While the new Income tax Act 2025 does not completely overhaul the existing provisions, it simplifies the language and enhances the presentation of the law. The core principles remain unchanged, but the new Income tax Act 2025 aims to make the tax provisions more taxpayer-friendly.
Through simplification, it seeks to promote greater transparency and efficiency for both taxpayers and the government. Below are the key changes introduced in the Income Tax Act, 2025, as compared to the Income Tax Act, 1961:
- The Income Tax Act, 2025 will replace the existing Act, effective from April 1, 2026.
- The new Income Tax Act 2025 focuses on simplifying and modernizing India’s direct tax laws, streamlining provisions for greater clarity and ease of compliance. Most tax rates and regimes for individuals and corporations remain unchanged.
- It introduces the concept of a “tax year,” replacing the terms “assessment year” and “previous year” to improve clarity and consistency.
- Obsolete and redundant sections have been removed, and the legal language has been simplified to make the law more accessible to taxpayers.
- The scope of taxation on virtual digital assets (such as cryptocurrencies) has been expanded.
- All TDS-related sections under the current Act (Sections 192 to 194T) have been consolidated into a single section—Section 393. The applicable rates and threshold limits remain unchanged.
- The language throughout the Income tax Act 2025 has been simplified to ensure better understanding and usability.
- The number of sections has been reduced to 536.
- In the new Income tax Act 2025, all sections are numbered sequentially, eliminating the use of alphabets in section numbers. This may give the impression of an increased section count, but substantively, it is not the case.
- There are no changes to the due dates under the new Act.
- The option to opt out of the default new tax regime continues to be available under the Income Tax Act, 2025. The new regime remains the default.
- The New Income Tax Act, 2025 comprises 536 sections, 23 chapters, and 12 schedules.
Income Tax Act 2025 effective date and filing deadlines
The Income Tax Act 2025 will come into force on 1st April 2026. It applies to income earned in the Tax Year 2026–27 and onwards.
Income tax return (ITR) filing deadlines:
| ITR Form | Income tax return filing Due Dates |
| ITR-1 & ITR-2 | 31st July |
| ITR-3 & ITR-4 (Non-audit) | 31st August |
| ITR-3 & ITR-4 (Tax Audit) | 31st October |
| Belated Return | 31st December |
Income Tax Slab Rates
New Tax Regime (Default – Section 202)
| Income Range (₹) | Tax Rate |
| Up to 4,00,000 | NIL |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| Above 24,00,000 | 30% |
Old Tax Regime
| Income Range (₹) | Age < 60 & NRI | Age 60–80 (Resident) | Age > 80 (Resident) |
| Up to 2,50,000 | NIL | NIL | NIL |
| 2,50,001 – 3,00,000 | 5% | NIL | NIL |
| 3,00,001 – 5,00,000 | 5% | 5% | NIL |
| 5,00,001 – 10,00,000 | 20% | 20% | 20% |
| Above 10,00,000 | 30% | 30% | 30% |
Rebate Provisions
| Tax Regime | Rebate Amount (₹) | Income Limit (₹) |
| New Regime | 60,000 | Up to 12,00,000 |
| Old Regime | 12,500 | Up to 5,00,000 |
Legislative timeline for the Income Tax Act, 2025
Here’s the legislative timeline for the Income Tax Act, 2025 presented in a clear table format:
| Date | Event |
| February 13, 2025 | Original Income-tax Bill introduced in Lok Sabha |
| July 21, 2025 | Parliamentary Select Committee submitted report with 285+ recommendations |
| August 8, 2025 | Original Bill withdrawn for revisions |
| August 11, 2025 | Revised Income-tax (No. 2) Bill passed in Lok Sabha |
| August 12, 2025 | Bill passed in Rajya Sabha |
| August 21, 2025 | Presidential assent granted |
| August 21, 2025 | Act notified in Gazette of India |
| April 1, 2026 | Act to become effective |
Chapters of the Income Tax Act, 2025
| S. No. | Chapter No. | Title / Overview | Notes / Sub-parts |
| 1 | Chapter I | Preliminary | Short title, extent, commencement, definitions |
| 2 | Chapter II | Basis of Charge | Tax year, scope of total income, charge of tax |
| 3 | Chapter III | Incomes which do not form part of Total Income | Exemptions, agricultural income, charitable institutions |
| 4 | Chapter IV | Computation of Total Income | Heads of income, deductions, adjustments |
| 5 | Chapter V | Income of other persons, Included in the Total Income of the Assessee | Clubbing provisions, spouse/minor child income |
| 6 | Chapter VI | Aggregation of Income | Combining multiple sources, composite income rules |
| 7 | Chapter VII | Set off, or Carry Forward And Set Off of Losses | Intra-head and inter-head set-off, carry forward rules |
| 8 | Chapter VIII | Deductions to be made in Computing Total Income | Section 80 deductions (80C, 80D, etc.) |
| 9 | Chapter IX | Rebate And Reliefs | Tax rebates, relief for double taxation |
| 10 | Chapter X | Special Provisions Relating to Avoidance of Tax | Transfer pricing, thin capitalization, anti-avoidance |
| 11 | Chapter XI | General Anti-Avoidance Rule | GAAR framework, impermissible avoidance arrangements |
| 12 | Chapter XII | Mode of Payment in Certain Cases | Advance tax, self-assessment tax, electronic payment |
| 13 | Chapter XIII | Determination of tax in Special Cases | MAT, AMT, taxation of firms, LLPs, trusts |
| 14 | Chapter XIV | Tax Administration | Powers of authorities, issue of notices, compliance |
| 15 | Chapter XV | Return of Income | Filing requirements, due dates, revised returns |
| 16 | Chapter XVI | Procedure for Assessment | Scrutiny, best judgment, reassessment |
| 17 | Chapter XVII | Special tax provisions for certain persons | Non-residents, foreign companies, special industries |
| 18 | Chapter XVIII | Appeals, Revision and Alternate Dispute Resolution | CIT(A), ITAT, DRP, Settlement Commission |
| 19 | Chapter XIX | Collection and Recovery of Tax | TDS, TCS, advance tax, recovery mechanisms |
| 20 | Chapter XX | Refunds | Claiming refunds, interest on refunds |
| 21 | Chapter XXI | Penalties | Defaults, concealment, misreporting |
| 22 | Chapter XXII | Offences and Prosecution | Prosecution provisions, offences under the Act |
| 23 | Chapter XXIII | Miscellaneous |
References:
- Gazette of India: https://egazette.gov.in/WriteReadData/2025/265620.pdf
- Budget Speech – 2024-25 (Minister of Finance): https://www.indiabudget.gov.in/doc/bspeech/bs2024_25.pdf
