The introduction of the Income-tax Act, 2025 has left many taxpayers scratching their heads. One question has surfaced repeatedly: with the switch from the familiar “Assessment Year” (AY) to “Tax Year” from 1 April 2026, will people have to file two income tax returns?
Thankfully, that’s not the case.
The Department has clarified that taxpayers will not be required to file two returns for the same income. Although the new law changes the terminology, the filing process for income earned during FY 2025-26 will continue under the existing rules.
Many taxpayers feared that the transition to the new law would mean filing one return under the old Income-tax Act, 1961 and another under the new Income-tax Act, 2025.
The tax department has put those concerns to rest.
Responding to a frequently asked question, : “No. The obligation to file the return for the Tax Year 2026-27 will arise after the end of the Tax Year and it is similar to the framework existing in Income Tax Act, 1961.”
In simple terms, taxpayers will continue filing only one return for income earned between 1 April 2025 and 31 March 2026.
The Income Tax Department has clarified that income earned during FY 2025-26 will be reported through Assessment Year 2026-27, even though the return will be filed after the new law comes into force.
The department said: “The ITR for income earned during FY 2025-26 will be filed for Assessment Year 2026-27 under the provisions of the Income Tax Act, 1961. Even though the filing will typically occur after April 1, 2026, the return relates to a tax year beginning before April 1, 2026 and is therefore governed entirely by the old Act.”
This means taxpayers should continue following the existing return filing process for the current filing season.
The department has also confirmed that the familiar ITR forms will continue for AY 2026-27.
Forms including ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7 will be notified under the Income Tax Act, 1961 and made available on the e-filing portal before the filing deadline.
Taxpayers should simply select Assessment Year 2026-27 while filing returns for income earned during FY 2025-26.
The confusion largely stems from the coexistence of the old and new tax laws during the transition period.
The department has explained that these are two separate compliance requirements.
For income earned during FY 2025-26, taxpayers must file their return under AY 2026-27 using the existing ITR forms under the old law. The due date remains 31 July 2026 for most non-audit taxpayers, while certain categories may have later deadlines.
The return for Tax Year 2026-27, which covers income earned from 1 April 2026 onwards, will only become due in 2027 under the new Income-tax Act, 2025.
The department has also clarified that the e-filing portal will support compliance under both the old and new laws during the transition period.
The new Income-tax Act also retains the same late filing fee structure that taxpayers are already familiar with.
According to the department, Section 428 of the Income-tax Act, 2025 prescribes a fee of Rs 1,000 where the total income does not exceed Rs 5 lakh, and Rs 5,000 in all other cases.
However, the department has clarified that these provisions will apply only to returns filed under the new Act for Tax Year 2026-27 onwards. Returns filed for AY 2026-27 and earlier years will continue to be governed by the late filing provisions under Section 234F of the Income-tax Act, 1961.
For now, the message from the tax department is clear, i.e., despite the arrival of a new tax law, taxpayers filing returns for FY 2025-26 have only one return to worry about, and it will continue to be filed under Assessment Year 2026-27 using the existing system.