The transition to the Income-tax Act, 2025 does not create a missing assessment year or require businesses to change their accounting year. CBDT’s transition FAQs clarify that income earned during 1 April 2025 to 31 March 2026 continues to be governed by the Income-tax Act, 1961 and is assessed in AY 2026-27. Income arising from 1 April 2026 onward is governed by the Income-tax Act, 2025 and uses the new Tax Year terminology.

CBDT also specifically clarifies that businesses do not need to alter their accounting periods because the new Tax Year remains aligned with the financial year. The 1961 Act has been repealed from 1 April 2026, but transitional and savings provisions continue to govern matters belonging to earlier periods. Income Tax India

Business impact: This distinction becomes particularly important during assessments, notices, tax provisioning, litigation and transaction reviews spanning 31 March/1 April 2026. Finance teams should identify the underlying period before selecting the applicable provision rather than assuming that every proceeding handled after 1 April automatically falls under the new Act.

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