New Income Tax Act marks fresh chapter, step towards Viksit Bharat: CBDT

The Income Tax Act, 2025, which came into force on April 1, 2026, marks a new chapter in India’s tax administration and represents a key step towards the vision of a “Viksit Bharat,” the Central Board of Direct Taxes (CBDT) said on Tuesday.

In an official statement, the CBDT emphasised that the new legislation replaces the over six-decade-old Income Tax Act, 1961, while significantly reducing its volume and complexity. The Board underlined that the intent behind the overhaul is not to change tax policy, but to make the law easier to understand and comply with.

“It marks a shift towards greater clarity and ease of compliance through simple language, a streamlined structure and a reader-friendly presentation, without altering the underlying tax policy,” the CBDT said.

According to the Board, the new Act has been designed keeping taxpayers’ convenience in mind, with a focus on reducing ambiguity and improving overall efficiency in compliance. By reorganising provisions and eliminating redundant sections, the law aims to make tax filing less time-consuming and more accessible, even for individuals without deep technical knowledge.

The CBDT also clarified that the transition to the new regime will be gradual to avoid disruption. The Income Tax Department’s e-filing portal will facilitate compliance under both the old and new laws during this period. Returns for Assessment Year 2026–27, which are scheduled to be filed around July 2026, will continue to be governed by the provisions of the old Act.

One of the key structural changes introduced in the new law is the move to a single “tax year” framework. This replaces the earlier system of having both a “previous year” and an “assessment year,” a distinction that often caused confusion among taxpayers. The new approach is expected to simplify timelines and make financial planning more straightforward.

Additionally, the Act offers greater flexibility to taxpayers by allowing them to claim TDS refunds even if income tax returns are filed after the prescribed deadlines, without attracting penal charges. This provision is expected to particularly benefit individuals who miss filing deadlines but are eligible for refunds.