Article · 15 min read

The Income Tax Act, 2025 Is Live: Here's What You Actually Need to Know

Treelife Free Intermediate India

A founder-facing walk through the switch from the Income-tax Act, 1961 to the 2025 Act on 1 April 2026: the single tax year, the renumbered sections and forms, what carried over unchanged and what Budget 2026 did change, including buybacks.

  • The 2025 Act is largely a restatement: rates, deductions and core principles carry over, while sections, rules and form names are renumbered (Form 16 becomes Form 130).
  • The 'previous year' and 'assessment year' pair is replaced by one tax year; returns for FY 2025-26 are still filed under the 1961 Act and the first return under the new Act is due in 2027.
  • Every ESOP scheme, agreement and TDS system that cites a 1961 section needs its references updated.
  • From 1 April 2026 a share buyback is taxed as capital gains for the shareholder, with promoters paying more.
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It answers 2 questions

  1. The Income-tax Act, 2025 replaced the 1961 Act on 1 April 2026. What actually changes for my startup and for me?
  2. My startup wants to run a buyback for early employees and angels. How is that taxed from 1 April 2026?

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  4. A venture investor's reading of the Budget 2026 change to buyback taxation and what it means for founders, early employees and... Inc42 Article · 6 min read Union Budget 2026: The Buyback Blowback For Founders Siddarth Pai
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