Income-tax Act, 2025
India's New Direct Tax Framework
The Income-tax Act, 2025 replaces the Income-tax Act, 1961, which had accumulated approximately 819 sections across 47 chapters over six decades of amendments. The new Act, which received Presidential assent on 21 August 2025, reduces the law to 536 sections across 23 chapters and 16 schedules, cutting the word count from 5.12 lakh to 2.60 lakh.
- The Act replaces the twin concepts of "Assessment Year" and "Previous Year" with a single unified "Tax Year" (the financial year commencing 1 April).
- Virtual Digital Assets (VDAs), including cryptocurrencies and tokenised assets, are formally defined and brought within the tax framework.
- The Act aims to reduce litigation by simplifying language, removing redundant provisions, and standardising definitions.
- An internal CBDT committee conducted the comprehensive review; the Income Tax Bill 2025 was tabled in Lok Sabha on 13 February 2025.
- Effective date: 1 April 2026, meaning it will first apply to Tax Year 2026-27.
● Tracked since February 08, 2026 · last seen August 09, 2026 · updates as the daily brief publishes
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