President Droupadi Murmu Gives Assent to Income-Tax Act 2025 and New Law to Replace I-T Act 1961 from April 1, 2026.

National

In August 2025, President Droupadi Murmu granted her assent to the Income-Tax Act (I-T Act), 2025, which was later notified by the Ministry of Law and Justice (MoLJ) through a gazette notification. The new law is set to replace the Income-Tax Act of 1961 and will come into effect from April 1, 2026.


      - The Income-Tax Act, 2025, has been introduced to replace the decades-old I-T Act, 1961, with a modern and simplified version aimed at reducing complexity and improving compliance. The government emphasized that the Act is designed to ease taxpayers’ compliance burden while ensuring transparency and clarity in tax administration.

      - One of the major highlights of the new Act is that it does not introduce any new tax rate but instead focuses on removing redundant provisions and outdated legal structures. By doing so, it aims to ensure that taxpayers face fewer legal hurdles and that the overall taxation process becomes more straightforward.

      - The structural reforms introduced under the new Act include a significant reduction in the number of sections from 819 in the I-T Act, 1961, to 536, and a reduction in chapters from 47 to 23. The word count of the law has also been reduced drastically from 5.12 lakh words to 2.6 lakh words, making it more concise and user-friendly.

Main Point :-   (i) For the first time, the Act incorporates 39 new tables and 40 new formulas, which are intended to provide taxpayers and professionals with greater clarity and ease of reference. This modernization reflects the government’s efforts to make taxation more accessible, both for individual taxpayers and businesses.

      (ii) A major change brought by the I-T Act, 2025, is the renaming of the Assessment Year (AY) and Financial Year (FY) to “Tax Year.” This change has been made to avoid confusion and create uniformity in tax terminology, marking a significant shift in India’s tax administration system.


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