Once a company understands what the Income-tax Act, 2025 changes in principle, the harder part is operational: making sure every system, contract, and filing process that referenced the old Act is actually updated before FY 2026-27 filings are due. This is the checklist we're running with clients through the transition.
1. Finance Systems and ERP Configuration
- Confirm your accounting/ERP system's tax module has been updated by the vendor to reflect new section references for TDS, TCS, and withholding computations
- Re-test automated TDS rate mapping — a system still tagging deductions against 1961 Act section numbers can misapply rates if the vendor's patch has gaps
- Update chart-of-accounts tax codes and reporting templates that reference specific sections in their labels
2. Contracts and Legal Documentation
- Review vendor, customer, and lender contracts with tax indemnity or withholding clauses that cite specific 1961 Act sections — these clauses remain legally valid by cross-reference, but flagging them for the new numbering avoids confusion in a dispute later
- Update loan agreements and financing documents referencing tax deductibility sections (interest deductibility, thin capitalization provisions)
- Revisit ESOP scheme documents and employment agreements that reference specific perquisite valuation sections
3. Tax Positions and Prior Filings
- Catalogue significant tax positions taken in prior years under specific 1961 Act provisions (deductions claimed, exemptions availed, transfer pricing methodologies) and map each to its 2025 Act equivalent
- Confirm whether any position relied on a provision that has been genuinely restructured (not just renumbered) in the new Act, and get a second opinion from your tax advisory and compliance advisor on whether the position still holds
- Flag any pending assessments or appeals that were filed under 1961 Act references, since procedural continuity provisions typically carry these forward, but this should be confirmed rather than assumed
4. Compliance Calendar
- Rebuild your internal compliance calendar using 'tax year' terminology rather than the old previous-year/assessment-year framework, so internal communications don't create confusion about which period a filing covers
- Reconfirm due dates for advance tax installments, TDS/TCS returns, and the annual tax audit and return filing — the substantive dates are largely unchanged, but this is worth verifying rather than carrying forward last year's calendar unchecked
- Align the tax compliance calendar with your broader accounting and compliance calendar (GST, ROC, payroll) so the transition doesn't create a gap between systems tracking different reference points
5. Team Readiness
- Run a structured internal training session mapping old-to-new section numbers for the provisions your finance and tax teams use most often (TDS rates, depreciation schedules, deduction eligibility)
- Update internal SOPs, audit working paper templates, and tax provisioning workbooks that hard-code 1961 Act section references
- Brief your statutory auditors and tax advisors on which positions and disclosures need re-mapping, so the FY 2026-27 tax audit doesn't surface these questions for the first time at year-end
6. Board and Governance Reporting
- Update board resolution templates and audit committee reporting formats that cite specific tax provisions
- Include a one-time transition note in the board's compliance report for FY 2026-27, confirming the company has reviewed and re-mapped its material tax positions to the new Act
Where Companies Underestimate the Work
The mistake most companies make is treating this as a 'wait and see how the tax department interprets it' exercise. In practice, the mapping work — contracts, ERP tax codes, prior-position documentation — is entirely within a company's control and doesn't need to wait for further clarification from the tax department. Doing it proactively, before the first FY 2026-27 filing, avoids scrambling through a full re-mapping exercise under return-filing deadline pressure.
Perfect Accounting runs a structured Income Tax Act 2025 transition review for clients — covering tax positions, compliance calendars, and system configuration — ahead of the FY 2026-27 filing season.