CBDT to Roll Out New Direct Tax Law from April 1, 2026

The Central Board of Direct Taxes (CBDT), under the Ministry of Finance, is planning to introduce a new direct tax law starting from April 1, 2026. This new law will replace the current Income Tax Act, which has been in use since 1961, making it more than 60 years old.

In a New Year message to income tax department employees, CBDT Chairman Ravi Agrawal said that all tax officials must work with clarity, focus, and a clear purpose so that the changes help taxpayers across the country. He stressed that the goal of the new law is to make the tax system smoother and more beneficial for everyone.

He also mentioned that new rules, procedures, and tax forms are currently being prepared to support the shift to the new tax law. This means the department is actively working to ensure a smooth transition once the new law comes into effect.

Calling 2026 a year of ‘special importance’, the CBDT chairman urged officials to be fully prepared. He asked them to understand the new law well and work together with confidence to implement it successfully, so taxpayers face fewer difficulties and more clarity in the tax process. He added in a letter, “Thigs year carries special significance. With the Income Tax Act 2025 notified and scheduled to take effect on April 1, 2026, we prepare for the shift to the Income Tax Act 2025.”

He said that new rules are being prepared, and training and capacity-building work has already started. In the coming months, everyone will need to actively take part in training and learning sessions so they can clearly understand the purpose and structure of the new law and then help taxpayers by explaining it in a simple and clear way.

He said, “Beyond the collection of revenue and taxes and enforcement, the role of the department is increasingly centred on facilitation, trust and service. Technology will be central as systems evolve to align with the new framework.”

He also said that knowing how to use data platforms and automated systems will be very important in the future, especially for younger officers and staff who will lead the tax department in the coming years. Looking back at 2025, the CBDT Chairman said the department closely monitored issues related to taxpayer complaints, correction of mistakes in tax orders, and long-pending appeals to ensure better service and fairness.

The CBDT chief also asked the tax officials to strengthen ‘behavioural’ administration through the non-intrusive usage of data to guide and enable the NUDGE framework, which encourages the taxmen to use data for better communication to foster voluntary compliance by taxpayers.

He wrote in the letter, “These values live through our decisions, be they big or small. Every member strengthens the integrity of the tax system and the work we do each day quietly supports the nation’s financial architecture.”