India implements Income-Tax Act 2025 to simplify tax framework

The Income-Tax Act, 2025, establishes a new legal framework for the levy, assessment, and administration of income tax in India, replacing the previous 1961 legislation. The Act aims to simplify tax laws, modernize tax administration through technology, and reduce complexity for various taxpayers, including individuals, companies, and firms.

The legislation classifies income into categories such as salaries, house property, business profits, capital gains, and other sources. It also outlines procedures for exemptions, deductions, and the assessment of tax liability.

Updated by the Finance Act, 2026, the framework includes specific provisions for the rectification of mistakes apparent from the record, various types of assessments—including summary and scrutiny—and procedures for appeals against tax orders. These rules are designed to help taxpayers and professionals manage liabilities and mitigate litigation risks.