Income Tax Act 2025

The Government of India has enacted the Income-Tax Act, 2025 (No. 30 of 2025), which received the President’s assent on 21st August 2025. This Act consolidates and amends the laws relating to income tax in India, replacing earlier provisions to create a more comprehensive and updated legal framework.

The Act defines key terms such as assessee, assessment, income, capital assets, amalgamation, agricultural income, charitable purpose, and many others, while also setting the basis for taxation, scope of total income, residential status, and charge of income tax.

Key Highlights:

• Extends to the whole of India.

• Comes into force from 1st April 2026.

• Provides updated definitions for modern business and digital assets, including virtual digital assets (VDAs), NFTs, crypto-assets, and cloud-based bookkeeping.

• Strengthens clarity on capital gains, business income, dividends, trusts, companies, and taxation procedures.

• Introduces revised rules on residency, total income computation, and taxation of global income.

This Act is a crucial step toward simplifying taxation, ensuring legal clarity, and aligning Indian tax law with modern economic and digital realities.