Income Tax Department Publishes Return-Filing FAQs for Income Tax Act, 2025: What Changes and What Still Follows the Old Act
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The Income Tax Department has published a detailed set of return-filing FAQs under the Income Tax Act, 2025, giving taxpayers and tax professionals a clearer map of how income-tax return compliance works during the transition from the Income Tax Act, 1961. The guidance is particularly relevant because the new Act has been in force from 1 April 2026, while several returns and proceedings relating to earlier periods continue to be governed by the repealed law.
AY 2026-27 still belongs to the old Act
The Department has clarified that income earned during financial year 2025-26 is to be reported for Assessment Year 2026-27 under the Income Tax Act, 1961. This remains the position even though the return is filed after 1 April 2026, when the Income Tax Act, 2025 came into force. The transition rule is therefore based on the period to which the income and proceeding relate, not merely the date on which the taxpayer performs the filing action.
The FAQ also confirms that taxpayers do not have to file two returns during financial year 2026-27 merely because the new law has begun. A return for Tax Year 2026-27 will become due only after that tax year ends, broadly preserving the familiar annual return cycle.
Section 263 becomes the central return-filing provision
For periods governed by the Income Tax Act, 2025, the Department says the principal return-filing provisions are consolidated in section 263. The section covers the original return, belated return, revised return and updated return in one place. The Department states that the broad filing obligation and the main categories of persons required to furnish returns remain substantially aligned with the earlier framework.
Belated, revised and updated return timelines
For AY 2026-27, the FAQ says a belated return under section 139(4) of the 1961 Act may be furnished on or before 31 December 2026 or before completion of assessment, whichever is earlier. The late-filing fee under section 234F remains ₹1,000 where total income does not exceed ₹5 lakh and ₹5,000 in other cases.
For the new Act framework, the Department lists the broad time limits in section 263: a belated return may be filed within nine months from the end of the relevant tax year or before completion of assessment, whichever is earlier; a revised return is described as being permitted within 12 months from the end of the relevant tax year or before completion of assessment, whichever is earlier; and an updated return under section 263(6) may be filed within 48 months from the end of the financial year succeeding the relevant tax year. The FAQ flags the 12-month revised-return point as linked to the Finance Bill, 2026 proposal, so professionals should verify the finally enacted position before advising on a deadline.
Updated returns continue, with restrictions
The Department explains that section 263(6) of the 2025 Act provides for updated returns. An updated return may be available whether or not an original, belated or revised return was previously filed, but it cannot be used to increase a loss, reduce the total tax liability or increase a refund. Only one updated return is permitted for a tax year, and additional income-tax is payable under section 267 at the prescribed rates.
For AY 2026-27 and earlier years, however, updated returns continue under the relevant provisions of the 1961 Act because those periods remain within the old-law transition framework.
Notices and scrutiny for older years stay under the 1961 Act
The FAQ gives practical examples showing that a defective-return notice or scrutiny proceeding relating to AY 2026-27 continues under the Income Tax Act, 1961 even if the notice is received after the new Act has commenced. The same transition principle applies to proceedings linked to older tax periods.
For taxpayers and advisers, this means return preparation software, notices, section references and procedural advice must be matched to the period involved. Using a 2025 Act section simply because the action happens after April 2026 can be wrong where the underlying assessment year remains governed by the 1961 Act.
Return verification remains familiar
The Department says there is no substantive change in the manner of verifying a return or in the categories of persons authorised to verify returns. Under the new Act, section 265 governs verification, while electronic modes such as Aadhaar OTP, net banking and digital signature continue.
What CAs and tax teams should do now
- Identify first whether the return or proceeding relates to AY 2026-27 or an earlier year, or to a tax year governed by the 2025 Act.
- Use the correct statutory section and time limit for that period rather than relying only on the filing date.
- Track final legislative changes where the FAQ itself refers to a Finance Bill proposal.
- Keep client communication clear on the difference between Assessment Year under the old Act and Tax Year under the new Act.
Useful official links
Key takeaway
the new Income Tax Act is in force, but the transition is deliberately dual-track. AY 2026-27 return filing and related proceedings continue under the 1961 Act, while the 2025 Act governs the new Tax Year framework. The Department's FAQ gives practitioners a useful first-party reference for navigating that overlap.
