Tax year and the new section numbers: meaning, how it works in India

A tax year is a twelve-month period from 1 April to 31 March that the Income-tax Act 2025 uses as its one basic time unit. Tax year 2026-27 runs from April 2026 to March 2027, and income earned in it is reported and taxed with reference to that same tax year.

The term replaces two older ideas. Under the Income-tax Act 1961, income was earned in the previous year and taxed in the assessment year that followed. A person who earned income in the year ending March 2026 was assessed in assessment year 2026-27. That is why filing always felt like looking backwards at a year with a different name.

Two names for one period meant two labels on the same form. A founder would hear that a salary was earned in FY 2025-26 and filed under AY 2026-27, and then read a TDS certificate that used both. Even accountants occasionally mixed the two.

The new Act drops the second label. Most people will find it easier: the year in which income arises is the year in which it is taxed. The Act came into force on 1 April 2026, as of November 2026, according to tax-adviser summaries.

A practical test is to look at the date on the document. A certificate for income earned before April 2026 will use the old terms, and one for income after that date will use the new term. Mixing the two in a board note or a diligence checklist is the commonest source of confusion for startup finance teams.

For the new Act, no. For old years, yes. Income earned up to 31 March 2026 is still dealt with under the 1961 Act, so returns, notices and appeals about those years carry assessment year labels. A startup may therefore see both terms in the same month: assessment year 2026-27 for the return on last year's income, and tax year 2026-27 for the year that is now running.

This overlap is a common source of mistakes. When a document says 2026-27, the reader needs to know whether it means the assessment year (last year's income, old Act) or the tax year (this year's income, new Act).

The new Act has fewer, renumbered sections. The official mapping from old to new sections is published by the tax department, and tools exist to search it. The list below has only the mappings confirmed in published guidance as of November 2026. Anything not on it should be checked in the official table before it is cited.

• Section 80-IAC (startup tax holiday): section 140 of the new Act.
• Section 194J (TDS on professional and technical fees): section 393(1), under the table of TDS payments.
• Section 80C (deductions for savings and investments): section 123, per tax-adviser summaries.
• Section 56(2)(viib) (angel tax): no live equivalent, because it was abolished in 2024 before the new Act began.
• Section 17(2) (taxable perquisites such as ESOPs): the new number was not confirmed for this guide, so check the official mapping table.
• Form 16 (annual salary TDS certificate): reported as Form 130.

Treat the mapping as a translation table, not a legal opinion. Start with the clauses a company actually cites: payroll certificates, vendor TDS, ESOP letters, the holiday certificate and the tax clauses in investment agreements.

The practical sequence is simple. List every old section the company mentions. Look each up in the official mapper from the tax department. Confirm with a chartered accountant that the new section carries the same rule, because a renumbered section can also have changed wording. Then update templates.

Tax software, bank challans and government portals have been updating their screens to new section and form names. Startups may notice mismatches during the first months: a vendor invoice that cites an old section, a bank portal that still lists the old payment code, or a certificate with the old form name.

These are usually clerical, but filings that carry the wrong section can be rejected or draw a query. Ask the accountant to confirm which Act and which year each document belongs to.

The 1961 Act grew by amendment for more than sixty years. New provisions were squeezed in with letters, so people spoke of sections such as 80-IAC, 115BAA or 194J, and the chapters no longer followed a clear order. The new Act presents the same ideas in a fresh order with fewer, simpler sections, grouped by topic, and uses tables for rules such as TDS where the old Act had many separate sections.

That is why a single new section can hold what used to be many old ones. The TDS provisions are the clearest case: section 393 holds a table that covers payments that earlier had their own numbers, such as 192, 194C and 194J. A reader who looks for a separate section for each payment type will not find it. The table row is the new address.

Articles written after April 2026 may cite either numbering. A story on a startup's tax dispute may mention section 56(2)(viib) because the case concerns an old year, even though the rule has been abolished. A story on a new rule may cite a new section that readers have never seen.

A simple habit helps: when a section number appears, ask which Act it belongs to and which year it concerns. If the story does not say, treat the number as unverified and look it up in the official table.

A financial year is the period for which a company keeps accounts under company law. Most Indian startups pick 1 April to 31 March, so the financial year and the tax year usually line up. They are still different ideas, and a company with a non-standard accounting period would need to check how the tax law treats it.

A startup with a foreign parent that follows a calendar year for its group should not assume the two periods match. The Indian tax year is fixed by the Act, not by the accounts. This guide is general information, not legal or tax advice, so a startup should check its position with a professional.