New Income Tax Act 2025 from April 2026: Simplified rules and forms coming soon

Finance Minister Nirmala Sitharaman today said the Income Tax Act, 2025 will be implemented from April 1 and rules and tax returns forms will be notified shortly.

Beginning April 1, the Income Tax Act, 2025, will come into force replacing the six-decade-old tax law and the changes made in tax laws in 2026-27 Budget will be incorporated in the new legislation. In her Budget speech in the Lok Sabha on Sunday, she said, "This (direct tax code) was completed in record time and the Income Tax Act 2025 will come into effect from first April 2026. The simplified income tax rules and forms will be notified shortly, giving adequate time to taxpayers to acquaint themselves with its requirements."

The forms have been redesigned, such that ordinary citizens can comply without difficulty, she added.

"The rollout of the new Income Tax Act from 01.04.2026 signals a major push toward simplification and taxpayer ease. Redesigned forms and clearer compliance procedures could reduce administrative burden and improve voluntary compliance. As proposed previously, the Income Tax Act had become complicated through years of amendments. Simplification of Income Tax Act was a long-pending need for masses," said Manmeet Kaur, Partner at Karanjawala & Co.

The 2025 I-T law is revenue neutral with no change in tax rates. It has only made direct tax laws simple to understand, removed ambiguities, thereby reducing scope for litigations. It reduces text volume and sections by about 50 per cent vis-a-vis the 1961 Income Tax Act.

The new law simplifies the tax timeline by doing away with the distinction between the assessment year and the previous year, replacing it with a single "tax year" framework. It also allows taxpayers to claim TDS refund even when ITRs are filed after deadlines, without any penal charges.