The Income-tax Act, 2025 came into effect on April 1, 2026, replacing the 1961 Act. The reform aims to simplify tax laws, improve clarity, and reduce compliance burden. It reorganizes provisions in a logical structure using plain language. The reform does not change tax rates but focuses on making the law easier to understand and implement. It is supported by the Income Tax Rules, 2026, notified by CBDT to ensure a smooth transition.
The Income-tax Act, 2025 came into force on April 1, 2026. It replaced the old Income-tax Act, 1961, which had become complex due to many amendments over 60 years.
The new law was passed by Parliament in August 2025 and later approved by the President. To support implementation, the Central Board of Direct Taxes (CBDT) notified the Income-tax Rules, 2026 on March 20, 2026.
The Act is reorganized in a logical structure and uses simple language. It avoids legal confusion and reduces disputes.
The 1961 Act had become lengthy and difficult to understand due to multiple amendments.
Q1. Which Act is replaced by Income-tax Act, 2025?
A) Income-tax Act, 1951
B) Income-tax Act, 1961
C) Finance Act, 2000
D) Revenue Act, 1922
Answer: B
Q2. When did the new Income-tax Act come into force?
A) March 20, 2026
B) April 1, 2026
C) August 2025
D) January 2026
Answer: B
Q3. Who notified Income-tax Rules, 2026?
A) NITI Aayog
B) RBI
C) CBDT
D) SEBI
Answer: C
Q4. What is the main aim of the new Act?
A) Increase tax rates
B) Simplify tax law
C) Remove taxpayers
D) Add new taxes
Answer: B
Q5. Which Article ensures legal taxation?
A) Article 32
B) Article 265
C) Article 370
D) Article 21
Answer: B
Question: What is the role of CBDT in tax administration?
Answer: CBDT manages direct tax policy and administration under the Ministry of Finance.
Students often think the new Act changes tax rates.
But it only changes structure and language, not tax policy.
Focus on implementation date, purpose, and difference between structural reform and policy change.