong PAN can attract a higher TDS deduction, and the Section 393 mapping does not change that.

3. Expect new numbers on this year's certificates. TDS certificates and portal entries for FY 2026-27 use the new sections and forms. Give your CA partner the new numbers when you share documents, and ask them to map them to your 1961-Act working for FY 2025-26.

How to claim TDS credit from marketplace platforms in your ITR → Zero tax up to ₹12 lakh — what it means for business owners → Section 194O (now 393(1)): the 0.1% TDS rate fully explained →

The Income-tax Act 2025 is, at its core, a promise that the tax law will eventually say what it means. Rates are the same, the numbers are new, and for the next few months the safest habit is to write both the old and new section next to each item you file.