New Income Tax Act Effective April 2026; Early ITR Rollout in January to Aid Smooth Transition

Taxpayers will get the full compliance framework for the new income-tax regime by the beginning of the next financial year. The Central Board of Direct Taxes (CBDT) will notify the revised Income Tax Return (ITR) forms and rules under the Income Tax Act, 2025 by January, giving businesses and individuals sufficient time to adjust before the new law takes effect on April 1, CBDT Chairman Ravi Agarwal said on Monday.

Agarwal added that the department is “in the process of designing forms and rules” and intends to keep them simple, streamlined, and taxpayer-friendly. The Directorate of Systems is currently reworking compliance formats in collaboration with the tax policy division, according to media reports. Once cleared by the law ministry, the forms will be placed before Parliament.

also said delays in the issuance of refunds are largely due to high-value transactions flagged by the system, and that the department is analysing certain refund claims.

Income Tax Act 2025

The Income Tax Act 2025, introduced in the Union Budget in February and passed by Parliament on August 12, replaces the decades-old Income Tax Act of 1961. The new legislation does not alter tax rates but seeks to reduce complexity, modernise language, and eliminate obsolete provisions.

Key structural changes include:

• Sections reduced from 819 to 536

• Chapters consolidated from 23 to 47

• Total word count cut from 5.12 lakh to 2.6 lakh

The biggest beneficiaries will be individual taxpayers, small businesses, and financial professionals, as the new return-filing formats are simplified with clearer definitions and fewer ambiguities. With the revamped forms set to roll out in January, taxpayers will have enough time to prepare for the transition from decades-old procedures to India’s first modernised income-tax code.