How did the entire income tax system change from 2019 to 2025? These major changes proved to be a 'boon' for taxpayers..
The changes made to India's income tax system in the last few years have not only transformed the way taxes are filed but have also saved ordinary citizens more money. The decisions taken by the central government between 2019 and 2025 have replaced the old, complex system with a structure that is now easier for everyone to understand.
Previously, people chased after investments like LIC, PF, and home loans to save on taxes, but now the system has shifted from 'exemptions' to 'lower tax rates'.
2019-2020: The Beginning of Tax System Reforms
This journey began in 2019 when the government provided extra tax benefits to homebuyers on home loans. This was followed by a major step in 2020: the 'New Income Tax System'. While it offered lower tax rates, it removed investment-linked exemptions. Although this initially seemed unusual to some, the government's intention was clear: to create a system that was less bureaucratic and more efficient.
Faceless Assessment: No More Office Visits
During this period, the government also implemented another significant reform: 'Faceless Assessment'. Now, taxpayers no longer need to visit income tax offices or meet with tax officers in person. Everything became online. Cases are allotted through computers, and hearings are conducted digitally. This eliminated direct contact between officials and taxpayers, reducing corruption and increasing public trust in the system.
2023-2024: A Boon for the Middle Class
The 2023 budget made the new tax system the 'default' option and made income up to ₹7 lakh completely tax-free. Following this, in 2024, the government began the process of overhauling existing laws. An announcement was made to rewrite the Income Tax Act of 1961 to simplify its complex language. Capital gains tax was also simplified to avoid confusion for those involved in the stock market and real estate transactions. Budget 2025: The Biggest Relief and a New Law
The year 2025 proved to be the biggest "boon" for taxpayers. The new tax regime proposed making annual income up to ₹12 lakh tax-free, which significantly empowered the middle class. Now, a new Income Tax Act is set to be implemented from 2026. The government claims that its language will be so simple that the average person will be able to understand their taxes themselves, and legal complications will be reduced.
What to Expect from Budget 2026
Today, most taxpayers have adopted the new system because it allows for tax savings without any investment. Now, everyone's eyes are on the 2026-27 budget. Experts believe that the government will maintain these reforms for the time being.
Disclaimer: This content has been sourced and edited from NDTV India. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
