Income Tax Act 2025: Key Changes, Applicability & PDF Download

Income -act-2025

The long-anticipated Income Tax Act 2025 has been officially presented in Parliament on February 13, 2025. A dedicated committee is now reviewing the bill and will submit its report before the Monsoon Session. This new tax law aims to modernize and simplify India’s taxation system while improving efficiency. The Income Tax Act 2025 PDF is available for taxpayers and professionals to understand its provisions.

Explore key highlights of the Income Tax Act 2025, its implementation date, major changes, and how to download the Income Tax Act 2025 PDF for details.

Effective Date and Transition Timeline

The Income Tax Act 2025 will come into effect on April 1, 2026, meaning that FY 2026-27 will be the first financial year taxed under the new framework. For students appearing for taxation exams:

  • Exams before March 31, 2026, will follow the Income Tax Act, 1961.

  • Exams from April 1, 2027, will be based on the Income Tax Act 2025.

Objectives of the Income Tax Act 2025

The government has introduced this law with three primary goals:

  • Align India’s tax system with international best practices.

  • Simplify tax laws using clear language and logical structures.

  • Streamline tax calculations to enhance transparency and efficiency.

To achieve these goals, several structural modifications have been implemented in the new tax law.

Key Highlights of the Income Tax Act 2025

1. Reduction in Sections

The previous Income Tax Act had 298 sections, with over 800 sub-provisions. The new Income Tax Act 2025 has streamlined this structure to 536 sections, eliminating redundant provisions.

2. Chapter Restructuring

The earlier tax law contained 47 chapters. However, the Income Tax Act 2025 PDF consolidates them into 23 chapters, making it more concise and easier to understand.

3. Reduction in Length and Complexity

To improve readability:

  • Word count has been reduced from 5.12 lakh words to 2.6 lakh words.

  • The total number of pages in the Income Tax Act 2025 PDF is now 622 pages, making it 200 pages shorter than the previous law.

4. Simplification of Tax Language

The government has introduced clearer language, tables, and formulas to explain tax calculations. This step ensures taxpayers can easily interpret provisions.

5. Measures to Reduce Litigation

One of the major reforms in the Income Tax Act 2025 is the integration of past judicial rulings. By clarifying earlier disputes, the law aims to minimize conflicts between taxpayers and tax authorities.

6. Introduction of the 'Tax Year' Concept

The traditional terms ‘Previous Year’ and ‘Assessment Year’ have been replaced with a unified ‘Tax Year’ concept, running from April 1 to March 31. The first tax year under this change will be Tax Year 2026-27.

7. Retention of Old and New Tax Regimes

Unlike expectations, the government has decided to continue both the old and new tax regimes under the Income Tax Act 2025. This decision provides flexibility for taxpayers to choose a preferred regime.

8. Inclusion of Virtual Digital Assets (VDA)

For the first time, Virtual Digital Assets (VDA), including cryptocurrencies and NFTs, have been classified as taxable assets. Earlier, only traditional assets such as money, bullion, and jewelry were covered under taxable assets. The Income Tax Act 2025 PDF elaborates on tax treatment for digital assets.

9. Tax Slabs Remain Unchanged

The tax slab structure remains consistent with the one announced in the Union Budget 2025. The effective tax on an income of INR 12 lakh will be NIL due to available rebates.

10. Retention of Five Income Heads

The tax classification system remains unchanged, with income divided into five heads:

  • Salary

  • House Property

  • Business/Profession

  • Capital Gains

  • Other Sources

11. Revised Section Numbers for Better Organization

To enhance clarity, section numbers have been restructured as follows:

  • Salary Income: Earlier Sections 15-17 → Now Sections 15-19

  • House Property Income: Earlier Sections 20-27 → Now Sections 20-25

  • Business/Profession Income: Earlier Sections 28-44 → Now Sections 26-66

  • Capital Gains: Earlier Sections 45-55 → Now Sections 67-91

  • Other Sources: Earlier Sections 56-59 → Now Sections 92-95

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