PracticeMock Blog • April 8, 2026 • 8 min read • Current Affairs + General Awareness
India officially retired its 64-year-old Income Tax Act, 1961 on 1st April 2026. The new Income Tax Act, 2025 is now live — and it’s already showing up in banking exam questions. If you’re prepping for RBI Assistant, SBI PO, or any IBPS exam in 2026, this is one topic you absolutely cannot skip.
Here’s the honest truth: the new Act doesn’t change how much tax you pay. What it changes is how the entire system works — the language, the structure, the forms, and the timelines. And that’s exactly what examiners love to test. Let’s break it down into 5 changes you need to know cold.
1 Biggest Terminology Change
Goodbye “Assessment Year” — Hello “Tax Year”
For decades, every taxpayer had to juggle two confusing terms: Previous Year (when you earned the income) and Assessment Year (when you actually filed and paid tax on it). The new Act scraps both and replaces them with a single, clean concept: Tax Year. The Tax Year runs from April 1 to March 31 — just like the Financial Year — making it far simpler to understand when income is earned and when it is taxed.
🌟 Exam Tip
Expect MCQs like: “Under the Income Tax Act 2025, which concept replaces ‘Assessment Year’?” → Answer: Tax Year. This is a very high-probability question for RBI Assistant and IBPS Clerk GA sections.
2 Structural Overhaul
819 Sections Trimmed Down to 536
The old Income Tax Act had ballooned to over 800 sections across 47 chapters after 65+ years of amendments. The new Act reorganises everything into 536 sections across just 23 chapters. Redundant provisions have been removed, scattered rules have been consolidated, and the language has been rewritten in plain, easy-to-understand English. Finance Minister Nirmala Sitharaman described this as a “historic simplification” of India’s tax system.
🌟 Exam Tip
Remember the key numbers: 536 sections, 23 chapters. These are static facts that appear frequently in banking exam GA sections. Also note: the Act was passed by Lok Sabha on August 11, 2025.
3 Major Compliance Update
TDS Gets a Complete Makeover — New Sections & New Forms
All the old TDS sections (Section 192, 194C, 194J etc.) have been replaced. TDS is now governed under three consolidated sections: Section 392 (TDS on salary), Section 393 (TDS on all other payments to residents and non-residents), and Section 394. The familiar Form 16 (annual TDS certificate for employees) has been replaced by Form 130. Forms 15G and 15H — used to declare nil TDS — have been merged into a single unified Form 121.
🌟 Exam Tip
Form changes are classic GA question material. Remember: Form 16 → Form 130. Form 15G + Form 15H → Form 121. Also note that the TDS threshold on interest for senior citizens has been raised to ₹1 lakh under the new Act.
4 Digital India Integration
Virtual Digital Assets & Digital Rupee Now Officially Recognised
The new Act takes a big step into the digital economy. It officially recognises Virtual Digital Assets (VDAs) — including crypto — under various sections for taxation. Importantly, the Digital Rupee (CBDC) is now recognised as an official electronic payment method under India’s tax law. This integrates digital payments made using RBI’s Central Bank Digital Currency into mainstream tax compliance practices. The taxation treatment for VDAs remains unchanged, but their formal legal recognition is a landmark step.
🌟 Exam Tip
For SBI PO and RBI Assistant, questions on CBDC and digital assets in the context of banking policy are very relevant. The recognition of the Digital Rupee under the Income Tax Act 2025 ties directly into RBI’s broader digital financial ecosystem.
5 Technology-First Approach
Faceless Assessments & Virtual Digital Space Access
The new Act doubles down on digital governance. Faceless assessments — where tax cases are processed without face-to-face interaction — are now a core statutory provision, not just an administrative measure. Additionally, tax authorities now have explicit power to access a person’s virtual digital space (email accounts, social media, online investment accounts, websites) during search and seizure operations. This is formally defined in the Act as “an environment constructed through computer technology.” This marks a landmark shift toward digital accountability in India’s tax administration.
🌟 Exam Tip
Faceless assessment and digital governance is a hot theme for banking exams in 2026. Pair this with your knowledge of RBI’s digital initiatives for a stronger General Awareness performance in SBI PO and RBI Grade B.
Preparing for IBPS or SBI PO 2026? Get daily current affairs, full-length mocks, and GA capsules — all in one place with PracticeMock.
Quick Reference: Old Act vs New Act
| Concept | Income Tax Act 1961 | Income Tax Act 2025 |
|---|---|---|
| Filing timeline term | Previous Year + Assessment Year | Tax Year |
| Total sections & chapters | 800+ sections, 47 chapters | 536 sections, 23 chapters |
| TDS on salary | Section 192 | Section 392 |
| TDS on other payments | Section 194C, 194J, etc. | Section 393 (consolidated) |
| Employee TDS certificate | Form 16 | Form 130 |
| Declaration to avoid TDS | Form 15G / Form 15H | Form 121 (unified) |
| Tax audit report | Form 3CD | Form 26 |
| Senior citizen TDS threshold (interest) | ₹50,000 | ₹75,000 |
| Tax slabs & rates | Unchanged. No revision in tax rates. New tax regime continues as the default. | |
| Effective date | Since 1961 | 1st April 2026 (Tax Year 2026-27) |
Your Exam Prep Checklist
The Income Tax Act 2025 is live and banking exam setters love fresh, current content. Here’s how to make sure this topic doesn’t cost you marks:
- ✓ Memorise the 5 key changes above — especially section and form number changes
- ✓ Know the effective date: 1st April 2026 (applicable from Tax Year 2026-27 onwards)
- ✓ Understand the “Tax Year” concept and how it replaces AY/PY
- ✓ Memorise structural stats: 536 sections, 23 chapters
- ✓ Remember the Act was passed by Lok Sabha on August 11, 2025
- ✓ Pair this topic with Budget 2026 and RBI policy notes for a stronger GA score
- ✓ Practice MCQs on this topic — exam setters will definitely pick this up
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Wrapping Up
The Income Tax Act 2025 is one of those rare reforms that touches everything — terminology, structure, forms, technology, and compliance. The good news for aspirants? Tax rates haven’t changed, so you don’t need to memorise new slabs. What you do need is command over the structural and procedural changes — and that’s exactly what this blog gives you.
Bookmark this page, revise the quick-reference table, and test yourself with current affairs mocks on PracticeMock. Your 2026 banking exam score will thank you.
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All information in this blog is based on the Income Tax Act 2025 as officially notified, effective 1st April 2026. Tax laws are subject to further notifications and CBDT circulars. This blog is for exam preparation purposes only and does not constitute tax or legal advice. | PracticeMock Blog, April 8, 2026.
Frequently Asked Questions (FAQs)
Everything you need to know — about the Income Tax Act 2025, your exam prep, and PracticeMock.
The Income Tax Act 2025 officially replaced the Income Tax Act 1961 on 1st April 2026. It applies from Tax Year 2026–27 onwards. Returns filed for FY 2025–26 are still governed by the old 1961 Act.
No. Tax rates have not changed at all. The new Act is purely a structural overhaul — same slabs, same deductions, same rebates. Income up to ₹12 lakh remains effectively tax-free under the new tax regime. The government has officially confirmed the reform is “revenue neutral.”
Under the old Act, you had two confusing terms — Previous Year (when you earned income) and Assessment Year (when you were taxed on it). The Income Tax Act 2025 scraps both and replaces them with one clean term: Tax Year, running from 1st April to 31st March — same as the Financial Year.
Form 16 has been replaced by Form 130 under the new Act. The purpose is exactly the same — it’s still your annual TDS certificate from your employer. Only the number has changed. Similarly, Form 15G and Form 15H have been merged into a single new Form 121.
Absolutely. It’s one of the biggest economic reforms of 2025–26 and a near-certain GA topic for all major banking exams in 2026. Examiners typically pick up key numbers (536 sections, 23 chapters), terminology changes (Tax Year), form number changes, and the effective date. Expect at least 1–2 direct questions from this topic.
Follow current affairs daily — don’t try to cram at the end. Focus on the last 6 months before your exam date. Take topic-wise quizzes regularly to retain what you read. Attempt full mock tests to build speed and exam temperament. PracticeMock offers free daily CA quizzes, weekly CA PDFs, and live banking tests every week — all free after signup.
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The official PDF is available on the Income Tax Department’s website at incometaxindia.gov.in. The new Income Tax Rules 2026 are also on the same portal. For a quick exam-focused summary, PracticeMock’s weekly current affairs PDFs cover all key facts in a concise, revision-friendly format.
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