Finance Minister Nirmala Sitharaman announced in the Union Budget 2026-27 that a new Income Tax Act called the Income Tax Act, 2025 will officially come into effect from April 1, 2026. This new law will replace the old Income Tax Act of 1961, which has been in use for over 60 years.
According to the Finance Minister, the new Act aims to simplify the tax system by reducing confusing provisions, making rules easier to understand and cutting down disputes between taxpayers and the tax department. It keeps the current tax rates the same but reorganises and shortens the law to make compliance simpler for people and businesses.
She added that simplified tax rules and new tax-return forms will be notified shortly so that taxpayers have enough time to learn and follow them before the law begins in April.
The changes are part of a major tax overhaul aimed at making India’s income tax system more user-friendly.
