Income-Tax Act 2025: Key Points Every Taxpayer Should Know
· Free Press Journal
The new Income-tax Act, 2025 has been introduced with effect from 1st April 2026, replacing the earlier Income-tax Act, 1961. The new law primarily focuses on simplification, improved clarity, and enhanced digital compliance, while largely retaining the existing tax structure.
Few of the the key changes relevant for individuals are discussed below.
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1. Introduction of “Tax Year”
Often confusing concepts of Previous Year and Assessment Year have been replaced with a single “Tax Year” (1st April to 31st March), making the system simpler and easier to understand.
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Income Tax Rules Overhaul Begins April 1, New Tax Year System & Revised Deadlines Come Into Force2. Simplified Structure of the Law
The number of sections have been significantly reduced to 536 in comparison with 819 sections existed earlier. The number of Rules have been reduced to 333 from 511 earlier. The number of forms have been reduced to 190 from 399 existed a year ago. The language has been simplified eliminating complex references such as Section 12A(1)(b), 13(1)(d), 80C, etc. in the earlier Income Tax Act, 1961 to section 348, 350, 123, etc. in the new Income Tax Act, 2025.
3. Tax Rates –The tax slabs and rates remain broadly unchanged. The objective of the new law is simplification rather than increasing the tax burden.
4. Continuation of New Tax Regime
The existing new tax regime continues as the default option. Taxpayers may still opt for the old regime, subject to conditions.
New Income Tax Rules From April 1, Full List Of Key Changes Including Deadlines, STT Hike & TCS Cuts Explained5. Reorganisation of Deductions and Exemptions
Deductions and exemptions are now grouped under schedules for better clarity and logical structuring. Several deductions under section 80A to 80VVA of Income Tax Act 1961are now bifurcated in to different sections in Income Tax Act, 2025 (section 122 to 154).
6. Rationalisation of TDS/TCS Provisions
Various provisions relating to TDS/TCS have been consolidated and simplified, with more uniform thresholds and wider applicability. Tax Deduction at Source under section 192A to 196D of Income Tax Act 1961 have been merged and shown under a single table under section 193 thereby simplifying understanding of law.
7. Enhanced Digital Compliance
The new law emphasizes faceless assessments, digital filings, and faster processing of returns and refunds.
New Income Tax Rules From April 1, 2026, STT Raised To 0.15% & ITR Deadline Extended To Aug 318. Revised Return Filing Timelines
Return filing due dates have been rationalised based on categories of taxpayers. For individuals filing ITR 3 & ITR 4, the due date has been extended to 31st August from 31st July existed earlier. For filers of ITR 1 & ITR 2, due date remains 31st July as earlier. Due date for filing revised return extended up to 31st March of the following year.
9. Extended Time for Updated Returns
The time limit for filing updated returns has been increased to four years, providing more opportunity for voluntary compliance.
10. Relief and Changes in TDS/TCS for Individuals
TCS on foreign remittance has been reduced to two percent from five percent applicable earlier for education and medical purposes. Form 16 showing TDS on salary now renumbered as form 130. Form 26AS showing TDS credits and income earned in ITD portal now renumbered as form 168. Form 15G and 15H for self declaration of no tax liability to be filed in banks for not deducting TDS now merged into form 121. PAN application in form 49A is renumbered as form 93 and form 94.
Overall, the new Income-tax Act, 2025 is designed to make tax compliance more straightforward and transparent while maintaining continuity with the existing system.
(Venugopal Bhandary, Retired Senior Audit Officer-CAG and tax consultant at Venu’s Income Tax Services, Andheri East, Mumbai)