Five Major Income Tax Changes Effective April 1
The new Income Tax Act, which replaces the 63-year-old Income Tax Act of 1961, will come into effect starting April 1, 2026. This change is considered a major tax reform focused on making the system simpler and more modern for the common taxpayer.
1. Simplified Law Structure
The old 1961 law contained 819 sections, making it nearly impossible for the average taxpayer to understand.
The new law significantly reduces the number of sections and uses simpler language, aiming to reduce confusion and eliminate the need for taxpayers to rely solely on “legal language”.
2. New, Simpler ITR Forms
The new law will introduce simpler Income Tax Return (ITR) forms.
The forms will be shorter, unnecessary schedules are being removed, and the same information will no longer have to be filled in repeatedly.
The scope of pre-filled data will expand, and verification will be easier, making tax filing less tedious and less time-consuming for all categories of taxpayers.
3. Simplified Concept of ‘Tax Year’
The new rules aim to simplify the confusing relationship between the “Previous Year” (when income is earned) and the “Assessment Year” (when tax is filed).
The new concept of “Tax Year” will unify the timing of earnings, tax payment, and return filing into a single, more intuitive, and transparent framework.
4. No Major Change to Tax Slabs or Rates
The government’s focus is on simplifying the rules, not on drastically changing the rates.
This means there are no major changes to existing tax slabs, surcharges, or cess, providing relief from the fear of unexpected tax burdens for the average salaried individual and middle class.
5. Focus on Reducing Notices and Disputes
The new law is designed to reduce ambiguity in provisions and strengthen the faceless process, which is expected to lead to fewer notices and tax disputes.
This simplification is intended to reduce unnecessary inquiries and long-drawn tax battles, thereby reducing taxpayer stress and increasing confidence.