The Income Tax Department will notify the new return forms and rules under the simplified Income Tax Act, 2025, by January next year, CBDT Chairperson Ravi Agrawal announced on Monday. The new law, passed by Parliament in August, will come into effect from April 1, 2026, marking a major shift from the six-decade-old Income Tax Act, 1961.
Speaking at the launch of the Taxpayers' Lounge at the India International Trade Fair (IITF), Agrawal said the department aims to make the income tax return (ITR) process simpler and more taxpayer-friendly. The redesigned forms are expected to ease compliance under the new regime by minimizing complexity and improving user experience.
"We are in the process of designing forms and rules. We are working towards putting this in place by January so that taxpayers have sufficient time to adapt their systems," Agrawal told reporters.
Officials said the Directorate of Systems is coordinating with the tax policy division to finalise the forms, including ITR and TDS return formats. The drafts will undergo legal vetting before being notified and tabled in Parliament.
The Income Tax Act, 2025, aims to streamline India’s direct tax structure by removing outdated provisions and simplifying the legal language. It reduces the number of sections from 819 to 536 and the number of chapters from 47 to 23. The legislation's word count has also been cut nearly in half from 5.12 lakh words in the 1961 law to about 2.6 lakh.
While the new Act does not introduce any change in tax rates, it replaces dense legal text with 39 new tables and 40 formulas to enhance clarity. The government expects this simplification to help taxpayers and professionals interpret the law more easily and reduce compliance burdens.
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