By CA Subin B · Published 2 August 2026 · Subin B & Associates, Chartered Accountants
The Income-tax Act, 2025 came into force on 1 April 2026 and applies from Tax Year 2026-27 onwards. Filings currently being completed for FY 2025-26 (AY 2026-27) continue to be governed by the Income-tax Act, 1961, including tax audit reports in Forms 3CA, 3CB and 3CD.
The Income-tax Act, 2025 removes the twin concepts of "Previous Year" and "Assessment Year" and replaces them with a single Tax Year. Income earned in the financial year ending 31 March 2027 is simply the income of Tax Year 2026-27 — there is no separate assessment year to track.
| Concept | Income-tax Act, 1961 | Income-tax Act, 2025 (w.e.f. 1 April 2026) |
|---|---|---|
| Tax audit | Sec 44AB | Sec 63 |
| Tax audit report form | Form 3CA / 3CB / 3CD | Form No. 26 |
| Presumptive taxation | Sec 44AD / 44ADA / 44AE | Sec 58 |
| TDS on payments to non-residents | Sec 195 | Sec 393(2), Table Sl. No. 17 |
| Lower / Nil TDS certificate | Sec 197 | Sec 395 |
| Application for lower TDS certificate | Form 13 | Form No. 128 (Rule 213, IT Rules 2026) |
| Remitter declaration | Form 15CA | Form 145 |
| Chartered Accountant certificate | Form 15CB | Form 146 |
| NRI TDS quarterly return | Form 27Q | Form 144 |
| TDS certificate (non-salary) | Form 16A | Form 131 |
| Deductions on actual payment | Sec 43B | Sec 37 |
| Mode of computation of capital gains | Sec 48 | Sec 72 |
| Investment-linked deduction | Sec 35AD | Sec 46 |
| Assessment Year / Previous Year | AY / PY | Tax Year |
Under Section 44AB of the 1961 Act, taxpayers who declared lower profits than the presumptive rates could often avoid audit by simply not opting into presumptive provisions. Under Section 63 of the Income-tax Act, 2025, the audit trigger operates directly on the profitability benchmark itself. Low-margin businesses and professionals declaring income below the prescribed rates will be caught by mandatory audit requirements regardless of how they file.
1. Align accounting systems and master charts of accounts to reference both 1961 and 2025 section references.
2. Review vendor contracts and lower TDS applications under Section 395 (Form No. 128).
3. Audit low-margin business lines to assess Section 63 audit triggers ahead of Tax Year 2026-27 close.
Subin B & Associates provides direct tax advisory and transition audits for enterprises, firms and NRIs.
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