New Delhi The Income-Tax Act, 2025 that received assent of President Droupadi Murmu on Wednesday will come into force on April 1, 2026, a government notification said.
“The Income-tax Act, 2025 has received the Hon’ble President’s assent on 21st Aug 2025. A landmark reform replacing the 1961 Act, it ushers in a simpler, transparent & compliance-friendly direct tax regime,” the Income-Tax Department said in a post on X.
The new law will replace the decades old Income-Tax Act, 1961, with a modern and simpler version to enhance ease of compliance. The Lok Sabha had passed the bill on August 11 and the Rajya Sabha returned the bill without any amendments the next day.
Speaking in the Rajya Sabha about the legislation on August 12, Union finance minister Nirmala Sitharaman said the new income-tax bill does not propose any change in tax rates as it aims to simplify the language and bring “lucidity” which would help anyone understand it without any anomalies.
“There are no new rates being brought in here, no tax issues which are being brought in here,” she said, assuaging apprehensions that the government would tinker with tax rates.
The finance minister reiterated the government’s commitment to stable tax policy, saying, “2019 onwards, honourable Prime Minister Shri Narendra Modi had given clear instructions—Covid or no Covid, we shall not increase the tax burden on people.”
{{/usCountry}}The finance minister reiterated the government’s commitment to stable tax policy, saying, “2019 onwards, honourable Prime Minister Shri Narendra Modi had given clear instructions—Covid or no Covid, we shall not increase the tax burden on people.”
{{/usCountry}}Explaining the simplification of taxation law, she said: “By removing redundant provisions and archaic language, we have reduced the number of sections from 819 to just 536. We have cut the number of chapters from 47 to 23. The number of words has been reduced from 5.12 lakh to 2.6 lakh.”
Stressing the need to align laws with the modern digital era, she said: “For the first time, we have introduced 39 new tables and 40 new formulae to replace dense text, using modern, structured formats to enhance clarity.”
The new income-tax bill was drafted within a record time of six months and introduced in the Budget session in February 2025. The drafting involved nearly 75,000 person-hours, with a team of dedicated officers of the income-tax department working tirelessly, she said.
The government reintroduced the bill in the Parliament to extensively incorporate suggestions of the Select Committee, which made 566 recommendations. The government on August 8, withdrew the original bill that was introduced in the Lok Sabha on February 13, to incorporate recommendations of the committee. A revised version of the bill was reintroduced on August 11.
The Income-tax bill was initially introduced in the Parliament on February 13, 2025 after completing the exercise of simplification in a record period of six months. The bill was referred to a select committee which submitted its report on July 21, 2025.