The new Income Tax Act 2025 is here. It replaces erstwhile Income Tax Act, 1961 to simplify tax laws, reducing sections from 800+ to 536 across 23 chapters. This act is effective from 1st April 2026.
For Financial Year 2025-26 (Assessment Year 2026-27), the provisions of old act will be applicable for ITR filing.
In this article we talk about the key changes and how to configure your Runtime HRMS settings to work correctly for FY 2026-27 onwards.
Key Changes
- The term Previous Year & Assessment Year are now replaced with the single term Tax Year
- Changes in tax slabs and computation of tax
- Various form numbers are changed (see below for details)
- Various section numbers are changed (see below for details)
- Addition to list of Metro Cities
Changes in Tax Slabs & Computation of Tax
Old Tax Regime
The income tax rates (slabs) for old tax regime under Income Tax Act 2025 are as follows:
Income Slabs | Age < 60 Yr | Age > 60 < 80 Yr | Age > 80 Yr |
Upto Rs. 2,50,000 | NIL | NIL | NIL |
Rs. 2,50,001 to Rs. 3,00,000 | 5% | NIL | NIL |
Rs. 3,00,001 to Rs. 5,00,000 | 5% | 5% | NIL |
Rs. 5,00,001 to Rs. 10,00,000 | 20% | 20% | 20% |
Above Rs. 10,00,001 | 30% | 30% | 30% |
New Tax Regime
Income Slab | Tax Rate |
Upto Rs. 4,00,000 | NIL |
Rs. 4,00,001 to Rs. 8,00,000 | 5% |
Rs. 8,00,001 to Rs. 12,00,000 | 10% |
Rs. 12,00,001 to Rs. 16,00,000 | 15% |
Rs. 16,00,001 to Rs. 20,00,000 | 20% |
Rs. 20,00,001 to Rs. 24,00,000 | 25% |
Above 24,00,000 | 30% |
Form Number Changes
The form numbers of various income tax forms are changed. Below is the list of some common old form numbers with their new numbers.
| Form Description | Existing Form Number | New Form Number |
|---|---|---|
| Certificate of tax deducted and salary paid to an employee | FORM 16 | FORM 130 |
| Certificate for tax deducted at source | FORM 16A | FORM 131 |
| Declaration for non-deduction of TDS (for e.g. Fixed Deposits with banks) | FORM 15G & 15H | FORM 121 |
| Quarterly statement of deduction of tax in respect of salaries paid to employees | FORM 24Q | FORM 138 |
| Challan-cum-statement of deduction of tax | FORM 26QB, 26QC, 26QD, 26QE | FORM 141 |
| Audit Report by CA | FORM 3CA, 3CB, 3CD | FORM 26 |
| Annual information statement (TDS & Others) | FORM 26AS | FORM 168 |
Section Number Changes
With the new Income Tax Act 2025, all sections have undergone change in numbers. Some of the commonly used sections are mentioned below with their new numbers.
| Section Description | Existing Section | New Section |
|---|---|---|
| TDS Provisions | Section 192 to 194T | Section 168 |
| Permanent Account Number | Section 139A & 139AA | Section 262 |
| New Tax Regime | Section 115BAC | Section 202 |
| Income from House Property | Section 24 | Section 22 |
| Tax Rebate | Section 87A | Section 156 |
| Return of Income | Section 139 | Section 263 |
| Exempted Incomes | Section 10 | Section 11 |
Addition of Metro Cities
For claiming exemption of House Rent Allowance (HRA), 4 new cities are added in the list of Metro Cities. It may be noted that Metro cities allow deduction @ 50% while non-metro cities allow deduction @ 40%. The existing list of cities are: Delhi, Mumbai, Kolkata & Mumbai.
Newly added cities are:
- Bengaluru
- Pune
- Hyderabad
- Ahmedabad
How to update Metro cities in Runtime HRMS
If you have employees in one of the newly added cities, follow below steps to update metro city status for tax calculations.
Update for All employees/Bulk Update
- Go to Bulk Updates > Employee Options
- Select All Business Units, All Cost Centers, All Departments and All Designations
- In the Location selection, only select the new locations that you need to update
- You will then be able to see count of affected employees
- Under the Salary Calculations & Deductions, find the option named Metro City Status
- Click on Turn On
- After the operation is completed, you will see number of employees affected by the update
Update for a single employee
- Go to All Employees and search for the employee record
- Open employee record and go to Salary Tab
- Check the latest revision of salary.
- If the latest revision is not APR’26, add a new revision as follows:
- Click Add Revision
- Select APR-2026
- Select Copy salary from last revision checkbox
- Leave the Consider Increment checkbox
- Click on Add
- Once APR’26 revision is added, click on Edit button for this revision item
- Scroll down and find the Income Tax (TDS) option
- Change Metro City Resident toggle to ON
New Tax Regime is the default regime
The new Tax Regime (Section 202) is the default tax regime for ITR filing. The user has to opt for old regime in case they want the taxes to be calculated as per old tax slabs.
How to update Tax Regime in Runtime HRMS
Update for All Employees/Bulk Update
In order to update the new regime for all employees or a set of employees, follow these steps:
- Go to Bulk Updates menu
- Select All Business Units, Locations, Cost centers, Departments, Designations
- In case you want to update for a certain Location or Department, select as per the requirement
- Find the option Income Tax Regime
- Click on Turn ON
Update for a Single Employee
To update tax regime of a single employee, follow these steps:
- Go to Data Capture > IT Declarations
- Select the year as 2026-27 and search for the employee
- Then you will see Apply New Tax Regime option. Turn it ON
Thank you for reading. We hope this article has helped you understand some of the basic changes in the new Income Tax Act 2025. In case you face any difficulty in configuring Runtime HRMS with the above changes, feel free to contact support using options available at Help Center.
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