The income tax law changed on 1 April 2026. The Income-tax Act, 2025 replaced the 1961 Act from that date, as announced in the Budget speech of 1 February 2026. For salaried people in Chennai, that means two sets of rules are running side by side this year: the return you filed for income earned in 2025-26, and the income you are earning now, in what the new law calls Tax Year 2026-27.
If you are waiting on a refund, it belongs to the old law. If you are choosing between the new and old regimes for this year’s TDS, read on. This is general information, not tax advice; for your own case, consult a chartered accountant or tax practitioner.
Which law applies to what
The Income Tax Department’s transition FAQs set out the split:
- Income earned in FY 2025-26 is governed by the 1961 Act and assessed as Assessment Year 2026-27, using the existing ITR forms.
- Income earned from 1 April 2026 falls under the 2025 Act. The “previous year” and “assessment year” labels give way to a single “tax year”, so FY 2026-27 is Tax Year 2026-27.
- Refund rights that arose under the 1961 Act continue after the change.
- Returns for Tax Year 2026-27 will be due from July 2027.
Checking your refund status
Refunds for returns filed this year, for AY 2026-27, are issued after the return is processed. To track one:
- Log in to the e-filing portal at incometax.gov.in with your PAN and password.
- Open the filed returns section under e-File and select AY 2026-27 to see the processing status and any refund issued.
- Make sure the bank account you want the refund in is added and pre-validated in your profile; refunds go only to a validated account linked to your PAN.
- Check your registered email and the portal’s pending actions for any intimation or adjustment notice.
Common reasons for delay are an unverified return (e-verify within the time allowed), a bank account that failed validation, a mismatch between the return and Form 26AS or the AIS, or an adjustment of the refund against an earlier demand.
Two deadlines for this year: a belated return for AY 2026-27 can be filed by 31 December 2026, or before assessment is completed if earlier, according to the FAQs. And Circular No. 07/2026 of 28 September 2026 extended the filing date for one category of filers, mainly audit cases, from 31 October to 21 November 2026, with audit reports moved to 21 October.
New regime and old regime: the basics
The new regime is the default. You can opt for the old regime if the deductions you claim make it cheaper. Salaried people without business income can choose each year at the time of filing. Those with business or professional income must file Form 10-IEA by the due date to opt out, and switching back is restricted.
Here are the slabs the department lists for AY 2026-27 (income earned in 2025-26) for resident individuals below 60:
| Taxable income | New regime | Old regime |
|---|---|---|
| Up to ₹2.5 lakh | Nil | Nil |
| ₹2.5–4 lakh | Nil | 5% |
| ₹4–5 lakh | 5% | 5% |
| ₹5–8 lakh | 5% | 20% |
| ₹8–10 lakh | 10% | 20% |
| ₹10–12 lakh | 10% | 30% |
| ₹12–16 lakh | 15% | 30% |
| ₹16–20 lakh | 20% | 30% |
| ₹20–24 lakh | 25% | 30% |
| Above ₹24 lakh | 30% | 30% |
The Section 87A rebate is the big difference. Under the new regime it is up to ₹60,000 where taxable income does not exceed ₹12 lakh, which makes income up to that level effectively tax-free. Under the old regime it is up to ₹12,500 for income up to ₹5 lakh. A 4 per cent health and education cess applies in both.
The new regime allows very few deductions; the department’s page lists home loan interest on a let-out property, the employer’s contribution to NPS, and Agniveer Corpus Fund contributions. The old regime keeps familiar ones such as 80C, 80D health insurance and house rent allowance, which can tip the balance for a Chennai family paying high rent in Adyar or Nungambakkam and investing in PPF and insurance.
What about FY 2026-27?
The Budget 2026-27 highlights did not list any change to personal income tax slabs or the rebate; they focused on procedure, such as allowing revised returns up to 31 March instead of 31 December, and cutting TCS on overseas tour packages to 2 per cent. Confirm the rates for Tax Year 2026-27 in the Finance Act, 2026 before planning, and tell your employer your regime choice so TDS is deducted correctly.
Quick answers
Which law covers my refund for 2025-26 income?
The Income-tax Act, 1961; such refund rights continue after 1 April 2026.
Is the new regime compulsory?
No. It is the default, but salaried taxpayers can choose the old regime when filing.
Is income up to ₹12 lakh tax-free?
Under the new regime, the rebate covers tax where taxable income does not exceed ₹12 lakh, for AY 2026-27.
What is the belated return deadline?
31 December 2026 for AY 2026-27, or earlier if assessment finishes first.
Information checked against official sources on 18 October 2026. Fees, dates and rules can change; confirm on the linked official pages before acting.
Sources
- Individual (resident, under 60) for AY 2026-27: tax slabs and regimes (Income Tax Department e-filing portal)
- FAQs on interplay and transition from the Income-tax Act, 1961 to the Income-tax Act, 2025 (Income Tax Department)
- Latest news, including Circular No. 07/2026 (Income Tax e-filing portal)
- Budget Speech 2026-27 (Ministry of Finance)
- Budget 2026-27 Highlights (Ministry of Finance)
