India's 2025 Income Tax Act reforms introduce dual filing tracks and extended updated return window

The Income Tax Act, 2025 has been introduced in India alongside the existing 1961 Act, creating two parallel compliance tracks. For the financial year 2025‑26 (assessment year 2026‑27) taxpayers must still file returns using the old forms under the 1961 Act, while income earned from 1 April 2026 onward is governed by the new Act, with the first return due in July 2027. The new legislation replaces the “assessment year” concept with a single “tax year”, renumbers many sections—including moving depreciation from Section 32 to Section 33 and consolidating presumptive taxation under Section 58—and reorganises the business‑income chapter.

In parallel, the Updated Return mechanism under Section 139(8A) has been expanded. The Finance Act 2025 extended the permissible filing period from 24 to 48 months after the end of the relevant assessment year. The Finance Act 2026 added provisions that link Updated Returns to reassessment proceedings under Sections 148 and 148A, clarifying that an Updated Return generally cannot be filed once assessment proceedings are pending, while the rules for scrutiny assessments under Section 143(2) remain unchanged.