New Income Tax Act that takes effect on 1 April

New Delhi: The government notified the Income Tax Act, 2025, on Friday, saying it will replace the more than six decades-old direct tax law at the beginning of the new financial year on April 1. The Bill to replace the Income Tax Act, 1961, on Thursday received President Droupadi Murmu’s consent. The Department of Income Tax said in a social media post that the new law was streamlined, integrated and attempted to minimize the litigation. “A landmark step towards ease of compliance and comfort to do business,” it says. The new law will significantly reduce the tax proceedings, Baijayant Panda, chairman of the Lok Sabha Committee who reviewed the bill, told Mint in an interview on July 22. A new India deserves a simple, easy-to-income, easy income tax law, Panda said. Reform The new law reviews the existing complex and comprehensive statute. Among other things, it provides tax relief to Unified Pension Scheme (UPS) subscribers on the lines of the subscribers of the National Pension System (NPS). UPS is an alternative to NPS that guarantees the central government’s staff a pension equivalent to 50% of the average basic payment of the past 12 months to more than 25 years of service. The tax benefits include exemption from 60% single-sum withdrawal at retirement. The Ministry of Finance is of the opinion that although the simplification of the law does not have a direct or immediate effect on income collection per se, it is updated and that all amendments have been recorded until 2025. Policymakers expect the changes to the structure of the new law and its concise, luxurious and easy to read and understand will act as a Nudge for a higher tax payment. Clear language, increased use of tabular format for the representation of information and mathematical formulas for easier understanding is aimed at raising tax security, a greater convenience to pay taxes and make the convenience of business, Finance Minister told Parliament in March.