Taxpayers will soon get their first glimpse of the compliance framework under India’s new income tax regime. The Central Board of Direct Taxes (CBDT) plans to notify the revised Income Tax Return (ITR) forms and related rules under the Income Tax Act, 2025, by January, ensuring businesses and individuals have ample time to adjust before the new law becomes operative 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 confirmed that the department is currently “designing forms and rules” with the intention of making them simple, streamlined and taxpayer-friendly. The Directorate of Systems is reworking all compliance formats — including ITR forms and quarterly TDS returns — in coordination with the tax policy division. Once the final version is approved by the law ministry, it will be presented before Parliament.
The Income Tax Act, 2025 — passed by Parliament on August 12 — replaces the 63-year-old Income Tax Act of 1961, marking the most extensive revamp of India’s direct taxation framework in decades. While the new law does not alter tax rates, it aims to modernise the system, reduce complexity and eliminate outdated provisions that have accumulated over the years.
A Major Overhaul in Structure
The new Act significantly simplifies tax legislation:
- Sections reduced: from 819 to 536
- Chapters cut: from 47 to 23
- Word count halved: from 5.12 lakh to 2.6 lakh
- Clarity improved: dense text replaced with 39 tables and 40 formulas for transparent computation
For taxpayers, especially individuals, small businesses and financial professionals who manage multiple forms, the biggest advantage will likely be simplified return formats, clearer definitions and reduced ambiguity.
Although tax rates remain unchanged, the new framework is designed to minimise disputes, promote uniform interpretation and make compliance more predictable. With the new forms expected by January, financial planners and businesses will have roughly three months to update their systems and processes before the next financial year begins.
Bottom Line
No new taxes — just a cleaner, simpler and more transparent law. As India transitions to its first modernised income tax code in over six decades, early preparation will be crucial for taxpayers and advisers alike.
Key Points at a Glance
- All compliance forms under the Income Tax Act — including ITR and quarterly TDS forms — are being redesigned.
- The Directorate of Systems is working with the tax policy division to ensure taxpayer-friendly formats.
- The Income Tax Act, 2025 will be implemented from April 1, 2026.
- The new Act simplifies tax laws and reduces wordiness to make them easier to understand.
- Nonew tax rates have been introduced.
- The Act removes outdated provisions and modernises language.
- Sections reduced from 819 → 536; chapters from 47 → 23.
- Total word count reduced from 5.12 lakh → 2.6 lakh.
- Introduces 39 tables and 40 formulas to replace dense text for improved clarity.