Income Tax Act 2025: Simplifying Tax Laws from April 1, Replacing Six-Decade-Old Act

• The Income Tax Act, 2025, will replace the 64-year-old Income Tax Act, 1961, effective April 1.
• The new Act aims to simplify direct tax laws, reduce ambiguities, and decrease litigation without altering existing tax rates.
• It introduces a single 'tax year' system, eliminating the distinction between 'previous year' and 'assessment year' for easier compliance.
• The new legislation significantly cuts the volume of text and sections by nearly 50% compared to the 1961 Act.
• Approved by Parliament on August 12, 2025, and assented by Droupadi Murmu on August 21, 2025, it incorporates all Budget 2026-27 tax changes.

Why It Matters: The Income Tax Act, 2025, simplifies India's tax framework, making it leaner and more taxpayer-friendly.