India's Income Tax System to Undergo Major Overhaul from April 2026: CBDT Chairman

• The entire income tax system, including filing, notices, penalties, and case resolution, will be transformed starting April 1, 2026.
• The new Income Tax Act 2025 aims to simplify laws, reduce litigation, and build taxpayer trust, moving beyond just legal language.
• Key changes include combining assessment and penalty processes, decriminalization for minor errors, and a 'nudge' model for compliance.
• A limited relief window is introduced for minor errors under the Black Money Act for those with foreign income up to Rs 1 crore and foreign assets up to Rs 5 crore.
• Draft rules and forms for the new Act will be released in February to allow stakeholders to prepare for the upcoming changes.

Why It Matters: India's income tax system will see a comprehensive overhaul from April 2026, focusing on simplification and trust.