The Income-Tax Act, 2025 has officially received the assent of Hon’ble President Droupadi Murmu on 21st August 2025, paving the way for a historic reform in India’s direct tax system. This new legislation will replace the six-decade-old Income-tax Act, 1961 and will come into effect from 1st April 2026.
A Simpler and Modern Law
The new Act has been designed to make compliance easier and taxation law more transparent. The government’s objective is to ensure lucidity, clarity, and reduced complexity, making the law understandable for taxpayers, professionals, and institutions alike.
Key highlights include:
- ✅ Reduction in sections from 819 to 536
- ✅ Reduction in chapters from 47 to 23
- ✅ Words reduced from 5.12 lakh to 2.6 lakh, making the law more concise and user-friendly
- ✅ Removal of redundant provisions and archaic language
No Change in Tax Rates
Union Finance Minister Nirmala Sitharaman, while addressing the Rajya Sabha on 12th August 2025, clarified that the new law does not propose any changes in tax rates. The focus remains on simplification, not increasing the tax burden.
She further emphasized the government’s commitment to stable tax policy, recalling Prime Minister Narendra Modi’s directive since 2019 that “Covid or no Covid, we shall not increase the tax burden on people.”
Legislative Journey
- 11th August 2025 – Bill passed in the Lok Sabha
- 12th August 2025 – Rajya Sabha returned the bill without amendments
- 21st August 2025 – Presidential assent received
What It Means for Taxpayers
For individuals, businesses, and professionals, this reform marks a new era of simplified taxation. With fewer sections, chapters, and technical jargon, compliance is expected to become more straightforward, transparent, and efficient.
At Whytax, we believe this reform paves the way for a more efficient tax ecosystem, minimizing ambiguity and reducing compliance burden for individuals and businesses alike.