What did the Income-tax Act, 2025 change for Indian freelancers?

On 1 April 2026 the Income-tax Act, 2025 came into force and the Income-tax Act, 1961 was repealed, with transitional provisions for pending matters.¹ For a freelance developer, designer, writer or consultant billing foreign clients, the day-to-day effect is mostly vocabulary: new section numbers, new form numbers and a new name for the year. A handful of rules did change, and those are worth knowing before the first return under the new Act is filed in 2027.

This guide covers the changes that matter to individual service exporters and small firms, and links to the page that owns each topic. Facts are as of October 2026 and follow the Act as amended by the Finance Act, 2026.² Your position depends on your own facts, so confirm the details with a chartered accountant (CA).

What is the Income-tax Act, 2025?

The Income-tax Act, 2025 is the law that replaced the Income-tax Act, 1961 from 1 April 2026 and governs income earned from that date.¹ CBDT says no new tax is imposed by the 2025 Act; the aims are simpler language, fewer cross-references and clearer structure.¹

• Size of the Act: 536 sections and 16 schedules, compared with 819 sections and 14 schedules in the 1961 Act.¹
• Size of the Rules: the Rules fell from 511 rules and 399 forms to 333 rules and 190 forms.¹
• Rates: for tax year 2026-27, slab rates and rebate are in section 202 and section 156 of the 2025 Act.²

Which income-tax Act applies to which period of income?

The Act that applies depends on when the income was earned.¹

CBDT's FAQs state there is no "missing year" or overlap in this shift.¹ For example, a translator filing in 2026 for FY 2025-26 still quotes the 1961 Act, while the same translator's income from April 2026 onwards will be reported under the 2025 Act.¹

What is a tax year under the Income-tax Act, 2025?

A tax year is the financial year in which you earn the income, starting on 1 April.² It replaces the old pair of "previous year" (when you earned) and "assessment year" (when it was assessed).¹ If you start freelancing partway through the year, section 3(2) makes your first tax year run from the start date to 31 March.² Tax year 2026-27 means income earned between 1 April 2026 and 31 March 2027, which the old terms would have called assessment year 2027-28.¹

Who does the Income-tax Act, 2025 apply to?

The Income-tax Act, 2025 applies to every taxpayer's income earned from 1 April 2026, including freelancers and firms billing foreign clients.¹²

How does a freelancer move to the Income-tax Act, 2025?

A freelancer moves to the Income-tax Act, 2025 by closing out FY 2025-26 under the old Act and then applying the new section and form numbers from tax year 2026-27.¹³

1. File any pending return for FY 2025-26 under the 1961 Act and its forms.¹
2. For tax year 2026-27, pay the 15 March 2027 advance tax instalment if you are on the presumptive scheme, or the quarterly instalments if you are not.²
3. Keep books and records in the form the 2026 Rules describe, for at least seven tax years from the end of the relevant year.³ See bookkeeping for foreign income.
4. Use Form 44 for foreign tax credit and Form 41 for treaty relief documentation from tax year 2026-27.³
5. Watch for the ITR forms for tax year 2026-27. As of 28 October 2026 they are not on the e-filing portal's downloads page.⁴ See which ITR form freelancers file.

What section numbers, forms and due dates changed under the Income-tax Act, 2025?

Almost every section number changed under the Income-tax Act, 2025, along with several form numbers and three compliance rules. The sections service exporters meet most often are:²

A fuller old-to-new map is on the section 44ADA new section number page.

Which income-tax forms were renumbered for freelancers?

The Income-tax Rules, 2026 renumbered the forms a cross-border freelancer uses.³

• Foreign tax credit: Form 67 under rule 128 of the 1962 Rules becomes Form 44 under rule 76 of the 2026 Rules, for income from tax year 2026-27.³ See Form 44 replacing Form 67.
• Treaty relief documentation: Form 10F becomes Form 41; tax residency certificate rules are in rule 75.³ See Form 41 replacing Form 10F.
• Tax audit report: now Form No. 26 under rule 47.³ See tax audit for freelancers.

Which income-tax compliance rules changed in substance for freelancers?

Three changes are more than renumbering:²⁵

See section 62 specified professions.

Which income-tax rules stayed the same for service exporters?

• Worldwide income: section 5(1) taxes a resident on income from whatever source, including income that accrues outside India.² See income tax on foreign income.
• Presumptive scheme: still 50% of gross receipts, still ₹50 lakh or ₹75 lakh, still only for resident individuals and non-LLP firms.²
• Advance tax: still payable if the year's tax is ₹10,000 or more, with instalments on 15 June, 15 September, 15 December and 15 March, and a single 15 March instalment for presumptive taxpayers.²
• Tax audit threshold: a tax audit is still needed when professional gross receipts exceed ₹50 lakh, unless profits are declared under section 58(2).²

What happens if a freelancer gets the Income-tax Act, 2025 transition wrong?

A freelancer who misses a deadline or files under the wrong Act still has correction routes, but interest can apply to an advance tax shortfall under sections 424 and 425.²

• Missed due date: a belated return can still be filed within nine months from the end of the tax year under section 263(4).²
• Error in a filed return: a revised return is allowed within twelve months from the end of the tax year, or before assessment is completed.²
• Later correction: an updated return can be filed within 48 months under section 263(6).²
• Short advance tax: interest on the shortfall applies under sections 424 and 425.²

How is a freelancer's presumptive income calculated under the Income-tax Act, 2025?

Under section 58(2), Table row 3, a resident freelancer in a specified profession declares 50% of gross receipts as profit, provided receipts are within ₹50 lakh, or ₹75 lakh where the cash receipts condition is met.²

For example, say a resident IT consultant receives ₹30,00,000 from foreign clients in tax year 2026-27:²

Tax on that profit then follows the slab rates in section 202 and the rebate in section 156.² The full worked examples are in the section 44ADA guide.

What are the common mistakes with the Income-tax Act, 2025?

The common mistakes are quoting the wrong Act for the year, using old form numbers and assuming every rule moved unchanged.¹³

• Wrong Act for FY 2025-26: income earned before 1 April 2026 is still filed under the 1961 Act.¹
• Old form numbers: foreign tax credit for tax year 2026-27 uses Form 44, and treaty relief documentation uses Form 41.³
• Old due date: non-audit business or professional income now has 31 August as its due date.²
• Naming an ITR form too early: the ITR forms for tax year 2026-27 were not on the portal as of 28 October 2026.⁴
• Assuming an LLP qualifies: the presumptive scheme for professionals covers resident individuals and non-LLP firms only.²