The Government of India has completely given a new look to the rules of income tax. For the first time after independence, there has been such a major improvement of tax. The old income tax law that has been going on since 1961 has now been removed. Instead, the Income Tax Act, 2025 will now be applicable. The President has also approved this law on 21 August 2025. This new law will be applicable from 1 April 2026. The tax rates have not changed in this, but the entire system has now been made straight, clean and understandable. Now the common man will also be able to understand the rules of tax, and companies will also get relief from the confusion of documents.
The old law was heavy
The law of 1961 was very big and complicated. It had more than five lakh words, 819 different sections and 47 chapters. Now all these have been reduced in the new law. Now the new law has merged in only two and a half million words. The sections have come down to 536 and the chapter is now given more tables and formulas for the count -related count, which has made it very easy to read and understand the rules. Another big change is that now the words like assessment year and previous year have been finished. Now everyone will adopt the same method by the name of tax year i.e. the year from April to March will be seen according to the tax.
TDS rules will now be straight
TDS (Tax deducting) and TCS (tax recovering) rules were spread in different 71 sections in the old law. Now they have been added to only 11 sections. Now who has to deduct how much tax, which income will be taxed, who will get discounts, it has been written clearly in one place. This will not only benefit the common man, now it will be easy for companies to make reports. Now the scope of any mistake will be reduced.
Employees will get relief
In the new law, people have also been given relief. Earlier, if the company used to give you a car for going to office, then it was considered tax free. Now if the company bears your journey by taxi, bus or any other means, then it will also be out of tax. This is a good step according to today’s working life. Also, another big change is that now not only gold, silver, cash or precious items, but digital assets like bitcoin or anything that can earn money in future, will also be seen with tax. That is, now the definition of unknown property has also changed.
Tax officers will keep a close watch
Earlier, when the tax officers raided, they could only check the paper and property kept in the house, shop or office. But now the law has changed. Now tax officers will also be able to see digital documents. Whether you are your email, mobile, laptop, online trading account, even social media has now come under the purview of all investigation. The aim of this is that people who are hiding their earnings can be caught. Now the authorities will not only be able to earn your total earnings, but will be able to take action on your hidden earnings.
Time to rectify mistake was also reduced
So far, if someone has made a mistake related to TDS, then he used to get six years to fix it. Now this time has been reduced to two years. This will make the system faster and transparent. Apart from this, now a certificate will be available for less or zero TDS on more income. Till now it was available only on some things like rent, interest, commission, but now in many new cases, this facility will be available. This will facilitate businessmen in money transactions.
Rules strict for foreign companies
Earlier, foreign or connected companies used to show their earnings here and there to save tax, now the rules have been tightened for them too. Now if a company has more than 26% stake or if a company is in the hands of any other company, then it will be considered as a associated company. Earlier it was necessary to fulfill both these conditions simultaneously, but now there is also enough. This will further strengthen the government’s grip in cases like transfer pricing.