India’s New Income Tax Law Effective April 1, 2026
New Income Tax Act from April 1, 2026: What Changes for Taxpayers: New Income Tax Act from April 1, 2026: While presenting the Union Budget 2026–27, Finance Minister Nirmala Sitharaman announced that the new Income Tax Act, 2025, will come into force from April 1, 2026, replacing the nearly 60-year-old Income Tax Act.
The Finance Minister clarified that there are no changes to tax slabs or tax rates. The main objective of the new law is to make the tax system simpler, clearer, and more taxpayer-friendly.
Under the new Act, tax rules and forms have been simplified so that ordinary citizens can file their returns easily. The government will issue notifications well in advance to help taxpayers understand the changes.
The Budget also offers relief by extending the ITR filing deadline from December 31 to March 31, giving taxpayers more time to file their returns.
No Change in Tax Slabs:
There is no change in income tax slabs in this year’s budget. The existing slabs under the new tax regime will continue.
Current Tax Slabs (New Regime):
Up to ₹4 lakh: No tax
₹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 revenue-neutral and does not change tax rates. Its main aim is to simplify tax laws and reduce disputes. The law has fewer sections (536 instead of 819) and fewer chapters (23 instead of 47), with clear tables and formulas for easy understanding.
New ‘Tax Year’ Concept:
The Act removes the terms Assessment Year and Previous Year. Instead, there will be a single Tax Year, meaning the 12-month financial year starting April 1. For new businesses or income sources, the tax year will start from the date they begin.
Easier TDS and Dispute Resolution:
All TDS-related rules are now combined into one section, making them simpler. Taxpayers can also claim TDS refunds even if they file their ITR late, without any penalty.
