Explainer: Simplified I-T Act to come into force from Apr 1

Allows taxpayers to claim TDS refund even when ITRs are filed after deadlines, without any penal charges

- MPOST BUREAU

Beginning April 1, the Income Tax Act, 2025, will come into force replacing the six-decade old tax law and the changes made in tax laws in 2026-27 Budget will be incorporated in the new legislation.

The 2025 IT law is revenue neutral with no change in tax rates. It has only made direct tax laws simple to understand, removed ambiguities thus reducing scope for litigations. It reduces text volume and sections by about 50 per cent visa-vis the 1961 income tax act.

The new law simplifies the tax timeline by doing away with the distinction between the assessment year and the previous year, replacing it with a single ‘tax year’ framework.

It also allows taxpayers to claim TDS refund even when ITRs are filed after deadlines, without any penal charges.

Any changes with regard to taxation of individuals, corporates, HUFs and others, which are announced in the Budget for 2026-27 on February 1 will be incorporated in the new IT Act, 2025.

The rules to implement the new Income Tax law are being framed and likely to be notified after the presentation of the FY27 Budget.