Income-tax Act, 2025 comes into force, replacing the 1961 Act
The Income-tax Act, 2025 came into force on 1 April 2026, replacing the Income-tax Act, 1961, with the Income-tax Rules, 2026 notified by CBDT on 20 March 2026.
Summary
The Income-tax Act, 2025 came into force on 1 April 2026, replacing the six-decade-old Income-tax Act, 1961, the Ministry of Finance said. The new law aims to simplify and modernise income-tax law through simpler language, a streamlined structure and reader-friendly presentation, without changing the underlying tax policy. The Bill was passed by Parliament on 12 August 2025 and received the President's assent on 21 August 2025. The Central Board of Direct Taxes notified the Income-tax Rules, 2026 on 20 March 2026 to operationalise the Act, along with simplified new forms.
Key facts
- In force
- 1 April 2026
- Replaces
- Income-tax Act, 1961
- Passed by Parliament
- 12 August 2025
- Presidential assent
- 21 August 2025
- Rules
- Income-tax Rules, 2026, notified by CBDT on 20 March 2026
- Tax policy
- Unchanged; focus on simpler language and structure
Practice MCQs 3 questions
On which date did the Income-tax Act, 2025 receive the President's assent?
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Correct answer: C — 21 August 2025
The Finance Ministry said the Bill was passed by Parliament on 12 August 2025 and received assent on 21 August 2025; the Rules were notified on 20 March 2026 and the Act came into force on 1 April 2026.
Consider the following statements about the Income-tax Act, 2025: 1. It replaces the Income-tax Act, 1961. 2. It alters the underlying tax policy to introduce new tax rates. Which of the statements given above is/are correct?
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Correct answer: A — 1 only
Only 1 is correct. The ministry said the Act simplifies the law without altering the underlying tax policy.
Which body notified the Income-tax Rules, 2026 to operationalise the Income-tax Act, 2025?
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Correct answer: B — Central Board of Direct Taxes
The Income-tax Rules, 2026 were notified by the Central Board of Direct Taxes on 20 March 2026.