Taxpayers often struggle with complex income tax rules and forms. While recent measures like faceless assessments have helped, a major reform is coming. From April 1, 2026, the outdated Income Tax Act of 1961 will be replaced by the simpler, modern Income Tax Act, 2025. This change aims to make tax compliance easier and more straightforward for all taxpayers.
Here are the key updates that will transform income tax filing starting next year, according to a government release.
1. Simplified Compliance Process: The new tax law simplifies compliance by reducing the 819 complex sections of the 1961 Act to fewer, clearer provisions. Using simpler language, it helps taxpayers easily understand income categories and required documents, eliminating the need for legal expertise. The government aims to make tax filing straightforward and hassle-free.
2. Streamlined ITR Forms: The new tax law introduces simplified ITR forms that are shorter and remove unnecessary schedules. Repetitive data entry will end, with more pre-filled information and easier verification. This will make tax filing quicker and less stressful for salaried individuals, small businesses, and freelancers alike.
3. Clearer 'Tax Year' Concept: The new tax rules replace confusing "Previous Year" and "Assessment Year" terms with a simple "Tax Year" concept. This clearly defines the year of earnings, tax payment, and return filing in one framework, making tax calculations more straightforward and easier for taxpayers to understand and follow.
4. Tax Slabs and Rates Remain Unchanged: The new tax law does not alter existing tax slabs, surcharges, or cess. Instead, the government focusses on simplifying rules, offering relief to salaried and middle-class taxpayers by avoiding any unexpected tax increases. This ensures continuity and stability in tax rates while improving clarity and compliance.
5. Reduction in Notices and Disputes: Ambiguous and complex tax sections often cause unnecessary notices and disputes. The new law removes such ambiguities, strengthens the faceless assessment process, and digitises the notice system. This will reduce misunderstandings, enquiries, and lengthy disputes, lowering taxpayer stress and boosting confidence. In conclusion, April 1 marks not just a new financial year but a new tax era with simpler laws, forms, and language, designed with the common taxpayer in mind. Filing taxes will become easier and more transparent.
