New Income Tax Law: The new Income Tax Act will come into effect in the country on April 1. The new Income Tax Act 2025 will replace the 64-year-old Income Tax Act 1961. The government claims that it does not change tax rates, but rather makes the rules simpler, clearer, and less controversial.
According to the government, the new tax law will be approximately 50 percent shorter. The language has been simplified so that even ordinary people can understand the rules without the help of a tax expert. Unnecessary sections have been removed, and many outdated and redundant tax provisions have been completely eliminated. The government claims that this will also reduce tax disputes and court cases.
Until now, complex terms like “previous year” and “assessment year” in income tax used to confuse people. This has been eliminated in the new law. Now there will be only one term: “tax year.” This will simplify the process of filing ITR. Furthermore, if a taxpayer files their return after the due date, they will be entitled to a TDS refund, which was previously difficult. The government has clarified that all new tax-related changes in Budget 2026-27, whether they relate to personal tax, corporate tax, or HUF rules, will be incorporated under the new Income Tax Act 2025. Following Parliament’s approval, its rules and tax forms are now being formulated.
However, this isn’t the first time an attempt has been made to revamp the tax system. In 2010, an attempt was made to introduce a Direct Tax Code, but it failed. Later, in 2017, a committee was formed, and based on its report, this new law has been drafted. The objective of the Income Tax Act 2025 is clear: to make the tax system simple, transparent, and reliable.
The Income Tax Act of 1961 was enacted at a time when India’s economy wasn’t as digital and modern as it is today. Over time, it underwent hundreds of amendments. As a result, the law became so cumbersome and complex that it became difficult to read, let alone pay taxes. This had become a significant problem for small taxpayers, employed individuals, and senior citizens. The government believes the time has come to rewrite the entire law.
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