Income Tax Act 2025 - Frequently Asked Questions

The new Income Tax Act became an act after receiving president assent on 21st August, 2025.  The new act is applicable from 1st April 2025. The Income Tax Act 2025 was introduced by Finance Minister Nirmala Sitharaman in the Lok Sabha on 13th February 2025 aims to replace the existing Income Tax Act 1961.

In this article we will answer some of the frequently asked questions about the Income Tax Act 2025.

Key Highlights

The following are the key changes made in the new Income Tax Act, 2025:

• 700+ sections in the old act has been reduced to 534.
• Introduces the concept of ‘tax year’, removing confusion between previous year and assessment year.
• Consolidates and restructures provisions (e.g., all TDS sections in one table) and its sequence.

When will the Income Tax Act 2025 be Applicable?

The provisions of the Income Tax Act 2025 will be applicable after it is passed by both the houses of the parliament and is assented by the President of India. The Act is likely to come into effect from 1st April 2026.

What is “Tax Year”?

“Tax Year” means a period of 12 months commencing from 1st April and ending on 31st March of the following year.

What is the Slab Rate in Income Tax Act 2025?

The Slab Rates are the rates at which the income of the taxpayer will be taxed. India follows a progressive tax rate scheme i.e., the slab rate of tax increases with an increase in the income. This ensures that the individuals earning higher income pay higher taxes.

There are two tax regimes in India; 

• The New Tax Regime (Default Tax Scheme)
• The Old Tax Regime (Optional Tax Scheme)

The New Tax Regime (Default Tax Regime)

The Income Tax Slab Rates for The New Tax Regime is provided under section 202 of the Income Tax Act 2025 as follows:

The Old Tax Regime (Optional Tax Regime)

The Slab Rates under The Old Tax Regime is provided in the Income Tax Act 2025 as follow:

What is the Rebate Limit in The Income Tax Act 2025?

The Rebate Limit in the Income Tax Act are as follows:

• New Tax Regime: A person filing a tax return under the New Tax Regime can claim a rebate if his income is not more than Rs. 12,00,000 i.e., you can get a tax rebate of up to Rs. 60,000.
• Old Tax Regime: A person filing a tax return under the Old Tax Regime can claim a rebate if his income is not more than Rs. 5,00,000 i.e., you can get a tax rebate of up to Rs. 12,500.

The Income Tax Act 1961 v/s The Income Tax Act 2025

The Income Tax Act 2025 will replace the Income Tax Act 1961. However, not much has changed. The Income Tax Act 2025 is seen as shorter in length and less complex when compared to the Income Tax Act 1961, but the number of sections have increased significantly. One of the prominent changes might be the introduction of Tax Year in the Income Tax Act 2025 which looks like it will replace the concepts of Financial Year and Assessment Year of the Income Tax Act 1961. 

To know more about the difference between the Income Tax Act 2025 and the Income Tax Act 1961 you can click here to read a much detailed article about the same.

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