Overview The Indian government is set to introduce a new Income Tax Act, the Income Tax Act, 2025 , which aims to simplify tax laws and reduce complexities for taxpayers. According to the Minister of State for Finance, Pankaj Chaudhary , the new Income Tax returns (ITR) form, based on the I-T Act 2025 , will be notified prior to the 2027-28 fiscal year . This initiative is a significant step towards modernizing the Indian tax system. Key Developments Enactment and Implementation Enactment Date: The Income Tax Act, 2025 , was enacted on August 21, 2025 . Effective Date: The new Act will come into effect from April 1, 2026 , marking the beginning of the next financial year. Replacement of Existing Act: The new Act will replace the existing Income Tax Act, 1961 , which has been the cornerstone of India's income tax laws for several decades. Simplification and Consultation Simplification Goal: The primary objective of the new Act is to make tax laws simpler and reduce wordage in the legislation, making it easier for taxpayers to understand and comply. CBDT Committee: The CBDT (Central Board of Direct Taxes) committee on simplification of ITR forms is actively consulting with tax experts, institutional bodies, and field formations of the I-T Department to gather feedback and ensure the new forms are taxpayer-friendly. Form Reworking Comprehensive Rework: All different forms applicable under the Income Tax Act, such as Tax Deducted at Source (TDS) quarterly return forms and ITR forms, are being reworked to align with the new Act. Collaboration: The Directorate of Systems is working closely with the tax policy division to ensure that the new forms are user-friendly and efficient. Notification Timeline ITR Notification: ITR forms relating to the Income Tax Act, 2025 , will require changes in consequence of amendments made during Budget, 2026 . First Tax-Year: ITRs pertaining to the first tax-year 2026-27 shall be notified prior to FY 2027-28 . Current Fiscal Year Assessment Year 2026-27: With regard to ITR forms for income earned in the current fiscal (Assessment Year 2026-27), consolidation and simplification are in process. Existing Provisions: These forms will be notified as per the provisions of the Income Tax Act, 1961 . UPSC Relevance This news is highly relevant for the UPSC Civil Services Exam , particularly for the GS3 (Indian Economy) and GS2 (Government Policies) papers. Understanding the changes in tax laws and the government's efforts to simplify the tax system is crucial for aspirants. Key Areas for Exam Preparation Income Tax Act, 2025: Its objectives, key provisions, and potential impact on the Indian economy. CBDT: Its role in tax administration and policy formulation. ITR Forms: The process of filing income tax returns and the significance of simplification efforts. Tax Deducted at Source (TDS): Understanding the mechanism and its implications for tax collection. Important Facts The Income Tax Act, 2025 , was enacted on August 21, 2025 . It will come into effect from April 1, 2026 . The new Act aims to replace the Income Tax Act, 1961 . CBDT is consulting with experts to simplify ITR forms. ITRs for the tax-year 2026-27 will be notified prior to FY 2027-28 .