Rapid Fire
Income-tax Act, 2025
- 02 Apr 2026
- 3 min read
The Income-tax Act, 2025, has officially come into force on 1st April, 2026, superseding the six-decade-old Income-tax Act, 1961.
- Core Objective: It is believed that these revisions are designed to align exemption limits with current cost structures and inflationary trends, which have rendered many existing thresholds outdated.
- The broader objective is to ease the tax burden on salaried individuals while modernising the tax administration system.
- Operational Framework: The Central Board of Direct Taxes (CBDT) notified the Income-tax Rules, 2026 to operationalise the new legislative provisions.
- Procedural Overhaul (Introduction of Form 130): In a major push for standardisation and digitization, the traditional Form 16 (a tax deducted at source (TDS) certificate issued by an employer to an employee) is being replaced by a new system-generated Form 130 to improve reporting accuracy.
- Tax Year Consolidation: The traditionally distinct concepts of Financial Year (FY) and Assessment Year (AY) have been merged into a single, unified "Tax Year."
- Digital Expansion: The definition of undisclosed income now explicitly includes virtual digital assets, and authorities are granted access to "virtual digital spaces" (e.g., social media, email servers) during search and seizure.
- Standardised Compliance: The transition includes simplified and re-engineered tax forms, designed to make the filing process more user-friendly and efficient.
- Strategic Vision: This reform is positioned as a critical step toward improving tax administration and supporting the broader national goal of Viksit Bharat.
- Income Tax: It is a direct tax on the income earned by individuals, companies, or other entities during a financial year. For individual taxpayers in India, it is levied according to progressive tax slabs.
- These slabs may vary under the new tax regime or with applicable rebates and deductions.
- According to the Central Board of Direct Taxes, India’s gross direct tax collections for 2025-26 stood at Rs 7.99 lakh crore, down 1.9% from Rs 8.14 lakh crore in FY 2024-25.
| Read more: Income Tax Bill, 2025 |
