EY calls for clarity, FAQs on Income Tax Act 2025 ahead of April 2026 rollout

India is on the cusp of a landmark reform in its direct tax regime, with the Income Tax Act, 2025, set to come into force from April 1, 2026, replacing the six-decade-old Income Tax Act of 1961.

As the country prepares for this significant transition, policymakers, tax authorities and industry experts are emphasising the need for clarity, preparedness and taxpayer-friendly implementation.

From calls by EY India for detailed guidelines to avoid confusion and litigation, to the CBDT’s push for training, technology adoption and proactive engagement by tax officials, the focus is firmly on ensuring a smooth, predictable and trust-based shift to the new tax framework.

On the implementation of the new Income Tax Act 2025 from April 1, EY India suggested that detailed guidelines and FAQs should be provided to minimise the confusion during the transition from the Income Tax Act 1961 to the new Act.

"This is crucial to avoid litigation and ensure a smooth transition for taxpayers. Certainty and predictability: Establishing a stable tax environment by minimising frequent changes in tax rates is essential. A predictable tax policy builds trust and improves compliance, which is vital for enhancing revenue collection," EY said, PTI reported.

In his New Year address to officers, Agrawal said work is underway on drafting fresh rules, procedures and forms to support the move to the Income Tax Act, 2025, which will replace the Income Tax Act of 1961.

He stressed that successful implementation would depend on thorough preparation, familiarity with the new legislation and collective confidence within the department. He added that training and skill-building programmes have already been initiated to ease the shift to the new regime.

He noted that inquisitiveness and active involvement from officers would be critical to ensuring a smooth transition.

Emphasising the role of technology, Agrawal said systems will be increasingly aligned with the new tax structure, making familiarity with digital platforms and automated processes essential—particularly for younger officers who will shape the department’s future.

The government has brought in the Income Tax Act, 2025 with the objective of simplifying and streamlining income tax legislation, making it clearer and more accessible. While the law focuses on structural and language-related changes, it does not introduce any significant shifts in tax policy.