The biggest complaint regarding income tax in the country has always been that the law is very complex. It becomes difficult for the common man to understand what he has to do in which section and how much tax he has to pay. To overcome this problem, the government is now bringing a new and more simple law, named Income Tax Act 2025. This new law will be applicable in the entire country from April 1 and will replace the almost 64 year old Income Tax Act 1961.
The Income Tax Act 1961 was made at a time when India's economy was not as digital and modern as it is today. Over time, hundreds of amendments were made in it. The result was that the law became so heavy and complicated that it became difficult to even read, let alone pay taxes. This had become a big problem for small taxpayers, employed people and senior citizens. The government believes that the time had come to rewrite the entire law.
According to the government, the new tax law will be approximately 50 percent smaller. In this, the language has been simplified so that even common people can understand the rules without the help of tax experts. Unnecessary sections have been removed and many old and useless tax provisions have been completely abolished. The government claims that this will reduce tax related disputes and court cases.
The biggest relief is that there has been no change in the tax rates. That means your tax slab will remain the same as it was before. This law is revenue neutral, meaning it will not have any impact on the government's earnings. The only difference will be that now the rules for paying taxes will be clearer and easier to understand.
Till now, difficult words like previous year and assessment year in income tax used to confuse people. It has been abolished in the new law. Now there will be only one word, tax year. This will make the process of filling ITR even simpler. Apart from this, if a taxpayer files the return even after the due date, he will be entitled to get TDS refund, which was not easy earlier.
The government has made it clear that whatever new tax-related changes will be made in the Budget 2026-27, be it personal tax, corporate tax or HUF related rules, all will be included under this new Income Tax Act 2025. After getting approval from the Parliament, its rules and tax forms are now being prepared.
This is not the first time that an attempt has been made to redesign the tax system. There was an attempt to bring a direct tax code in the year 2010, but it could not succeed. Later in 2017, a committee was formed, based on whose report this new law has now been prepared. The objective of the Income Tax Act 2025 is clear. To make the tax system simple, transparent and reliable. Tax will remain the same, but it will now be easier to understand. This change is being considered a big relief for employed people, small businessmen and senior citizens.
