India's Income-tax Act 2025: what solo professionals need

The Income-tax Act 2025 replaces the Income-tax Act 1961 from 1 April 2026. For most self-employed professionals in India, the way income is taxed barely moves. What changes is the wording, the section numbers and one term: the "tax year" replaces the "previous year" and the "assessment year." The presumptive scheme for professionals continues. This is general information, so confirm your own position with a chartered accountant.

What changes on 1 April 2026 and what does not

The 1961 Act is repealed and replaced. According to the Income Tax Department, the 2025 Act has 536 sections and 16 schedules, with the rules reduced from 511 to 333 and the forms from 399 to 190. ClearTax reports that the chapter count holds at 23 while the page count falls from 823 to 622.

The new law applies going forward. In the Department's FAQ, the 1961 Act "will continue to govern all tax years beginning before 1st April, 2026," and assessments, appeals and other proceedings for earlier years continue under the old Act until they are resolved. So income you earned up to 31 March 2026 stays under the old law, and income from 1 April 2026 falls under the new one.

For a typical solo professional this is a rewrite of the wrapper. Your client income is still professional or business income. Your deductions are still deductions, even if the section numbers moved. Tax rates are set separately each year, so check the current Finance Act for the slabs that apply to you.

The tax year, explained

The change you will feel most is a single word. The old law made you juggle two timelines: the previous year, when you earned the money, and the assessment year, when you were assessed. People mixed them up constantly.

The Department's FAQ says the term "assessment year" has been discontinued, and "tax year" replaces "previous year." It defines a tax year as "a period of twelve months contained in a financial year." So money earned between 1 April 2026 and 31 March 2027 falls in Tax Year 2026-27. That is the year you report it.

There is one wrinkle if you are starting out. A tax year can be shorter than twelve months when a business or source of income begins mid-year. The Department's example is a business set up on 1 December 2026, whose tax year runs from that date to 31 March 2027. If you go full-time partway through the year, your first tax year is the stub from your start date.

The new term does not force you to change your books. The FAQ says the tax year matches the financial year, so businesses do not need to change their accounting year. It also says a choice made under the old Act is treated as made under the equivalent provision of the new one, so you do not need to opt in again.

The new tax regime, formerly in Section 115BAC, now appears in Section 202, and the FAQ says it is the default regime. You can still opt out, so compare both regimes each year, as you would have before.

The old section numbers in your files

If you keep notes that say "claim under Section X," or templates that cite a clause, those references may now point somewhere else. The rule is often the same and only the address has changed. Do a pass through your saved documents before your first return under the new Act.

This matters most for contracts and invoices that quote tax provisions, for example a TDS clause. Ask your accountant which references to update, and keep a short list of old-to-new numbers for the ones you use often. Our tax guide for 2026 covers the wider picture for self-employed people in several countries.

Presumptive taxation for professionals

The presumptive scheme for professionals carries over. IndiaFilings says it continues under the 2025 Act, and I could not confirm the new section number from the pages I read, so check the number with your accountant.

Under the scheme as ClearTax describes it, eligible professionals can show 50% of gross receipts as income and pay tax on that, instead of keeping detailed books. It covers professions such as accounting, engineering, architecture, legal, medical, technical consulting and interior decoration, and individuals and partnership firms can opt in, but LLPs cannot.

The turnover limit is Rs 50 lakh of gross receipts, rising to Rs 75 lakh if cash receipts are no more than 5% of the total. For a professional paid mostly by bank transfer, UPI or card, the higher limit is the one that applies, but you have to be able to show the cash share.

What you gain is simplicity. Opting in exempts you from keeping books under Section 44AA and from audit under Section 44AB, and there is no mandatory five-year lock-in, unlike the scheme for small businesses. You must pay advance tax by 15 March.

There are two catches.

First, IndiaFilings says you declare the higher of the presumptive figure or your actual profit. So if your real margin is above 50%, the scheme is not a way to pay less. It is a way to file more simply. Second, ClearTax notes that an audit becomes necessary if your receipts go above the limit, or if you report less than 50% as income and your total income is above the basic exemption limit.

Do the comparison once a year. For work with high costs, such as paying subcontractors, regular filing may give a lower tax bill. For work with low costs, presumptive filing is usually easier. A chartered accountant can run both numbers.

Get your records ready for FY 2026-27

The new Act does not raise the bar on bookkeeping. It does make the timeline cleaner, because one tax year maps to one financial year. Prepare with a short checklist:

• Draw a clean line at 1 April 2026, so no invoice or payment is unclear about which law applies.
• Keep income by client and by tax year.
• Record the split between cash and digital receipts through the year. To use the higher presumptive limit you need to show cash is 5% or less.
• Decide early whether you will file presumptive or regular. Presumptive needs clean gross receipts. Regular needs expense records.
• Keep your old records. Earlier years remain under the 1961 Act.

If you bill clients abroad, you also need the currency and the rate on the day. Our guide to multi-currency invoicing explains how to keep that tidy, and the post on what to put on an invoice lists the fields that make an invoice usable as evidence.

How Delivvo keeps the income record in order

Delivvo does not file taxes or calculate them. It keeps the records your accountant needs, by client and by date, so that gross receipts for a tax year are easy to total.

This is how it works for a self-employed professional:

1. A client enquires through your inquiry form and sits on the lead board until you quote.
2. You send a quote, and when the client accepts, the client record, project, contract, invoice and payment schedule are created together.
3. Invoices are numbered in order in a format you choose, so there are no gaps for an accountant to explain. You can void an invoice or issue a credit note, and the original stays on record.
4. The client pays through your own gateway, and Delivvo takes 0%, so the payment shows in your gateway account exactly as received. Check which gateways support your country and currency before you rely on one.
5. Retainers use recurring invoices, and larger projects use payment schedules of up to 12 payments, each with its own invoice and due date.
6. Each client has one page showing quotes, contracts, invoices and files, which makes a per-client income trail easy to follow.

Every invoice also carries a verification code. Delivvo's templates are starting points, not tax or legal advice, and what you must put on an Indian invoice, such as GST details, is something to confirm with your accountant. See the page on invoices and tax.

This sits inside Delivvo's CRM for service businesses. More on how payments work.

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