India has passed the Income-tax (No. 2) Bill, 2025, replacing the 1961 Act after more than 60 years.
It will come into effect from April 1, 2026 (for FY 2026-27, AY 2027-28).
The main aim: Simpler language, fewer clauses, and easier compliance.
What’s New and Simple
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Simple Language: No complicated legal terms – easy for taxpayers, professionals, and students to understand.
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Fewer Clauses: Reduced from around 819 sections to 536 clauses, making it easier to find what you need.
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Better Structure: Related topics are grouped together so you don’t have to jump between multiple sections.
Important Definitions
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“Accountant” in the new Bill means a Chartered Accountant (CA) with a valid Certificate of Practice – same as earlier, but written more clearly.
Key Highlights
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Nil-TDS Certificates:
If you have little or no tax liability, you can apply for a certificate so that no TDS is deducted on certain payments. -
Clear House Property Rules:
Standard deduction and pre-construction interest rules are explained clearly to avoid confusion. -
Special Income Clarifications:
Better clarity on commuted pensions, anonymous donations, and vacant commercial property income. -
No Rate Changes Yet:
Your current tax slabs remain the same. Any changes will come only through future Budgets.
What’s Not Changing (for Now)
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Old vs New Regime: You still have the choice between the two regimes for FY 2024-25. Any move to a single regime will be announced separately.
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Tax Rates: The rewrite is about structure and clarity, not about changing slabs or exemptions.
Timeline
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August 2025: Bill passed in Parliament.
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Till March 2026: Transition period with FAQs and section-mapping tools.
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From April 2026: New law applies for FY 2026-27.
How to Prepare
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Learn the new clause numbers for the sections you use most often.
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Check if you can benefit from a Nil-TDS certificate.
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Update your tax checklists, templates, and training materials.
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Keep an eye on future Budgets for changes in rates or regimes.
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