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India’s New Income Tax To Be Effective From April 1 To Simplify Provisions: All You Need To Know
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India is set to usher in a new era of direct taxation from April 1, when the Income Tax Act, 2025, comes into force, formally replacing the six-decade-old Income Tax Act, 1961.
New Income Tax Act, 2025.
India is set to usher in a new era of direct taxation from April 1, when the Income Tax Act, 2025, comes into force, formally replacing the six-decade-old Income Tax Act, 1961. The new legislation is aimed squarely at simplification, clarity and ease of compliance, without altering existing tax rates.
Crucially, the new law is revenue-neutral. There is no change in personal or corporate tax rates. Instead, the focus is on rewriting the law in simpler language, removing ambiguities and cutting down the scope for litigation. Compared with the 1961 Act, the new legislation reduces the overall volume of text and sections by nearly 50%, making it far more accessible for taxpayers.
Why was the 1961 Income Tax Act replaced?
The Income Tax Act, 1961, was enacted when India was a young republic with a vastly different economic structure. Over the last 64 years, the economy, technology, and ways of earning income have changed dramatically. While successive governments amended the law to keep pace, the result was a bulky and complex statute filled with cross-references, provisos and obsolete sections.
With hundreds of amendments layered over decades, the law became difficult even for professionals to navigate, let alone ordinary taxpayers. The overhaul was driven by the need to modernise the framework and make it understandable in today’s economic and technological context.
What does the new Income Tax Act aim to achieve?
The Income Tax Act, 2025, is designed to be leaner and reader-friendly. The government’s objective is to allow taxpayers to clearly understand how their tax liability is computed, reduce interpretational disputes, and lower the volume of tax litigation. By removing redundant provisions and simplifying structure and language, the new law seeks to bring certainty and transparency to direct taxation.
How is the new law leaner?
The 1961 Act covered multiple direct taxes, including personal income tax, corporate tax, securities transaction tax, wealth tax and gift tax. Over time, several levies — such as wealth tax, gift tax, fringe benefit tax and banking cash transaction tax — were abolished, but many related sections continued to clutter the statute.
The old Act comprised around 298 sections across 23 chapters, many of which became obsolete or irrelevant. The new law cleans up this legacy, removing outdated provisions and presenting a consolidated, amendment-free statute that reflects the current tax regime.
No change in tax rates, but Budget changes will apply
Any changes in tax rates or slabs are typically announced through the Finance Act as part of the Union Budget presented every year on February 1. Accordingly, all tax proposals announced in the Union Budget for 2026-27 — covering individuals, corporates, HUFs and other taxpayers — will be incorporated into the new Income Tax Act, 2025.
This ensures continuity while allowing the simplified law to remain fully aligned with the latest policy decisions.
Key structural changes taxpayers should note
One of the most important reforms is the simplification of the tax timeline. The long-standing distinction between the “previous year” and the “assessment year” has been removed. The new law introduces a single ‘tax year’ concept, making compliance easier and more intuitive.
Another significant relief is on TDS refunds. Under the new framework, taxpayers will be able to claim refunds of tax deducted at source even if they file their income tax returns after the due date, without facing penal consequences, an important change for delayed filers.
Rules and return forms to follow Budget 2026-27
While the Act itself takes effect from April 1, the rules for implementing the new law are currently being framed. These are expected to be notified after the presentation of the FY27 Union Budget. Subsequently, various procedural forms — such as those for advance tax payments, TDS and income tax returns — will also be notified in line with the new framework.
Legislative journey of the new law
The Income Tax Act, 2025, was approved by Parliament on August 12, 2025, after scrutiny by a Parliamentary committee. It became law after receiving the assent of Droupadi Murmu on August 21, 2025.
Have such reforms been attempted earlier?
This is not the first attempt to replace the 1961 Act. In 2010, the Direct Taxes Code Bill was introduced in Parliament and referred to a Standing Committee, but it lapsed following a change in government in 2014. Later, in November 2017, the government constituted a six-member committee to redraft the income tax law, which submitted its report to the finance minister in August 2019. The Income Tax Act, 2025 is the culmination of that long reform process.
From April 1, India’s direct tax regime will become simpler, clearer and more modern legal foundation. While taxpayers will not see immediate changes in tax rates, they can expect easier compliance, reduced confusion and fewer disputes. With Budget-driven changes seamlessly integrated into the new law, the Income Tax Act, 2025, marks a structural shift aimed at making taxation more transparent and taxpayer-friendly.
(With PTI Inputs)
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January 11, 2026, 13:45 IST
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Chief executive Amanda Blanc said the group has seen limited claims so far relating to the US-Israel war with Iran, but flagged the potential for claims costs to jump if supply chains are badly disrupted for a long time.
She said: “We have a good case study on this in terms of the Ukraine situation back in 2022 and the impact on the supply chain, which had an inflationary impact on vehicle parts and replacement vehicles.
“Obviously, if this goes on for a prolonged period of time, we would expect that this could have some impact, but to speak about this from an Aviva perspective, we are very well placed to manage that with our supply chain and our owned garage network.”
Ms Blanc added: “We will take action as necessary to make sure we look after our customers and price accordingly for any new inflationary impact.”
She said there had been “very limited” travel claims so far.
Ms Blanc added: “We have had calls from customers asking about whether they should travel and those sorts of things, and we are pointing them to the Foreign Office guidance on that.”
Full-year results from Aviva on Thursday showed annual earnings leaped 25% higher, while the firm also announced it was resuming share buybacks as it continues to benefit from its £3.7 billion takeover of Direct Line.
The group unveiled an earnings haul of £2.2 billion for 2025, up from £1.8 billion in 2024, including a £174 million contribution from Direct Line, helping the group hit its financial targets a year early.
Aviva unveiled a £350 million share buyback after putting these on hold due to the Direct Line deal, which completed last year.
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“We have clear strengths in artificial intelligence which are creating major opportunities to transform claims, underwriting and customer experience,” she said.
The firm was unable to cope during high demand, Ofwat says, leading to “immense stress” for customers.
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Middle East heat may ripple across India’s energy supply chain, flags Goldman Sachs – The Times of India
As tensions continue to heat up in the Middle East, concerns are raising about disruptions to one of the world’s most critical energy shipping routes, the Strait of Hormuz. Any disruption could significantly affect major oil-importing countries such as India, as the narrow Strait of Hormuz is central to global energy trade. The strait sees almost 20 million barrels of oil passing through each day, or about a fifth of the world’s consumption, pass through the route. The waterway also carries roughly 19% of global liquefied natural gas (LNG) shipments, making it a crucial corridor for energy-importing economies.A recent report by Goldman Sachs has flagged early signs of stress in the region. The report warned that tanker traffic through the Strait of Hormuz has already begun showing signs of disruption, with shipping firms, oil producers and insurers adopting a cautious approach following reports of damaged vessels in nearby waters.According to the firm, financial markets have already begun factoring in the geopolitical risk. Oil prices currently carry an estimated risk premium of $18-per-barrel, reflecting the potential market impact if energy flows through the Strait of Hormuz were disrupted for about a month.
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Asian economies stand among the most exposed to such disruptions. Major importers such as China, India, Japan and South Korea depend heavily on oil and LNG shipments that transit through the strategic corridor.While global oil inventories and spare production capacity could help cushion short-term shocks, the report warned that sustained disruption to Gulf shipping routes could trigger sharp volatility in global energy markets and push prices higher across oil, gas and refined fuel products.Market participants and governments are closely watching tanker traffic in the Strait of Hormuz, along with diplomatic and military developments involving the United States, Iran and Gulf nations, to assess whether the current disruptions remain temporary or escalate into a broader energy supply shock.
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