The Income Tax Act 2025, which comes into from April 1, 2026, has updated rules, procedures, and forms. Many sections have been removed, related provisions have been grouped together, and definitions have been streamlined.
However, taxpayers, lawyers, and the officials executing the policy have a tough task ahead of them.
“For sixty years, tax interpretation has been shaped by court rulings under the 1961 Act. Now, with the law re-drafted and reorganised, those rulings cannot be applied automatically. Where the wording remains similar, judicial principles may continue to hold, but where language and intent have changed, past decisions may no longer apply,” an tax expert said in a press release released earlier.
Many have considered lauded India’s new income tax law as one of the most significant structural reforms because it changes the way tax law is written, interpreted and complied with.
“The transition will require patience, learning and adjustment, but the long-term benefit is a simpler, more transparent system with reduced friction for taxpayers,” he added.
“Active involvement in training and familiarisation will help officials understand the intent and structure of the new law and assist taxpayers with clarity,” Ravi Agrawal, chairman of the Central Board of Direct Taxes (CBDT), told officials in a letter to the staff commemorating the new year.
Taxpayers can take steps now to ensure readiness for the new law:
- Watch out for official notifications from the Income Tax Department regarding new forms, procedures, and deadlines.
- Keep your financial documents easily accessible, as digital verification processes may increase.
- Consult your tax advisors or refer to official instructions to understand any changes in exemptions, deductions, or reporting requirements.
