The Income Tax department will notify ITR forms and rules under the simplified Income Tax Act, 2025 by January, officials said. The new law, which replaces the six-decade-old Income Tax Act of 1961, comes into effect from the next fiscal beginning April 1, 2026. The intent is to make tax compliance simpler and more taxpayer-friendly, Central Board of Direct Taxes (CBDT) chief Ravi Agrawal said on Monday.
“We are in the process of designing forms and rules. We are working towards putting this in place by January so that taxpayers have sufficient time to adapt their processes within their system,” Agrawal told reporters after launching the Taxpayers’ Lounge at the India International Trade Fair (IITF).
Simplified Forms to Ease Compliance for Taxpayers
According to officials, all forms applicable under the Income Tax Act, such as TDS quarterly return forms and ITR forms, are being reworked. The Directorate of Systems is collaborating with the tax policy division to ensure that the forms are clear and easy to use. After vetting by the law department, the rules will be notified and laid before Parliament.
The new legislation does not introduce any new tax rates but focuses on simplifying language and structure. The Income Tax Act, 2025 reduces redundant provisions and archaic terminology, cutting sections from 819 to 536 and chapters from 47 to 23. Word count has been reduced from 5.12 lakh to 2.6 lakh, while 39 new tables and 40 new formulas have been added to replace dense text, enhancing clarity and understanding for taxpayers.
New Act Aims for Clarity, Not Higher Tax Burden
Passed by Parliament on August 12, the Income Tax Act, 2025 is designed to make tax laws easier to comprehend and comply with. The simplified ITR forms and clear guidelines aim to reduce confusion among taxpayers and streamline reporting processes.
