Explore the Income Tax Act 2025 PDF with major reforms. Check new income tax bill 2025 highlights including tax year, simplified structure & VDA rules.
Income Tax Act 2025 PDF: Key Changes, Implementation & Highlights
The Income Tax Act 2025 PDF has officially been released, introducing a modern and streamlined tax framework in India. Tabled in Parliament on February 13, 2025, the new law replaces the decades-old Income Tax Act of 1961. While taxpayers have long awaited these reforms, the government has taken a thoughtful approach by focusing on clarity, simplicity, and transparency. A committee has also been formed to submit its final recommendations by the first day of the Monsoon Session.
Let’s explore the new income tax bill 2025 highlights, its implementation date, structural changes, and what this means for professionals, students, and businesses.
Applicability and Effective Date of the New Act
The Income Tax Act 2025 PDF will officially come into effect from April 1, 2026. Therefore, the first tax year under this law will be Tax Year 2026-27, replacing the traditional terms "Previous Year" and "Assessment Year". This change simplifies understanding for taxpayers and aligns with global tax standards.
Students preparing for professional exams like CA, CS, or CMA should note:
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Exams held before March 31, 2026 will follow the old Act (1961).
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Exams after April 1, 2027 will include questions based on the Income Tax Act 2025 PDF.
Primary Goals Behind the New Act
The government’s focus while drafting the Income Tax Act 2025 PDF was clear:
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Modernization of the tax system to match international practices.
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Simplification of laws using user-friendly language and layouts.
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Efficiency in calculations and reduced litigation.
These objectives are central to the new income tax bill 2025 highlights, which incorporate structural reforms and updated definitions to make compliance easier.
Structural and Legal Reforms in the Income Tax Act 2025
The new Act is not just a renaming exercise. Instead, it overhauls the framework completely. Here are the top new income tax bill 2025 highlights to know:
1. Reduction in Sections
The older law had 298 sections, but with sub-sections, the number ballooned beyond 800. The Income Tax Act 2025 PDF cuts this down to 536 sections, making it more concise.
2. Fewer Chapters
The law now has just 23 chapters, down from 47. This helps in better categorization and quick navigation.
3. Simplified Word Count & Page Numbers
To make the document easier to read, the Income Tax Act 2025 PDF contains:
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2.6 lakh words (compared to 5.12 lakh earlier)
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622 pages, nearly 200 less than the previous Act
4. Easier Language with Visual Aids
Tables and formulas have been added to simplify complex calculations, making tax filing smoother for both individuals and businesses.
5. Litigation Reduction Measures
The new Act incorporates landmark judicial rulings, reducing future tax disputes and enhancing legal certainty.
Key Provisions to Note
6. Introduction of ‘Tax Year’
The traditional concept of "Assessment Year" is now replaced with a single term, Tax Year, which follows the standard April–March cycle. The first applicable year will be Tax Year 2026-27.
7. Old and New Tax Regimes to Continue
Contrary to expectations, both tax regimes will continue under the Income Tax Act 2025 PDF, giving taxpayers the flexibility to choose.
8. Inclusion of Virtual Digital Assets (VDAs)
One of the most anticipated new income tax bill 2025 highlights is the taxation of Virtual Digital Assets like cryptocurrencies and NFTs. These now fall under taxable assets, closing gaps in digital income reporting.
9. Tax Slabs Remain the Same
The slab system remains unchanged as announced in Budget 2025. For instance, those earning INR 12 lakh annually may end up paying no tax due to applicable rebates.
10. Income Heads Stay Consistent
The classification of income into five heads continues:
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Salary
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House Property
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Business/Profession
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Capital Gains
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Other Sources
11. Revised Section Numbering
To make navigation easier, section numbers have been reorganized. For example:
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Salary: Sec. 15–19
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House Property: Sec. 20–25
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Business/Profession: Sec. 26–66
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Capital Gains: Sec. 67–91
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Other Sources: Sec. 92–95