Tax reform rollout: New Income Tax Act 2025 comes into force, CBDT calls it a shift towards simpler compliance

The Income Tax Act, 2025 came into force from April 1, marking a major overhaul of India’s tax framework, with the Central Board of Direct Taxes (CBDT) describing it as a step towards simplified compliance and a “new chapter” in tax administration, according to PTI.The new law replaces the six-decade-old Income Tax Act, 1961, and significantly reduces the volume of legislation while retaining the underlying tax policy."It marks a shift towards greater clarity and ease of compliance through simple language, a streamlined structure and a reader-friendly presentation, without altering the underlying tax policy," the CBDT said in a statement.“With its coming into force from April 1, 2026, the Income-Tax Act 2025 marks a new chapter in India's tax administration and an important step towards Viksit Bharat,” it added.The new framework introduces a single “tax year” system, eliminating the earlier distinction between assessment year and previous year, aimed at simplifying tax timelines.It also allows taxpayers to claim TDS refunds even if income tax returns are filed after the deadline, without any penal charges.The Income Tax Department said its e-filing portal will support compliance under both the old and new laws during the transition phase. Assessments, appeals and other proceedings related to earlier years will continue under the old Act until completion.Taxpayers filing returns for assessment year 2026-27 in July 2026 will continue to use forms under the old Act, while advance tax payments for the tax year 2026-27, beginning June 2026, will be governed by the new law.The CBDT said the changes aim to make the tax system more accessible and efficient, while maintaining continuity during the transition period.