India's New Tax Era: The Income Tax Act, 2025

The Income Tax Act, 2025, which came into effect on Wednesday, is set to redefine India's tax administration, as per the Central Board of Direct Taxes (CBDT). The Act, replacing the nearly six-decade-old Income Tax Act, 1961, aims to simplify tax compliance through clearer language and a more concise structure, all while maintaining existing tax policies.

The CBDT emphasizes that this change, effective from April 1, 2026, represents a crucial development in India's tax regime, aligning with the nation's goal of Viksit Bharat. During the transition, the e-filing portal will support filings under both the old and new Acts, with ongoing proceedings under the old Act continuing until resolved.

The new legislation eliminates the previous distinction between assessment and previous years, introducing a single 'tax year' system. Notably, it allows taxpayers to claim TDS refunds without penalties for late filings.