India's New Income Tax Act, 2025 Notified: Key Changes and Implementation Time line

India has officially notified the Income Tax Act, 2025, a complete rewrite of the six-decade-old 1961 law. The new statute has Presidential assent and is slated to take effect from April 1, 2026. Until then, you will continue filing under the 1961 Act while the government finalises rules and forms.

What changes for individual taxpayers

1)A simpler structure and a new “Tax Year”

The law reorganises provisions for clarity and replaces the older terms “previous year” and “assessment year” with a single term, “Tax Year”. This plain-language approach is meant to reduce confusion for everyday filers.

2)A codified new-regime slab framework

The Act embeds the new regime slab rates in law (Clause 202(1)) and makes them the basis for computing tax for individuals and HUFs from the go-live date. As summarised publicly, the slabs are:

3) Section 87A rebate clarified

The rebate framework is carried forward and aligned with the new regime. A full rebate up to 60,000 (or 100% of tax, whichever is lower) is described for eligible resident individuals under the new slabs. Do note that the rebate cannot offset tax on certain long-term capital gains.

4)Compliance is expected to get easier

The Central Board of Direct Taxes (CBDT) is preparing the rulebook, updated forms, and FAQs so taxpayers and employers can transition smoothly by year-end, well before the Act takes effect.

When the new law kicks in, and what you should do now

The effective date is April 1, 2026, which means your return for the year starting that day will be computed under the new Act. For the current year, you remain under the ITA (1961) as amended by the latest Finance Act. Keep an eye on CBDT updates so payroll declarations and TDS flows match the new forms once they arrive.

Between now and April 1, 2026, use an income tax calculator to model your numbers under the new regime slabs. Doing this alongside your existing estimates helps you plan salary structure, investments, and advance tax for the transition year. Once official calculators are updated, re-check the numbers on an income tax calculator provided by your bank, employer, or the e-filing portal.

Importance of an income tax calculator and how you can use it

Filing income tax can often feel overwhelming, especially with changing tax slabs, exemptions, and deductions. explore why an income tax calculator is important, how it simplifies tax planning, and how you can use it effectively to manage your finances throughout the financial year. The goal is to empower you with tools that make tax filing stress-free and more transparent.

• Step 1: Map your income

Enter your expected salary, bonus, rental income, and any capital gains into an income tax calculator. If you typically claim exemptions or deductions available under the current framework, add those to see the outcome. Then switch the income tax calculator to the new regime slabs for a like-for-like view.

• Step 2: Run the numbers and test the thresholds

Move the slider just above and below key slab cut-offs (for example, around 12,00,000 and 24,00,000) to see how small changes in taxable income affect your liability. Run these scenarios in the income tax calculator to decide on voluntary contributions, reimbursements, or timing of income where legitimate.

• Step 3: Factor the Section 87A rebate

If your income is near the eligibility range, check how the income tax calculator handles the 60,000 cap (or 100% of tax, whichever is lower) and remember that certain long-term capital gains do not qualify for the rebate.

• Step 4: Plan advance tax and TDS

Once CBDT notifies the new forms, update your payroll declarations and advance tax estimates using an income tax calculator. This avoids last-minute shortfalls or refunds in the first year under the new law.

By repeating these steps with an income tax calculator each quarter in FY 2026–27, you will keep your withholdings and advance tax aligned with reality, not rough guesses.

Why did we get the new Income Tax Act?

The old Income Tax Act grew complex after thousands of amendments. The 2025 law streamlines language, groups related topics together, and empowers the CBDT to specify procedures, aiming to cut litigation and improve day-to-day compliance for individuals and small businesses alike. Media reports and government communications underscore the “simpler, transparent and compliance-friendly” intent as India moves to a digital, faceless model.

For everyday taxpayers, the biggest practical shifts are:

• Knowing your slabs in advance under a stable framework
• Using an income tax calculator to manage the year rather than just the filing week, and
• Relying on streamlined forms and clearer FAQs as they roll out

The bottom line

India’s Income Tax Act, 2025, is notified now, and the new ITA starts from April 1, 2026. Use an income tax calculator today to preview your liability under the new slabs, revisit the model when CBDT issues forms and rules, and keep adjusting through the year so your TDS and advance tax stay accurate. With a little preparation and the right income tax calculator, your first filing under the new ITA will be straightforward.