Income Tax Department Clarifies Which Tax Payments Fall Under Income Tax Act, 2025

What has changed

The Income Tax Department has refreshed its general e-Pay Tax FAQs to explain how taxpayers should choose between the Income Tax Act, 1961 and the Income Tax Act, 2025 while making tax payments during the transition to the new law. The clarification is especially relevant for Chartered Accountants, tax professionals, finance teams and taxpayers handling payments that relate to Assessment Year 2026-27 as well as Tax Year 2026-27.

Which Act applies to which payment?

The Department states that payments relating to Tax Year 2026-27 or later are to be made under the Income Tax Act, 2025. By contrast, payments relating to periods before Tax Year 2026-27, including Assessment Year 2026-27 or earlier, continue to be made under the Income Tax Act, 1961.

This distinction matters because the new law uses the concept of a Tax Year, while the earlier law uses the Assessment Year framework. The FAQ specifically says that there is no Assessment Year concept under the Income Tax Act, 2025.

Self-assessment tax for AY 2026-27 remains under the 1961 Act

For self-assessment tax relating to AY 2026-27, taxpayers should continue to select the Income Tax Act, 1961. This is because AY 2026-27 relates to income earned before the new Tax Year framework becomes applicable for FY 2026-27.

For payments relating to Tax Year 2026-27 onwards, the Income Tax Act, 2025 should be selected instead.

Advance tax for Tax Year 2026-27 falls under the 2025 Act

The Department separately clarifies that advance tax for Tax Year 2026-27 is governed by the Income Tax Act, 2025. For practitioners, this means that the same taxpayer may encounter two different statutory selections on the portal in the transition period depending on the year and nature of the payment.

Some legacy payment categories are not available under the 2025 Act

The FAQ also lists payment categories that are not applicable under the Income Tax Act, 2025. These include surtax, tax on distributed profit of companies, tax on distributed income to unit holders, the erstwhile buy-back tax under section 115QA of the Income Tax Act, 1961, certain payments under the Black Money Act, Banking Cash Transaction Tax, Fringe Benefit Tax, Hotel Receipts Tax, Interest Tax, Estate Duty, Wealth Tax, Gift Tax and Equalisation Levy.

Tax Year means the financial year beginning April 1

According to the Department, a Tax Year means the twelve-month financial year commencing on April 1. Accordingly, Tax Year 2026-27 under the Income Tax Act, 2025 refers to Financial Year 2026-27.

Challan retention and expiry rules

The updated FAQ also gives practical e-Pay Tax workflow guidance. A challan saved as a draft before CRN generation is retained for 15 days from the date of its last update. Once a CRN has been generated but the CIN has not yet been generated, received or updated, the challan appears under the Generated Challans tab.

A generated challan expires after T+15 days from CRN generation. Expired challans remain visible for 30 days from the Valid Till date. Available actions can include payment, download of a challan or mandate form, copying the challan and viewing details, depending on the payment mode.

Payment modes confirmed by the Department

The e-filing portal supports Net Banking, Debit Card, Payment Gateway including UPI and credit card options, NEFT or RTGS through a mandate form, and over-the-counter payment at selected bank branches using cash, cheque or demand draft.

CSI file guidance for TDS compliance

The FAQ explains that a CSI file contains challan information such as payment amount, date, section and type of tax, and is used while filing TDS returns to verify tax-payment details. Only TAN users can download the CSI file from the e-filing portal. The date-range filter can cover a maximum period of 24 months, and CSI files for periods before July 1, 2022 are to be obtained from the Protean portal.

Practical takeaway for taxpayers and CAs

The key compliance point is to identify the correct period before generating a challan. Self-assessment tax for AY 2026-27 continues under the 1961 Act, while advance tax for Tax Year 2026-27 is under the 2025 Act. Professionals handling both legacy-year liabilities and current-year payments should verify the Act selection before completing payment so that the challan is mapped to the correct legal framework.

Useful official links

General Questions FAQs - Income Tax Department

Key takeaway

The official e-filing portal has refreshed its payment FAQs during the transition to the new Act, answering a practical issue that can cause challan selection errors for taxpayers and professionals.