New Amended Income Tax Act 2025 Comes into Force from April 1: Here’s What Taxpayers Should Know
The new amended Income Tax Act 2025, replacing the earlier 60-year-old tax rules, is scheduled to take effect from April 01, 2025. These changes will ultimately be reflected in Budget 2026-27. The changes made in income tax rules do not affect existing tax rates; only the direct tax rules have been made simpler to understand, with the aim of reducing the ambit of litigations and removing unclearness in the nation’s tax system.
The new IT rules have removed the confusion between ‘Assessment Year’ and ‘Financial Year’ by introducing a single term, namely, ‘tax year,’ replacing both. Now, as per the new rules, you are allowed to avail of a TDS refund without any late fee or penalty even if your ITR was filed late. Any changes reflected in the budget for 2026-27 regarding taxation of individuals, corporates, HUFs, and others will be implemented in the New Income Tax Act 2025.
The proposed Income Tax Act 2025 got approval from the Parliament of India on August 12, 2025, after deep consultation and examination of all the proposed changes by the Parliamentary Committee. The proposed rules became an act on August 21, 2025, when the Indian President, Droupadi Murmu, gave her expression of approval.
Now, several taxpayers and individuals have a common question: what was the need for making amendments to the around 60-year-old Income Tax Act 1961? In answer to this question, numerous experts believe that the Income Tax Law came into effect 64 years ago; since then, several changes have come to society. The needs of people have changed, the way of doing business has been transformed, and several other changes have occurred.
The 1961 Income Tax Rules were implemented when India had gained its independence a few years back; Indians were facing new challenges. Now, those rules are old as per the new, growing economy of India. Over time, the country has developed. Hence, the government is now implementing a few relevant amendments to the 1961 tax rules, aligning with the growing challenges of the nation.
The new income tax rules for 2025 have been amended, making them more friendly to readers. These changes are aimed at making the rules simpler to understand so that taxpayers are aware of their exact tax liability, which ultimately will reduce legal actions and reduce demands for deputed taxes.
Now, several taxpayers also have doubts about how the IT rules will help in reducing tax liability. So, as we are all aware of the fact that any changes in income tax rates are made using the Finance Act, which is part of the budget presented in the parliament of India on the 1st of every February. Therefore, any changes in the budget will also be implemented in the new bill.
