If your CA texted you last month saying "Section 195 has moved to 393(2)" and you have been staring at the screen ever since, you are not alone.
The Income Tax Act 2025 came into force on 1 April 2026 and formally replaced the 65-year-old Income Tax Act 1961. Almost every section number that NRIs have been quoting for years has changed. Here is the calm part: for the ITR you are filing this July, the old section numbers still apply. The new numbering only kicks in for income earned from 1 April 2026 onwards.
This guide gives you a clean old-to-new mapping table for the sections NRIs actually use, plus a plain-English explanation of what changed, what did not, and when to switch to the new numbers.
The 30-Second Summary Every NRI Should Read First
- The Income Tax Act 1961 was repealed on 1 April 2026.
- The Income Tax Act 2025 replaces it, with 536 sections instead of the old 819.
- Your AY 2026-27 ITR (for income earned in FY 2025-26), filed by 31 July 2026, still follows the 1961 Act and its old section numbers.
- The new Act's numbering only applies to Tax Year 2026-27 onwards, meaning returns filed in July 2027.
- Rates, slabs, and NRI rules are unchanged. This is a structural cleanup, not a tax hike.
- The core NRI test under Section 6 kept its number in both Acts.
Why the Change Happened
Six decades of amendments left the 1961 Act with roughly 819 sections and over 5,500 sub-sections. Provisions like 80CCD(1B), 194-IA, and 115BAC had made the code painful to read. The 2025 Act was drafted to fix exactly that. It:
- Cuts down to 536 sections across 23 chapters and 16 schedules.
- Groups related provisions (like all TDS rules) into a single chapter.
- Replaces the "Previous Year" and "Assessment Year" concepts with one term: Tax Year.
- Moves most Section 10 exemptions into Schedule II.
- Rewrites large sections in plain form, without heavy legalese.
Policy is essentially unchanged. Sections were renumbered, not rewritten.
The NRI Cheat Sheet: Old Section vs New Section
Save this table. These are the sections that come up most in NRI returns.
| What It Covers | Old (1961 Act) | New (2025 Act) |
| Residential status test (182-day and 60+365-day rules) | Section 6 | Section 6 (same number) |
| Scope of total income for NRIs | Section 5(2) | Section 5 |
| Deemed income arising in India | Section 9 | Section 9 (broadly retained) |
| Exemptions (NRE / FCNR interest, tax-free bonds) | Section 10 clauses | Schedule II of the new Act |
| NRI-specific investment income chapter | Chapter XII-A (Sections 115C to 115I) | Renumbered under the special rates chapter |
| LTCG rates on listed and unlisted assets | Section 112 / 112A | Retained under new numbering |
| New tax regime for individuals | Section 115BAC | Renumbered |
| Capital gains exemption: sale of residential house | Section 54 | Section 84 |
| Capital gains exemption: sale of other long-term assets | Section 54F | Reinvestment cluster (Sections 84 to 88) |
| Capital gain bonds (NHAI, REC, PFC, IRFC) | Section 54EC | Reinvestment cluster |
| Deductions like 80C, 80D, 80TTA, 80TTB | Chapter VI-A | Chapter VIII, Section 123 onwards |
| Home loan interest on self-occupied property | Section 24(b) | Retained under the house-property chapter |
| Tax audit for business or profession | Section 44AB | Section 63 |
| Presumptive tax scheme | Section 44AD / 44ADA | Renumbered under the presumptive chapter |
| All TDS provisions consolidated | Sections 192 to 196D | Section 393 (single TDS chapter) |
| TDS on payments to non-residents | Section 195 | Section 393(2) |
| Lower or nil TDS certificate for NRIs | Section 197 (Form 13) | Section 395 (Form 128) |
| ITR filing due date and forms | Section 139 | Renumbered under the returns chapter |
| Regular assessment | Section 143 | Renumbered under the assessment chapter |
| Reassessment notice | Section 148 | Renumbered under the assessment chapter |
| Refund of excess tax | Section 237 | Retained under the refund chapter |
Notes on this table:
- Where an exact number is quoted (Section 84, 123, 393, 393(2), 395, 63), it has been matched against the CBDT concordance table and current market references.
- Where the mapping reads "renumbered under X chapter," the provision survives in substance, but the exact new number is best confirmed at incometax.gov.in before quoting in a legal document.
- Rates, thresholds, and eligibility rules are unchanged unless separately amended by the Finance Act 2026.
Three Concept Changes NRIs Must Register
1. "Tax Year" replaces "Previous Year" and "Assessment Year"
The 1961 Act made you juggle two calendars. Under the 2025 Act, there is one concept: the Tax Year (1 April to 31 March). Income earned in Tax Year 2026-27 is assessed after that Tax Year ends. For NRIs used to translating "AY minus one equals FY," this simplifies conversations with your CA a lot.
2. Section 10 exemptions are now in Schedule II
Almost every NRI has quoted Section 10(4)(ii) for NRE interest exemption or Section 10(15) for tax-free bonds. Under the new Act, these exemptions still exist, but they now sit inside Schedule II. The tax outcome is identical. Only the reference in your bank certificate or CA opinion changes.
3. Section 195 is folded into Section 393(2)
The single most quoted section for NRIs, Section 195, no longer stands alone. All TDS provisions from old Sections 192 through 196D now live inside Section 393. Payments to non-residents specifically sit at Section 393(2). If a buyer deducts TDS on your property sale in India from 1 April 2026 onwards, the challan reads Section 393, not Section 195.
What Stays the Same for NRIs
Before you panic, this is what does not change:
- The 182-day rule and the 60+365-day rule under Section 6. The residential status test is identical.
- DTAA relief and the requirement to file Form 67 to claim foreign tax credit.
- NRE and FCNR interest exemption for non-residents.
- NRO interest TDS at 30% by default.
- Capital gains rates: 12.5% LTCG on most assets, 20% short-term on listed equity with STT, slab rates for other short-term gains.
- Reinvestment windows under old Sections 54, 54EC, and 54F: 2 years to buy, 3 years to construct, 6 months for capital gain bonds.
- The Rs 10 crore cap on the reinvestment exemption from residential property sale.
- Basic exemption limits and slabs as notified by the Finance Act.
If your investment strategy worked in March 2026, it works in April 2026 too. Just quote the new section.
When to Use Old vs New Section Numbers
| Situation | Which Act Applies | Which Section Numbers to Quote |
| ITR for FY 2025-26, filed July 2026 | 1961 Act | Old (195, 80C, 54, etc.) |
| ITR for Tax Year 2026-27, filed July 2027 | 2025 Act | New (393(2), 123, 84, etc.) |
| Notice issued before 1 April 2026 for any past year | 1961 Act | Old |
| Notice issued after 1 April 2026 for a pre-April 2026 period | 1961 Act (saved provisions) | Old |
| TDS challan for payment made after 1 April 2026 | 2025 Act | New |
| Lower TDS certificate application after 1 April 2026 | 2025 Act | Form 128 under Section 395 |
Rule of thumb: the Act that was in force when the income was earned governs that income.
How MostlyNRI Helps You Navigate Both Acts
At MostlyNRI, we run NRI tax filings across 30+ countries. The section-number switch is a routine adjustment for our team, not a source of confusion. Here is what we cover:
- Income Tax Return filing for NRIs with correct section citations for both Acts.
- Capital gains tax advisory for property, mutual funds, and equity sales.
- Income tax notice solutions covering both the 1961 and 2025 Acts.
- PAN card and Aadhaar linking are still essential under the new Act.
- Free NRI tax residency calculator built on the Section 6 test that survived the rewrite.
- City-specific NRI services in Mumbai, Bengaluru, Hyderabad, Pune, and more.
Conclusion
The Income Tax Act 2025 is a housekeeping upgrade, not a policy overhaul. Your rates, exemptions, DTAA benefits, and NRI-specific rules are intact. What has changed is the shelf each rule sits on. Old Section 195 became Section 393(2). Old Section 80C became Section 123. Old Section 10 exemptions moved to Schedule II.
For your July 2026 filing, none of this matters yet. The old 1961 Act still governs. From July 2027 onwards, however, your CA, your bank, and the Income Tax Department will all speak in new section numbers. Being early to the switch avoids embarrassing citations and delayed refunds.
If you want your next return filed with clean references under the correct Act, or you have received a notice with mixed old-and-new citations, talk to a MostlyNRI expert before things get tangled. We handle both acts fluently, so you never quote the wrong section again.
FAQs
Which Act applies to my AY 2026-27 ITR filing this July?
The Income Tax Act 1961 still applies. Income earned in FY 2025-26 is assessed under the old Act, with old section numbers. The new 2025 Act numbering only starts applying to income earned from 1 April 2026 onwards.
Did the 182-day residency rule for NRIs change under the 2025 Act?
No. The 182-day and 60-plus-365-day tests remain in Section 6 of both Acts. The section number was retained. The 120-day rule and deemed residency rule for high earners also continue exactly as before.
Is Section 195 gone under the new Income Tax Act?
Section 195 as a standalone provision no longer exists. All TDS provisions from old Sections 192 to 196D are consolidated into Section 393. TDS on payments to non-residents specifically sits at Section 393(2). The tax rules and rates are unchanged.
What is the new equivalent of Section 80C for NRI deductions?
Under the 2025 Act, Chapter VI-A becomes Chapter VIII, and Section 80C is renumbered as Section 123. The Rs 1.5 lakh limit and the eligible investments list stay the same. NRIs continue to have the same restrictions as before.
Where did the Section 10 exemptions, like NRE interest, go?
They moved into Schedule II of the Income Tax Act 2025. The exemption for NRE interest, FCNR interest, and tax-free bonds is retained in substance. Only the reference has changed. Your bank statements and CA letters will start citing Schedule II.
What is the new section for capital gains exemption on the sale of a house?
The old Section 54 exemption is now covered under Section 84 of the 2025 Act. Sections 54F and 54EC are clustered near it under the reinvestment exemptions. Reinvestment timelines and the Rs 10 crore cap continue unchanged.
Do I need a new PAN or a new TAN under the 2025 Act?
No. Your existing PAN and TAN continue to work under the Income Tax Act 2025 without any reissue. Form 13 for lower TDS certificate applications is replaced by Form 128, but PAN-based identity remains fully intact for all NRI filings.
Will notices from the Income Tax Department quote old or new sections after April 2026?
It depends on the year the notice covers. Notices for periods before 1 April 2026 quote the 1961 Act. Notices for Tax Year 2026-27 onwards cite the 2025 Act. Always check both the date of issue and the Act referenced in the heading.
Do DTAA benefits work the same under the 2025 Act?
Yes. DTAA relief between India and countries like the USA, UK, UAE, Canada, Singapore, and Australia continues without change. Form 67 filing for foreign tax credit remains mandatory. Only the internal cross-references have been updated in the new Act.
Should I refile any old returns under the new section numbers?
No. Returns filed under the 1961 Act stay under the 1961 Act, even if you file a revised or updated return later. The saved provisions in the 2025 Act preserve continuity for past assessments, appeals, and refund claims.
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