The Government of India has passed the new Income tax Rules 2025, bringing fresh tax slabs, higher rebates, and simpler filing rules. Know what changes from April 1, 2026, and how it impacts your income.

India Introduces New Income Tax Act 2025

In a historic tax reform, the Government of India has officially replaced the 63-year-old Income Tax Act of 1961 with the brand-new Income tax (No. 2) Bill, 2025.

The New Income Tax Rules 2025: Major Changes Every Indian Taxpayer Must Know, which aims to simplify compliance and promote transparency, will come into force from April 1, 2026.

Finance Ministry officials have confirmed that the new act is leaner and more citizen-friendly, reducing the total sections from over 800 to 536, and merging them into 23 concise chapters.

New Income Tax Rules 2025: Key Structural Changes

The term “Tax Year” will now replace “Previous Year” and “Assessment Year” for easier understanding.

Redundant provisions have been removed to streamline the filing and assessment process.

The act prioritizes digital filing, paperless verification, and quicker refund timelines.

New Income Tax Rules 2025 (FY 2025–26 / AY 2026–27)

The government has restructured income tax slabs under the new default regime to provide relief to middle-income earners:

Annual Income (₹)	Tax Rate
Up to ₹4,00,000	Nil
₹4,00,001 – ₹8,00,000	5%
₹8,00,001 – ₹12,00,000	10%
₹12,00,001 – ₹16,00,000	15%
₹16,00,001 – ₹20,00,000	20%
₹20,00,001 – ₹24,00,000	25%
Above ₹24,00,000	30%

In addition, the rebate under Section 87A has been raised — ensuring individuals earning up to ₹12 lakh per year will not pay any tax under the new regime.

Good News for Salaried Employees

The standard deduction for salaried and pensioned citizens has been increased to ₹75,000.
This change is expected to directly benefit millions of middle-class taxpayers, making salary slips a little lighter on tax deductions.

Refunds and Filing Simplified

• Late filers can still claim refunds — a major correction from the earlier law.
• The new act mandates prior notice before any tax action and ensures faster refunds through automation.
• E-filing and online grievance systems have been upgraded for transparency and accountability.

Crypto & Digital Assets Now Taxable

For the first time, Virtual Digital Assets (VDAs) — including cryptocurrencies, NFTs, and similar digital holdings — are formally defined and brought under India’s tax framework.
This move brings clarity and legal recognition to the fast-growing digital asset market.

Old Regime Still an Option

While the new regime will now be the default, taxpayers can opt for the old regime if it’s more beneficial.
Tax experts recommend comparing both systems before filing to choose the one that offers maximum savings.

🇮🇳 What This Means for You

For most Indians, these reforms mean:

• If your total income (under the new regime) is up to ~₹12 lakh, you might end up paying no tax (ignoring special incomes) under the new tax regime.
• Salaried persons might benefit from standard deductions + the relaxed slab structure.
• If you have business income, capital gains, rental income etc, you’ll want to see how the new Act affects deductions, losses, etc.
• Keep watching for announcements by the Central Board of Direct Taxes (CBDT) and Treasury clarifications for transition rules (from the old Act -> new Act).
• Until the new Act is in full force (1 April 2026), you should consider both old and new regimes (and their transitional rules) when planning your tax for FY 2025-26.

In short we can say:

• Lower tax on middle-income groups
• Simpler and quicker filing
• More transparent refund process
• Clearer rules for digital and crypto assets

The Income-tax Act 2025 signals a new phase of India’s economic evolution — one that aligns taxation with the spirit of a modern, digital, and inclusive economy.

Resources:

The Hindustan Times

The Times of India+1

Hindvaacha