New Income Tax Law Set for Rollout from FY27: Government to Notify All Rules by December 2025
The government is gearing up to introduce India’s new Income Tax Law from the beginning of the financial year 2026–27. According to senior officials, all related rules and procedures are expected to be officially notified by December 31, 2025, in a consolidated notification. This comprehensive tax reform aims to simplify compliance, reduce complexity, and enhance administrative efficiency in the country’s tax framework.
New Law to Bring Simplified Tax Structure
The Income Tax Bill, 2025, which received parliamentary approval earlier this year, was officially signed into law by President Droupadi Murmu in August 2025. The new law replaces the six-decade-old Income Tax Act, 1961, with a more streamlined and user-friendly framework. The government has reduced the number of sections from 819 to 536 and chapters from 47 to 23, effectively cutting the total word count from over 5.12 lakh to 2.6 lakh.
This major overhaul doesn’t introduce new tax rates but focuses on removing redundant provisions and outdated language, making the law clearer and more practical for taxpayers and professionals alike.
Around 400 Rules and 180 Forms to Support the Framework
The revamped tax structure will be backed by nearly 400 rules and 180 forms, compared to the previous system which had more than 500 rules. Officials have confirmed that the goal is to make compliance easier while ensuring smooth administrative operations.
A senior government officer stated, “By December 31, all rules will be consolidated and notified together. The budget work will proceed simultaneously. Once the framework is finalized, we’ll conduct multiple testing rounds and trial runs to ensure seamless implementation before launch.”
IT Infrastructure to Be Developed After Notification
Once the notification is issued, the focus will shift toward building and integrating IT infrastructure to support the new tax system. This process is expected to run from January to March 2025, ensuring that the backend systems, utilities, and user interfaces are fully operational before the rollout.
Officials added that forms are currently being compiled and merged, and prototypes will undergo extensive testing and data integration before activation. Each form will require detailed development, integration, and testing to ensure reliability. The integration work will also align with the Union Budget preparation cycle.
Purpose and Impact of the New Framework
The upcoming Income Tax Law is designed not only to streamline compliance but also to strengthen transparency and efficiency in the tax administration process. Rules under this law will define how liabilities are calculated, refunds are processed, and exemptions are applied — forming the operational backbone of the entire tax ecosystem.
Meanwhile, standardized forms will simplify how taxpayers and businesses submit information, file returns, and claim benefits. Together, these reforms are expected to make tax compliance simpler, faster, and more predictable, benefiting both individual taxpayers and corporations.
A Modern Tax Regime for a Digital India
With the integration of modern IT infrastructure and simplified regulatory frameworks, the government’s new tax regime represents a significant step toward a digitally driven and transparent tax system. The initiative aligns with India’s broader economic reform agenda — promoting ease of doing business, enhancing voluntary compliance, and minimizing disputes.
As officials prepare to finalize and test all components before the FY27 rollout, the New Income Tax Law, 2025, is being seen as a landmark reform that will reshape the way individuals and businesses interact with the country’s taxation system — making it simpler, smarter, and future-ready.
