India’s Income Tax (IT) Act, 2025, could lead to higher voluntary compliance, a senior revenue department official told the Press Trust of India.
The new law, which came into force on 1 April 2026, follows a full-scale review of the Income-tax Act, 1961, widely viewed as complex and difficult to navigate after decades of amendments and changes.
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The new act is said to simplify language, remove obsolete provisions and restructure the law in a more coherent format.
Key features of the framework include simplified tax slabs and a rationalised approach to exemptions, along with a stronger push towards digital systems for filing and other compliance requirements.
At an event, Income Tax-3, Mumbai chief commissioner Vikram Sahay was quoted as saying: “If you have an Act which is simple to understand, it becomes easier to comply. So, voluntary tax compliance will definitely go up because of a simplified Act.
“A time had come and it was felt that we should now embark on the process of simplifying that, simplifying the provisions, which is easier to understand, which will reduce litigation, which will help taxpayers in reading it in a plain language and trying to comply with the provisions of the Act.”
Sahay was speaking at an outreach programme in Mumbai for taxpayers, tax professionals, chartered accountants and trade bodies.
He added that to support the shift to the new regime, the Central Board of Direct Taxes has instructed Principal Chief Commissioners to roll out extensive outreach initiatives.
