New Delhi, Feb 5 The Central Board of Direct Taxes (CBDT) Chairman, Ravi Agrawal, has said that new income tax forms, implementing rules and a detailed set of frequently asked questions (FAQs) will be published soon this month to prepare taxpayers transition to the new Income Tax Act, 2025, which takes effect on April 1.
Agrawal said that explanatory presentations will be done along with FAQs to help manage an expected surge in queries during the initial implementation quarter from April through June.
"We will be issuing the new income tax forms and rules within February. They will be opened for stakeholder consultation before the new Income Tax Act of 2025 gets implemented from April 1, 2026,” Agrawal said at a post-Budget event.
Direct tax proposals announced in the Union Budget 2026-27 is part of a continuing effort to simplify India’s tax framework, he added.
The reform process began in July 2024 when the government announced a comprehensive review of the Income Tax Act, and initially simplified language and improved readability to reduce multiple interpretations and litigation.
The second phase of reforms, introduced through the latest Budget, proposed structural changes to tax provisions to improve clarity and ease compliance before the new Act comes into effect.
Decriminalisation of certain prosecution provisions, immunity from penalties in select cases, simplified compliance procedures and reduced litigation burden formed part of these reforms.
According to the CBDT, these steps are intended to strengthen tax administration while lowering compliance costs and improving taxpayer services.
The CBDT data showed that around 88 per cent of individual taxpayers filing returns through ITR-1, ITR-2, ITR-3 and ITR-4 have opted for the new tax regime, with increased adoption among small businesses and professionals, Agarwal said, adding government does not consider bringing in a sunset clause for filing income tax returns under the old regime.
Nearly 97 per cent of taxpayers under presumptive taxation schemes have migrated to the new regime, and 60 per cent of corporate income shifted disclosure to the revised tax structure, Agrawal said.
To strengthen the attractiveness of the new tax framework, the Budget proposed modification of Minimum Alternate Tax (MAT) provisions for companies. It proposed treatment of MAT as the final tax and with rate cut to 14 per cent from 15 per cent under the old regime.
Agrawal also stated that the Budget raised the Securities Transaction Tax (STT) on derivatives trading to discourage aggressive retail speculation in derivatives markets, although its impact will become clear over time.
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