Income Tax Act 2025: Key Income Tax Changes From April 1

The Income Tax Act, 2025, is set to take effect from April 1, 2026, by replacing the current Income Tax Act, 1961. The new law introduces a more simplified tax provision with clear language. It aims to remove the old provisions and reduce the compliance burden on taxpayers.

The CBDT Chairman, Ravi Agrawal, has asked the income tax department officers to familiarise themselves with the new income tax law so that they can further guide the taxpayers.

With the new law taking effect in a few months, the taxpayers must know the key changes from April 1, 2026:

• Revised ITR Forms: The Income Tax Department will be introducing updated ITR forms and procedures in alignment with the new law.
• More Use of Technology: The new income tax law will focus on digital processes. There will be an automated system used for assessments and managing the data. As a result, the taxpayers are expected to see changes in the issuance of notices and the handling of the filings.
• Ease of Compliance: The tax department is shifting its approach to make compliance easier for taxpayers. Instead of focusing only on strict enforcement, the department aims to guide and support taxpayers. Initiatives like NUDGE (Non-intrusive Usage of Data to Guide and Enable) are being used to enable voluntary compliance by the taxpayers.

What Should Taxpayers Do?

Here is what taxpayers can do:

• Maintain Systematic Records: Taxpayers must maintain an organised record of the necessary tax documents, as the digital verification may increase.
• Keep Up With Income Tax Updates: Actively monitor the official income tax notifications about the new processes, forms and deadlines.
• Seek Professional Help: In case you are confused about the applicability of the new law, it is better to consult a tax professional.