India will move to a new tax law framework from April 1 this year when the Income Tax Act, 2025 replaces the Income-tax Act, 1961. The change marks a shift in how tax rules are structured and presented, while keeping the core system largely the same.
Meanwhile in an X post, the official account of the Income Tax Department has released a detailed set of frequently asked questions to explain how this transition will work in practice.
KIND ATTENTION TAXPAYERS!
— Income Tax India (@IncomeTaxIndia) March 23, 2026
As part of its efforts to support taxpayers and stakeholders in the transition to the Income-tax Act, 2025, the Income Tax Department has released comprehensive FAQs explaining the interplay with the Income-tax Act, 1961.
The FAQs can be accessed here:… pic.twitter.com/pf63Qigwiu
What Is Changing And What Remains The Same?
One of the main points clarified is that the new law does not introduce new taxes or increase tax burden. It focuses on simplifying language, reorganising provisions, and improving clarity.
According to the document shared, "the income Tax Act, 2025 does not impose any new tax."
At the same time, the transition ensures continuity. Rights, obligations, and proceedings under the old law will remain valid. The document clearly states, "rights, benefits, obligations or liabilities that arose under the old Act continue to exist."
Key Questions Answered
1. Why is the old law being replaced?
The new Act aims to simplify a law that has become complex over decades. The FAQ explains that the 1961 Act had accumulated many amendments, making it difficult to navigate. The new Act provides a “streamlined, simplified, and modern tax code.”
2. Will the 1961 Act completely disappear?
No. While it will be repealed from April 1, 2026, it will continue to apply to earlier years and pending cases. This ensures that ongoing matters are not disrupted.
3. Are new taxes being introduced?
No. The document clearly states, "the income Tax Act, 2025 does not impose any new tax." The focus is on simplification, not increasing burden."
4. How does the change help small taxpayers?
The new law uses simpler language, reduces cross-referencing, and consolidates provisions. This is expected to make compliance easier and reduce the need for expert interpretation.
5. What is the biggest structural change?
The introduction of the concept of “Tax Year” replaces the earlier system of “previous year” and “assessment year.” This removes confusion caused by using two different years.
6. Will past assessments and proceedings remain valid?
Yes. as per the FAQ, "the repeal of the 1961 Act does not disturb anything relating to tax years before April 1, 2026." Completed assessments and pending cases will continue under the old law.
7. Is there any gap or overlap during the transition?
No. According to the FAQ, "no, there is no missing year or overlap." Income up to March 31, 2026 will be governed by the old Act, and income from April 1, 2026 onwards will fall under the new Act.
8. Will systems like PAN, TAN, and faceless assessments continue?
Yes. Existing systems will remain unchanged. The FAQ confirms that PAN, TAN, and faceless proceedings will continue under the new Act.
9. How long will both laws run together?
Both laws will operate simultaneously for some time. The document notes, "the Income-tax Department's e-filing portal will facilitate compliance under both the old and the new Acts concurrently."
10. What should taxpayers do during the transition?
Taxpayers need to carefully identify which law applies to their income year. They must select the correct “Assessment Year” or “Tax Year” while filing returns or making payments to avoid errors.
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