Income Tax Act, 2025 replaces the six-decades-old Income Tax Act, 1961 with objective to enhance predictability, transparency, reduce compliance burden, and offer taxpayers a streamlined and simplified tax filing process.
Key provisions of the Act
- Simpler language and Framework: Act has been condensed from 819 to 536 Sections, and 390 to 190 Forms.
- Provisions of Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) have been separated into two sub-sections.
- MAT 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.
- AMT has similar provisions as MAT which is applicable to non-corporate tax payers.
- The provisions of MAT are applicable to a corporate taxpayer only.
- Provisions of Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) have been separated into two sub-sections.
- "Tax Year" Concept: The traditionally separate concepts of Financial Year (FY) and Assessment Year (AY) have been merged into a single, unified term: "Tax Year".
- 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.
- 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.
- 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.
