India’s income tax regime is set for its overhaul in more than six decades, with the government formally notifying the Income-tax Act, 2025.
The new law, which has received the President’s assent, will replace the current Income-tax Act, 1961, and come into effect from April 1 2026, unless otherwise specified.
According to a gazette notification issued by the ministry of law and justice, the Act is aimed at consolidating and amending the country’s income tax laws.
“This Act may be called the Income-tax Act, 2025,” it stated, as cited by ET.
The Bill was cleared by both Houses of Parliament on 12 August 2025, before receiving President Droupadi Murmu’s assent on August 21, 2025.
In a post on X, the income tax department said, "The Income-tax Act, 2025, has received the Hon'ble President's assent on August 21, 2025. A landmark reform replacing the 1961 Act, it ushers in a simpler, transparent & compliance-friendly direct tax regime."
The new Act does not introduce any change in tax rates, rather simplifies language to make the country’s complex income tax laws easier to understand.
It also streamlines the legislation by removing redundant provisions and outdated terminology. Compared to the 819 sections across 47 chapters in the 1961 Act, the new legislation has 536 sections spread over 23 chapters. The word count has been cut from 5.12 lakh to 2.6 lakh words, PTI reported.
For the first time, the Act also introduces 39 new tables and 40 new formulas to replace dense legal text, aimed at improving clarity for taxpayers.
The new law, which has received the President’s assent, will replace the current Income-tax Act, 1961, and come into effect from April 1 2026, unless otherwise specified.
According to a gazette notification issued by the ministry of law and justice, the Act is aimed at consolidating and amending the country’s income tax laws.
“This Act may be called the Income-tax Act, 2025,” it stated, as cited by ET.
The Bill was cleared by both Houses of Parliament on 12 August 2025, before receiving President Droupadi Murmu’s assent on August 21, 2025.
In a post on X, the income tax department said, "The Income-tax Act, 2025, has received the Hon'ble President's assent on August 21, 2025. A landmark reform replacing the 1961 Act, it ushers in a simpler, transparent & compliance-friendly direct tax regime."
The Income-tax Act, 2025 has received the Hon’ble President’s assent on 21st Aug 2025.
— Income Tax India (@IncomeTaxIndia) August 22, 2025
A landmark reform replacing the 1961 Act, it ushers in a simpler, transparent & compliance-friendly direct tax regime.
Access the official document here: https://t.co/wOPk1PFQbP pic.twitter.com/Xw84hzpPb3
The new Act does not introduce any change in tax rates, rather simplifies language to make the country’s complex income tax laws easier to understand.
It also streamlines the legislation by removing redundant provisions and outdated terminology. Compared to the 819 sections across 47 chapters in the 1961 Act, the new legislation has 536 sections spread over 23 chapters. The word count has been cut from 5.12 lakh to 2.6 lakh words, PTI reported.
For the first time, the Act also introduces 39 new tables and 40 new formulas to replace dense legal text, aimed at improving clarity for taxpayers.
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