New Delhi: The government has officially notified the Income Tax Act, 2025, which consolidates and amends the existing income tax laws, replacing the over six-decade-old Income Tax Act, 1961.

The Act received the President’s assent on August 21, according to a gazette notification issued by the Ministry of Law and Justice.

Set to come into effect from April 1, 2026, the new simplified law does not introduce any new tax rates. It primarily simplifies language to make the Income Tax laws easier to understand.

The Act removes redundant provisions and archaic language, reducing the number of sections from 819 under the 1961 law to 536, and the number of chapters from 47 to 23. The total word count has been cut from 512,000 to 260,000 words.

“These changes are not merely superficial; they reflect a new, simplified approach to tax administration. This leaner and more focused law is designed to make it easy to read, understand and implement,” Finance Minister Nirmala Sitharaman told Parliament.

The new Income Tax Bill, 2025, was approved by Parliament on August 12, with the Rajya Sabha returning the bill to the Lok Sabha, which had approved it on 11 August.

“The largely dense and complex structure of the Income Tax Act, 1961, resulted in various interpretations, and several avoidable disputes kept mounting, not so much because of the rate, but because of the language. We were subjected to too many litigations. The density and complexity of the Act, along with the verbose style that dominated over the decades, made the Act very tedious for anyone to use,” Sitharaman said in the Rajya Sabha.

The revised bill incorporated most recommendations from the Parliamentary Select Committee before being passed by the Lok Sabha on August 11.

 

 

IANS