Income Tax Act 2025: In a significant announcement during her Budget speech, Finance Minister Nirmala Sitharaman said that the Income Tax Act, 2025--which was introduced earlier--will come into effect from the first day of the upcoming financial year, i.e., April 1, 2026.

She further said that rules and tax return forms will be notified with respect to the new bill shortly. The Income Tax Act Bill will replace the six-decade-old Income Tax Act 1961, bringing in a simplified tax returns process.

Key Features of Income Tax Act 2025

- The new law is a comprehensive guideline that sets the framework for taxation, administration, collection, and recovery of direct taxes in India.


- The Income Tax Act 2025 contains more than 600 pages, including 536 sections, 23 chapters, and 16 schedules.
Key Changes and Objectives.

Also Read: Union Budget 2026 Announcements: Check Full List Of Cheaper And Costlier Items

Income Tax Act 2025 Simplify Tax Laws

- The Income Tax Act 2025 has a goal of simplifying tax law and improving clarity for taxpayers by adopting simpler language, a reorganised layout, and more concise provisions compared to the lengthy, highly detailed jargon in the previous act (Income Tax Act 1961).

- The new law replaces the dual framework of "Previous Year" and "Assessment Year" with a single Tax Year, running from April 1 to March 31.

- It aims to significantly reduce complexity by streamlining structure, modernising terminology, and making the law easier to navigate.

Also Read: Budget 2026 Announcements: Electronic Manufacturing Stocks Jump Up To 6% As Budget Hikes Outlay To Rs 40,000 Crore

Meanwhile, the Finance Minister did not make any announcement regarding the tax regime, meaning the new tax regime will continue as the default option.

Important Dates For Income Tax Act

Enactment Date- The Income Tax Act 2025 came into force on August 21, 2025, following the approval of the Income Tax Bill, 2025.

Effective Date: The new legislation is proposed to come into effect from April 1, 2026.