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Income Tax Act 2025 | Current Affairs | Vision IAS
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Income Tax Act 2025

Posted 04 Sep 2025

Updated 08 Sep 2025

3 min read

Why in the News? 

Minimum Alternate Tax (MAT)

  • It aims to bring into the tax net "zero tax companies" which in spite of having earned substantial book profits and having paid handsome dividends, do not pay any tax due to various tax concessions and incentives provided under the Income-tax Law.
  • The provisions of MAT are applicable to a corporate taxpayer only.

Alternate Minimum Tax (AMT)

  • It has similar provisions as MAT which is applicable to non-corporate tax payers.

The President has given her assent to the Income Tax Act 2025 which replaces the Income-Tax Act, 1961. 

Key highlight of the Act

  • Commencement: The Act would come into force on the 1st April 2026.
  • Shorter and Simpler: New Act has simpler language and is shorter than the previous bill.
    • The provisions of Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) have been separated into two sub-sections.
  • Stability in Core Tax Elements
    • Tax rates and regimes for individuals and corporations remain unchanged.
    • There are no changes in offences and penalties.
    • Most definitions have also been retained. 
    • Faceless collection of information and assessment of tax cases.
  • Power to Frame Schemes: The Act empowers the central government to frame new schemes for greater efficiency, transparency, and accountability.
  • Undisclosed Income: The definition of undisclosed income for assessing search cases, which previously included money, bullion, jewellery, or other valuable articles, is expanded to include virtual digital assets.
  • Virtual Digital Space Access: Income tax authorities are now allowed to gain access to a virtual digital space during search and seizure proceedings.
    • The authorities will have power to gain access by overriding any required access code.
    • A "virtual digital space" is defined broadly to include email servers, social media accounts, online investment and trading accounts, and websites for storing details of asset ownership.
  • Dispute resolution panel: The Act allows certain eligible assessees to refer draft orders passed by assessing officers to a dispute resolution panel.  
    • These assessees include persons engaged in transfer pricing cases, non-residents, or foreign companies.
    • Transfer pricing refers to the price charged in a transaction between related entities of a multinational enterprise.
  • Pending Proceedings: Any proceedings pending before any income-tax authority, Appellate Tribunal, or court on the commencement of the new Act will continue and be disposed of as if the new Act had not been enacted.
  • Interpretation of tax treaties: The Act allows the central government to enter into agreements with other countries to provide relief in cases of double taxation. 

The President has given her assent to the Taxation Laws (Amendment) Act, 2025.

  • It is a legislative measure designed to modify existing tax laws, primarily the Income-tax Act, 1961, and the Finance Act, 2025.

Key features of the Act

  • Exemption for the Unified Pension System (UPS): Tax exemptions aligned with New Pension Scheme benefits.
  • Tax Benefit to Public Investment Funds (PIF) of Saudi Arabia & subsidiaries.
    • Public Investment Fund of Saudi Arabia has total $925 billion plus assets under management.
  • Block Assessment in Search Cases: It aims to streamline treatment of pending assessments/reassessments in block assessment procedures.
  • Tags :
  • Income Tax Act 2025
  • Taxation Laws (Amendment) Act, 2025
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