New Income Tax: A brand new Income Tax Act is set to roll out in the country starting April 1, 2026. The previous Income Tax Act from 1961 will be replaced by the Income Tax Act of 2025. Parliament approved it on August 12. On Monday, CBDT Chief Ravi Agarwal mentioned that once the new law is in place, the ITR form and all other forms will be totally simplified and made user-friendly. He emphasized that the goal is to make tax compliance easier and more approachable for taxpayers.
New forms will be ready by January
The CBDT chief pointed out that all ITR forms, quarterly TDS returns, and other documents are currently undergoing a redesign. The Directorate of Systems and the Tax Policy Division are collaborating on this. The aim is to have all forms and regulations finalized by January 2026, allowing taxpayers ample time to adjust their software and processes.
The new law will come into effect from April 1, 2026
The Income Tax Act 2025 will take effect from the next financial year, 2026-27 (April 1, 2026). This new Act aims to simplify tax laws and cut down on jargon, making it more comprehensible. Importantly, the new law does not introduce any new tax rates; it simply clarifies the language, which is crucial for grasping complex income tax regulations. It eliminates unnecessary provisions and outdated terminology.
The number of sections in the Income Tax Act of 1961 has been slashed from 819 to 536, and the chapters have been reduced from 47 to 23. The total word count of the new law has dropped from 512,000 to 260,000. Additionally, 39 new tables and 40 new formulas have been introduced to replace the condensed text of the 1961 Act, enhancing clarity.