Income Tax Act 2025: The biggest problem people in India have always faced with income tax is the complexity of its rules. It’s not easy for the average person to understand which rules apply to which section and how much tax they owe. To address this problem, the government is now introducing a new and simpler law, called the Income Tax Act 2025. This new law will come into effect across the country from April 1st and will replace the nearly 64-year-old Income Tax Act 1961.
The Income Tax Act 1961 was created at a time when the country’s economy was neither as modern nor as digital as it is today. Over the years, it has been amended hundreds of times, making the law quite lengthy and complex. It became so complicated that even understanding and reading it, let alone filing taxes, became difficult. This was a major problem, especially for salaried individuals, small taxpayers, and senior citizens. The government believes that it was necessary to rewrite the entire law from scratch.
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Key Features of the Income Tax Act 2025
According to the government, the new tax law will be about 50 percent shorter than the old one. It uses simple and clear language so that ordinary people can understand the rules without the help of a tax consultant. Several unnecessary sections have been removed, and outdated tax provisions have been eliminated. The government claims that this will also reduce tax-related disputes and court cases.
Tax Slabs Remain Unchanged
There are no changes to the tax rates in this new law. This means your tax slab will remain the same. This law is revenue-neutral, meaning it will not affect the government’s revenue. The only change is that the tax filing process will now be clearer, simpler, and easier to understand.
The Confusion of Assessment Year Eliminated
Until now, terms like “Previous Year” and “Assessment Year” in income tax have confused people. In the new law, these terms have been replaced with a single term—”Tax Year.” This will make filing ITRs even easier. In addition, if a taxpayer files their return even after the deadline, they will be entitled to a TDS refund, which was not so easily available before.
The government has also clarified that all new tax-related changes in the 2026-27 budget—whether related to personal tax, corporate tax, or HUF—will be implemented under this new Income Tax Act 2025. After parliamentary approval, the rules and new tax forms are now being prepared.
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Previous attempts have also been made
This is not the first time an attempt has been made to simplify the tax system. In 2010, an attempt was made to introduce a Direct Tax Code, but it could not be implemented. Subsequently, a committee was formed in 2017, and this new law has been drafted based on its recommendations.
Overall, the Income Tax Act 2025 aims to make the tax system simpler, more transparent, and more reliable. The tax rates will remain the same, but understanding and complying with the rules will become much easier. This change could prove to be a great relief for salaried individuals, small business owners, and senior citizens.