The Income Tax Act, 2025 is the new direct tax law that replaces the existing Income Tax Act, 1961. It was passed by Parliament and will come into effect from 1st April 2026 (FY 2026-27, AY 2027-28).
- Simplified Structure: Reduced from 298 sections to simpler, user-friendly provisions
- New Section Numbers: Completely new numbering system different from 1961 Act
- Technology-First Approach: Enhanced digital integration and automated compliance
- Rationalized Deductions: Streamlined tax benefits under new regime
- Updated Tax Rates: Revised tax slabs with higher exemption limits
| Milestone | Date |
|---|
| Act Passed | 2025 |
| Effective Date | 1st April 2026 |
| Financial Year | 2026-27 |
| Assessment Year | 2027-28 |
| Aspect | Old Act (1961) | New Act (2025) |
|---|
| Sections | 298 | ~170 |
| Deductions | 70+ | Rationalized |
| Tax Slabs | Complex | Simplified |
| Compliance | Manual-heavy | Digital-first |
| TDS Sections | Old numbers | New section codes |
- Resident individuals
- Non-resident Indians
- Companies (domestic & foreign)
- Partnership firms & LLPs
- Trusts and charitable institutions
- Every person liable to tax
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