New Income Tax Law: After the rules are notified, IT infrastructure will be created. The Income Tax Bill, 2025, after being passed by both houses of Parliament, also received President Draupadi Murmu’s assent in August 2025.
The new Income Tax Law is scheduled to come into effect from the beginning of the next financial year, 2026-27. The government is preparing to notify all the rules of the new law through a consolidated notification by December 31, 2025. A senior government official told Moneycontrol that the new tax framework will be supported by approximately 400 rules and 180 forms. This number is less than the more than 500 rules of the previous law. The new Income Tax Law aims to simplify compliance and improve administration.
“By December 31, we will notify all the rules in a consolidated notification. Budget work will also begin simultaneously. There will be a lot of work on the system – we will test the rules, do a trial run, and work together in the fourth quarter,” the official said.
The Income Tax Bill, 2025 became law in August
The Income Tax Bill, 2025, after being passed by both houses of Parliament, also received President Draupadi Murmu’s assent in August 2025. It subsequently became law. It simplifies tax laws and reduces the word count, making it easier to understand. The new law does not establish any new income tax rates. It removes unnecessary provisions and outdated language. The Income Tax Act, 1961, had 819 sections, but the new Act has reduced this number to 536. Similarly, the number of chapters has been reduced from 47 to 23. The new Income Tax Act also reduces the word count from 512,000 to 260,000.
In tax administration, rules set out procedures for implementing key tax law provisions—such as how liabilities are calculated, refunds are processed, or exemptions are applied. Forms, on the other hand, are standard templates through which taxpayers and businesses submit information, file returns, or make claims. Together, these rules and forms form the foundation of any tax system’s implementation.
System integration will continue until January-March 2025.
After the rules are notified, the IT infrastructure will be prepared. Backend work for this will continue until the January-March 2025 quarter. According to the official, the forms are being compiled and merged, and prototypes will be created and tested before enabling them on the system. He further said, “After notification, utilities will be created before enabling the forms. The prototypes will be tested, integrated with data, and checked. Each form requires detailed development, integration, testing, and checking. This work will accelerate in the March quarter.” The system integration process will run concurrently with budget preparations.
