India's New Income Tax Act 2025: Simplified ITR Forms and Rules Expected by January

India's Income Tax Department is preparing to notify the Income Tax forms and rules under the new Income Tax Act, 2025, by January. This significant legislation, which replaces the Income Tax Act of 1961, will come into effect from the next fiscal year, starting April 1, 2026. The primary goal, as stated by Central Board of Direct Taxes (CBDT) chief Ravi Agrawal, is to simplify tax compliance and make it more taxpayer-friendly.

All relevant forms, including TDS quarterly return forms and ITR forms, are currently being reworked by the Directorate of Systems in collaboration with the tax policy division. The objective is to ensure clarity and ease of use for taxpayers. Once vetted by the law department, these rules will be laid before Parliament.

Importantly, the new Act does not introduce any new tax rates. Instead, it focuses on simplifying the existing tax structure. This includes reducing the number of sections from 819 to 536, chapters from 47 to 23, and the overall word count from 5.12 lakh to 2.6 lakh. Thirty-nine new tables and 40 new formulas have been added to replace dense text and enhance taxpayer understanding.

Impact

This simplification is expected to reduce confusion and streamline tax filing processes for millions of Indian taxpayers and businesses. While it doesn't alter tax liabilities, it enhances the ease of doing business and personal financial management in India. Rating: 5/10.

Explanation of Difficult Terms:

• Income Tax Act, 2025: The new legislation that will govern income taxation in India, replacing the previous Act.
• ITR forms: Income Tax Return forms, which are documents filed annually by taxpayers to report their income and tax liabilities.
• Central Board of Direct Taxes (CBDT): The apex body for direct tax administration in India, part of the Department of Revenue.
• TDS quarterly return forms: Forms used to report taxes deducted at source (TDS) by payers on behalf of the recipient, filed on a quarterly basis.
• Directorate of Systems: The IT wing of the Income Tax Department responsible for managing its technological infrastructure and software.
• Tax policy division: The part of the tax administration that formulates and advises on tax policies.
• Parliament: The legislative body of India, responsible for making laws.