New Income-tax Act, 2025 becomes official
On August 21, the new Income-tax Act, 2025 received the President's assent and was officially notified by the government. This landmark legislation replaces the decades-old Income-tax Act, 1961, and will take effect from April 1, 2026. The new law is intended to be simpler and more transparent.
- Abolishes Assessment Year concept: The bill removes the term "Assessment Year" and replaces it with a unified "Tax Year".
- Pensioner relief: The new law provides a full tax exemption on the commuted pension received from an approved pension fund, bringing parity to non-government employees who invest in such funds.
- Simplified framework: The Institute of Chartered Accountants of India (ICAI) has stated that the new bill simplifies the tax framework, which will enhance the ease of doing business in India.
ITR filing status for AY 2025–26
With the extended September 15, 2025 deadline approaching for salaried taxpayers and others not requiring an audit, the number of ITRs filed for AY 2025–26 remains less than 50% of last year's total.
- As of August 25, 2025, over 3.67 crore ITRs have been filed.
- The Income Tax Department has already processed over 2.29 crore of these returns.
- Taxpayers who have already filed are reminded to complete the e-verification process within 30 days to avoid invalidation.
Tribunal rulings on capital gains
Recent rulings by the Income Tax Appellate Tribunal (ITAT) have provided clarity and potential relief for taxpayers on capital gains.
- STCG rebate allowed: An ITAT Ahmedabad ruling has clarified that the tax rebate under Section 87A is applicable for Short-Term Capital Gains (STCG) from shares sold on a stock exchange (covered by Section 111A) for FY 2024–25.
- LTCG rebate also allowed: Following the STCG ruling, the ITAT Chennai bench also allowed the Section 87A rebate on Long-Term Capital Gains (LTCG) for eligible taxpayers with lower incomes.
Other updates this week
- CBDT issues notifications: The Central Board of Direct Taxes (CBDT) continues to issue press releases and circulars regarding the new Act and other ongoing matters.
- Form utilities released: The Income Tax Department has enabled Excel utilities for filing various ITRs, including ITR-5, ITR-6, and ITR-7 for AY 2025–26.
- Filing updated returns: Utilities for filing updated returns (ITR-U) in ITR-3 and ITR-4 for AY 2021–22 and AY 2022–23 have been made live on the e-filing portal.