New Income Tax Act from April 2026; ITR forms will be ready by January

The intent of the department is to keep the I-T Return forms simple to ease compliance under the new law, which replaces the six-decade old Income Tax Act, 1961

Taxpayers will soon get a first look at the compliance framework under India’s new income-tax regime. The Central Board of Direct Taxes (CBDT) will notify the revised Income Tax Return (ITR) forms and rules under the Income Tax Act, 2025 by January, giving businesses and individuals sufficient time to adjust before the new law takes effect on April 1, 2026, CBDT chairman Ravi Agrawal said on Monday.

 

Speaking after inaugurating the Taxpayers’ Lounge at the India International Trade Fair (IITF), Agrawal said the department is “in the process of designing forms and rules” and intends to keep them simple, streamlined and taxpayer-friendly. The Directorate of Systems is currently reworking all compliance formats — including ITR forms and quarterly TDS forms — in collaboration with the tax policy division. Once cleared by the law ministry, they will be placed before Parliament.

 

The Income Tax Act, 2025, passed by Parliament on August 12, replaces the six-decade-old Income Tax Act of 1961 and represents the most significant overhaul of India’s direct tax law in recent history. While the new legislation does not change tax rates, it aims to reduce complexity, modernise language and eliminate obsolete provisions that have accumulated over the years.

 

The scale of simplification is substantial.

 

The number of sections has been cut from 819 to 536

 

Chapters reduced from 47 to 23

 

Word count nearly halved from 5.12 lakh to 2.6 lakh

 

Dense text has been replaced with 39 tables and 40 formulas to make computation clearer and more transparent

 

For taxpayers, especially individuals, small businesses and financial professionals who navigate multiple forms, the biggest relief may come from simplified return filing formats, clearer definitions and fewer ambiguities.

 

While rates remain unchanged, the new Act aims to reduce disputes, standardise interpretation and make compliance more predictable. With forms expected by January, financial planners will have a three-month window to update systems, processes and advisory frameworks ahead of the next financial year.

 

Bottom line: No new taxes — but a cleaner, lighter, easier law. For taxpayers and advisers, early preparation will be essential as India transitions to its first modernised income-tax code in over 60 years.

 

Key points: 

• All the different forms applicable under the Income Tax Act, like TDS quarterly return form and ITR forms, are being reworked
• Directorate of Systems is working with the tax policy division to make the forms taxpayer-friendly.
• The Income Tax Act, 2025 will come into effect from next financial year, beginning April 1, 2026. 
• The new Act will make tax laws simple and reduce wordage in the legislation making it easy to understand.
• The new legislation does not impose any new tax rate 
• New ACT has only simplified the language, which was required for understanding the complex income tax laws.
• The new law removes redundant provisions and archaic language and reduces the number of sections from 819 in the Income Tax Act of 1961 to 536 and the number of chapters from 47 to 23.
• The number of words has been reduced from 5.12 lakh to 2.6 lakh in the new law
• It has introduced 39 new tables and 40 new formulas, replacing the dense text of the 1961 law, to enhance clarity.