On 21 August 2025, the Income-Tax (No. 2) Bill, 2025 officially received the President’s assent, becoming the Income-Tax Act, 2025 — a landmark overhaul of India’s tax code. This modernized legislation is slated to commence from 1 April 2026, ushering in a new unified Tax Year system and supplanting the six-decade-old Income-Tax Act, 1961.
Income-Tax Bill, 2025 Receives Presidential Assent & Implementation Timeline
1. Presidential Assent Secured
The Income-Tax (No. 2) Bill, 2025 has officially received the President’s assent on 21 August 2025, thereby becoming the Income-Tax Act, 2025.
2. Effective Date: When Does the Act Come Into Force?
The new Act is set to replace the Income-Tax Act, 1961, and will officially come into effect from 1 April 2026, marking the start of the new tax year 2026–27.
3. Background & Legislative Journey
- Initial Bill introduced on 13 February 2025 in Lok Sabha, proposing a modern overhaul of the 1961 framework.
- Withdrawn on 8 August 2025 due to drafting errors in key clauses related to house property, salary deductions, and commercial property.
- Revised Bill (No. 2) tabled on 11 August 2025, swiftly passed by both houses—Lok Sabha on the same day and Rajya Sabha on 12 August 2025.
- Passed into law upon Presidential assent on 21 August 2025.
4. Key Features of the New Act
According to Wikipedia, the Income-Tax Act, 2025:
- Comprises 536 sections, organized into 23 chapters and 16 schedules, replacing the more convoluted structure of the 1961 Act.
- Introduces a unified “Tax Year”, replacing the separate concepts of “Previous Year” and “Assessment Year” to simplify tax computation.
- Retains tax slabs unaffected, though structured more logically, and includes provisions such as:
- ₹12 lakh annual basic exemption with refined slab arrangements for middle-income taxpayers
- Faceless, digital-first assessments to reduce human interface
- Clarifications for house property deductions, standard deductions, pre-construction interest, commuted pension, TDS certificates, taxation of anonymous donations, and vacant commercial property rules.
5. Summary Table
| Milestone | Date | Description |
|---|---|---|
| Original Bill Introduced | 13 Feb 2025 | Lok Sabha presentation of Income-Tax Bill, 2025 |
| Withdrawal & Redrafting | 8 Aug 2025 | Bill withdrawn due to errors in key clauses |
| Revised Bill Tabled | 11–12 Aug 2025 | Passed by both houses of Parliament |
| Presidential Assent | 21 Aug 2025 | Bill becomes Income-Tax Act, 2025 |
| Effective Date | 1 April 2026 | Act replaces Income-Tax Act, 1961 for Tax Year 2026–27 |