New income‑tax law to take effect from this date, know detail

New Income Tax Act 2025: The central government is going to implement a new law from the next financial year. Therefore, a major change is coming for taxpayers across the country. The central government is going to implement the new simplified Income Tax Act 2025 from the upcoming financial year. This will replace the more than six-decade-old Income Tax Act of 1961.

This move aims to make the tax system simpler, more transparent, and more compliance-friendly. The new Income Tax Act is expected to be very significant, opening up new options for both ordinary and high-net-worth individuals. The government had approved this Act some time ago.

What will the new Income Tax Law be like?

It’s good to know that the new Income Tax law will be effective from April 1st. It emphasises reducing complex provisions, ambiguous definitions, and lengthy legal processes. The government believes that a simpler law will increase voluntary tax compliance and provide relief to taxpayers from unnecessary disputes.

The government is also implementing two other laws. The first is the imposition of an additional excise duty on cigarettes. The second is the application of an additional cess on pan masala, in addition to the GST rates. Both these laws will be implemented from the date decided by the government.

The government has stated that the tax reforms implemented in 2025 aim to stimulate domestic demand amidst a challenging global economic environment. Uncertainties regarding duties and tax rates also affect investment and consumption.

Significant GST Rate Reduction

The Modi government at the centre made a major decision this year by significantly reducing GST rates. From September 22nd, GST rates were reduced on approximately 375 goods and services. This reduced the tax burden on everyday items, benefiting both businesses and consumers.

The government has moved towards consolidating the four-tiered GST structure (5%, 12%, 18%, and 28%) into two main rates of 5% and 18%. This is seen as a major reform towards making the indirect tax system simpler and more rational.