Income Tax Act 2025: New tax law from April 1st, find out what will change..

The biggest complaint about income tax in India has always been that the law is too complex. It's difficult for the average person to understand which section applies to them, what they need to do, 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 on 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 India's economy was not as digital and modern as it is today. Over time, hundreds of amendments were made to it. As a result, the law became so cumbersome and complicated that it became difficult not only to file taxes but even to understand the law itself. This had become a major problem for small taxpayers, salaried individuals, and senior citizens. The government believes that the time has come to rewrite the entire law from scratch.

What's special about the Income Tax Act 2025?
According to the government, the new tax law will be approximately 50 percent shorter. The language has been simplified so that ordinary people can understand the rules without the help of a tax expert. Unnecessary sections have been removed, and many old and redundant tax provisions have been eliminated. The government claims that this will also reduce tax disputes and court cases.

Tax rates remain the same, and rules become simpler.
The biggest relief is that there are no changes in the tax rates. This means your tax slab will remain the same as before. This law is revenue-neutral, meaning it will not affect the government's revenue. The only difference will be that the rules for filing taxes will now be clearer and easier to understand.

The hassle of the Assessment Year is over.
Until now, difficult terms like "Previous Year" and "Assessment Year" in income tax have confused people. These have been eliminated in the new law. Now there will be only one term: "Tax Year." This will make the ITR filing process even simpler. In addition, if a taxpayer files their return even after the due date, they will still be entitled to a TDS refund, which was not easily possible before.

The government has clarified that all new tax-related changes in the 2026-27 budget, whether related to personal tax, corporate tax, or HUF rules, will be incorporated under this new Income Tax Act 2025.  After parliamentary approval, the rules and tax forms are now being prepared.

Previous attempts
This is not the first time an attempt has been made to revamp the tax system. In 2010, an attempt was made to introduce the Direct Tax Code, but it was unsuccessful. Later, in 2017, a committee was formed, and this new law was drafted based on its report. The objective of the Income Tax Act 2025 is clear: to make the tax system simple, transparent, and reliable. The tax rates will remain the same, but understanding the system will be easier. This change is considered a major relief for salaried individuals, small business owners, and senior citizens.