The Income-tax Act, 2025 has been in force since 1 April 2026, yet the returns for FY 2025-26 are still being filed under the Income-tax Act, 1961 and the due dates of 31 July and 31 August have already gone. Many individuals who are preparing their first ITR under Income Tax Act 2025 are finding that the new law has not yet reached the return form in front of them.
The reason is the way the tax system treats income years. A return for FY 2025-26, which is assessment year (AY) 2026-27, reports income earned between April 2025 and March 2026. That period was completed before the new Act came into force, so the older law continues to apply to it. A news report on the ITR deadlines, published around mid-July, had also stated that these returns are still filed under the 1961 Act.
It is a common assumption that a new Act means a new return, and several families are now asking whether their salary, capital gains or interest income will be reported in a different manner.
The due dates for FY 2025-26 were fixed according to the type of return. The last date was 31 July 2026 for ITR-1 and ITR-2, which are used mostly by salaried individuals and those with capital gains from shares and mutual funds. For non-audit cases filing ITR-3 and ITR-4, including business owners, professionals and those under the presumptive scheme, the last date was 31 August 2026.
Returns of taxpayers whose accounts require an audit were due on 31 October 2026, and the CBDT extended this date to 21 November 2026. Several of these filers are completing their final submissions ahead of 21 November 2026.
Alongside this, individuals which have missed the earlier dates are checking what is still available to them, and that position is explained later in this article. First, it is useful to see which parts of the law have actually changed with the new Act, and which parts the taxpayers will notice only in the coming year.
What the new Act changes and what it leaves alone
The Income-tax Act, 2025 has replaced the earlier law in full, and it has 536 sections arranged in 23 chapters. The structure of the law has been rewritten, with the sections renumbered and regrouped under new chapter headings.
The tax rates and the slabs, however, have been left unchanged. Individual who had paid tax at a certain rate on income last year will find the same rate applied under the new Act, and there will be no change in the slab limits also. Many families had expected a new tax calculation, but they are now seeing that the amount of tax payable on a given income remains the same after the change of law.
The section references which individuals, chartered accountants and banks had used for many years are now being replaced by new references under the 2025 Act and these new references will appear slowly in the notices, the payslips and the documents issued by the companies.
However, for the return for FY 2025-26, the position will be different from this. Returns for FY 2025-26 are still being filed under the 1961 Act, as the news report on the ITR deadlines had stated and the first return filed in this period will therefore follow the old rules. The schedules for salary, for capital gains and for income from other sources will continue to show the earlier section references.
Many investors are also asking about specific items such as tax on Sovereign Gold Bonds (SGBs) and tax on A dividend is a part of a company's profit that the board decides to pay to shareholders, usually in cash, in proportion to the shares held. Read the full meaning of Dividend income under the new Act. From 1 April 2026, only Sovereign Gold Bonds held from original issue until maturity are exempt from capital gains tax. Dividends remain taxable at slab rates.
Individuals holding SGBs or receiving dividends from shares and mutual funds will report these incomes in the same manner as in the earlier years for now, as the return belongs to the older law.
The change being discussed most by the investors concerns buybacks. It will apply to the payments made from 1 April 2026 and so it will be reported in a later return.
Buybacks move from dividend to capital gains
Before 1 April 2026, the money received by a shareholder from a company buyback was taxed as dividend income in the hands of the investor. This followed the change made in Budget 2024, and Deccan Herald reports that the tax was charged at the slab rate of the individual, going up to 30% plus cess. Investors who tendered shares in the earlier period were therefore paying tax on the full amount received, without any deduction for what they had paid to buy the shares.
From 1 April 2026, buybacks are taxed under Section 69 of the Income-tax Act, 2025. As per TaxGuru, the deemed dividend treatment has been dropped, and the cost of acquisition can now be deducted from the buyback proceeds. The tax is thus charged on the gain only.
Non-promoter retail shareholders will pay the standard capital gains rates on buybacks, which are 12.5% for long term gains and 20% for short term gains, TaxGuru says. Families holding shares for many years will therefore be taxed at the lower rate when they tender them.
The Ministry of Finance, in the Budget papers released through PIB, had proposed that all shareholders be taxed on capital gains, while the promoters pay an additional buyback tax. The effective rates come to 22% for corporate promoters and 30% for non-corporate promoters. As per the Finance Act 2026, a flat surcharge of 12% applies to this additional promoter tax under Section 69(2).
On 7 April 2026, the Delhi High Court held that a buyback is a reduction of capital and not an acquisition of an asset for tax purposes, as reported by Deccan Herald.
Tax on buyback gains made after 1 April 2026 is paid through advance tax or self-assessment tax during FY 2026-27.
These payments belong to FY 2026-27, so they will appear in the return filed in the next year, under the new Act.
Under the earlier dividend treatment, the amount received from a buyback was shown in the return as income from other sources, and the purchase price of the shares did not enter the calculation at all. Investors who tendered shares between 1 October 2024 and 31 March 2026 were taxed on the entire payment as dividend, and the cost of the shares was treated as a capital loss that could be set off only against capital gains.
The position from 1 April 2026 is different. Same buyback payment will now be reported in the capital gains schedule, along with the sale of shares and units of mutual funds. The investor will have to keep the purchase date and the purchase cost ready, since the holding period decides whether the gain is taken as long term or short term.
For promoters, the additional tax on the buyback is payable by the promoter shareholder under Section 69(2), over and above the capital gains tax.
The Delhi High Court view has also made many tax professionals look again at the older buyback transactions. Investors who had tendered shares earlier are following the point that a buyback is treated as a reduction of capital and not as the acquisition of an asset, and it is not yet clear how this will apply to those past cases.
Brokers and registrars will send the buyback statements to shareholders in the coming months and these will be the documents on which the next return is built. Investors who tendered shares after 1 April 2026 are already collecting contract notes and demat statements, since the tax will be settled in advance tax instalments during FY 2026-27 and the final reporting will be done when the return is filed in the next year under the 2025 Act.
Late filers and the audit case dates
Individuals who missed the 31 July and 31 August dates are now looking at the belated return which is the option available after the original due date has passed. Many of these filers are checking the last date on which such a return can be submitted for FY 2025-26.
Belated returns for FY 2025-26 can be filed until 31 December 2026. The date of 31 March 2027 that appears in some reports is the last date for a revised return, not a belated return.
Taxpayers who missed the earlier dates can file a belated return on or before 31 December 2026, or before assessment is completed, whichever is earlier.
The Central Board of Direct Taxes (CBDT) extended the deadline for the tax audit report from 30 September to 21 October 2026 through Circular 7/2026, dated 28 September 2026.
The same circular moved the return due date for audit cases from 31 October to 21 November 2026. Business owners and professionals whose accounts are audited can therefore file by 21 November 2026.
