Income-tax Act, 2025 – A summary of key changes vis-à-vis the Income-tax Act, 1961

In brief

The Government of India has worked towards simplifying the tax laws of the country. As a major step in this direction, the Income-tax Bill, 2025 (Bill) was introduced in the Lok Sabha on 13 February 2025 which was then referred to the Select Committee (Select Committee on the Income-tax Bill, 2025). After multiple rounds of public consultation and feedback and taking into consideration the recommendations of the Select Committee (provided in its report tabled in the Parliament on 21 July 2025), a second version of the Bill, namely, the Income-tax Bill (No. 2) of 2025 was introduced in the Parliament on 11 August 2025. This Bill was passed by the Lok Sabha on 11 August 2025 and by the Rajya Sabha on 12 August 2025. The Bill has now become an Act upon receiving the presidential assent on 21 August 2025 and was also notified on the even date. The Income-tax Act, 2025 shall come into force on 1 April 2026.

While the objective of the Income-tax Act, 2025 is to simplify the language of the law, there are certain changes which, while appearing to simplify the language of the law, could result in multiple interpretations. Some changes have also been introduced. In this Tax Insights we have summarised some key changes in the Income-tax Act, 2025.