Finance Minister Nirmala Sitharaman announced that the Income Tax Act, 2025 will come into effect from April 1, 2026, with simplified rules and redesigned tax return forms to be notified shortly.
The new direct tax code, completed in record time, slashes the legislation’s text and sections by approximately 50% compared to the 1961 Act. This revenue-neutral reform maintains existing tax rates while prioritizing ease of compliance, ambiguity removal, and litigation reduction for ordinary taxpayers.
Key Simplification Features
A unified “tax year” framework eliminates the assessment year/previous year distinction, streamlining record-keeping and compliance timelines. Taxpayers can now claim TDS refunds even for belated ITR filings without penalties, enhancing refund efficiency and reducing disputes.
Taxpayer-Friendly Forms Ahead
Redesigned forms prioritize user experience, giving adequate familiarization time before implementation. These changes support the default new tax regime, complement staggered ITR deadlines (July 31 for ITR-1/2, August 31 for businesses), and align with digital tax administration goals
