The Income-Tax Act, 2025 is a landmark legislation enacted on 21 August 2025, replacing the six-decade-old Income-Tax Act of 1961. It consolidates, modernizes, and simplifies the framework of direct taxation in India with the objective of making tax administration more transparent, efficient, and taxpayer-friendly.

The Act is structured into 536 sections, spread across 23 chapters and supported by 16 schedules, reflecting a major reduction and simplification from the earlier statute. Among its most significant reforms is the introduction of a unified “Tax Year”, removing the dual concept of “Assessment Year” and “Previous Year” that had often led to complexity and confusion.

The Act retains a basic exemption threshold of ₹12 lakh, alongside rationalized tax slabs aimed at providing relief to middle-income groups. It strengthens the compliance ecosystem through digital-first, faceless assessment and appeal mechanisms, thereby reducing human interface, minimizing scope for harassment, and curbing corruption.

Other key provisions include:

• Streamlined refund mechanisms with faster processing and reduced litigation.
• Mandatory prior notices before initiation of assessments to safeguard taxpayer rights.
• Standardized deductions for house property income and pensioners to ease calculation.
• Expanded definition of undisclosed income, now covering virtual digital assets and other modern instruments.
• Restrictions on anonymous donations to religious or charitable trusts not engaged in social service, ensuring greater accountability.

The Income-Tax Act, 2025, therefore, represents a comprehensive overhaul of India’s direct tax regime. By simplifying legal language, reducing the number of sections, and embedding digital governance, it aligns with the vision of “Ease of Doing Business” and “Viksit Bharat”, ensuring that India’s tax law remains relevant, accessible, and future-ready.