New Income Tax Act: Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2026-27 on Sunday, announced that the New Income Tax Act, 2025 will come into force from April 1, 2026, replacing India’s six-decade-old Income Tax law.
The finance minister said the new legislation focuses on simplifying tax laws and improving compliance, while keeping the existing tax structure unchanged. She also assured taxpayers that simplified income tax rules and redesigned forms will be notified soon, giving people enough time to understand and adapt.
“The forms have been redesigned in such a way that ordinary citizens can comply without difficulty,” Sitharaman said in Parliament.
Income Tax Return Deadline Extended
In a major relief for taxpayers, the government has extended the income tax return filing deadline. Returns can now be filed up to March 31, instead of the earlier December 31 deadline.
However, the finance minister made it clear that no changes have been made to tax slabs or rates in this year’s budget.
New Tax Regime Slabs (Unchanged)
The tax structure announced in Union Budget 2025 will continue under the new law:
- Up to ₹4 lakh – Nil
- ₹4–8 lakh – 5%
- ₹8–12 lakh – 10%
- ₹12–16 lakh – 15%
- ₹16–20 lakh – 20%
- ₹20–24 lakh – 25%
- Above ₹24 lakh – 30%
What Is the New Income Tax Act, 2025?
The New Income Tax Act, 2025 is a revenue-neutral reform, meaning it does not increase or reduce tax rates. Its main goal is to simplify direct tax laws, remove outdated provisions, and reduce confusion that often leads to disputes and litigation.
Key structural changes include:
- Sections reduced from 819 to 536
- Chapters cut from 47 to 23
- 16 schedules included
- Introduction of tables and formulas for clearer interpretation
Four Core Objectives of the New I-T Act
- Simplification: Old language and redundant provisions have been replaced with clear and modern wording.
- Digital Compliance: Encourages faceless assessments and online processes to reduce human interface and corruption.
- Taxpayer-Friendly Approach: Aims to improve transparency, ease of filing, and reduce legal disputes.
- Global Alignment: Updates tax rules to reflect modern economic realities, including digital assets and global income.
