Income Tax Act, 2025 to replace 1961 Act from 1 April 2026

Exam-focused facts from the 2 February 2026 current affairs briefing.

Key facts

Finance Minister Nirmala Sitharaman announced the Income Tax Act, 2025 will come into force from 1 April 2026.
The new Act is revenue-neutral with no changes to existing tax rates or slabs.
The legislation cuts overall text volume and number of sections by nearly 50% compared with the 1961 Act.
A single 'tax year' concept replaces the distinction between 'previous year' and 'assessment year'.
Taxpayers can claim TDS refunds even if returns are filed after the due date without penal charges.
The deadline for revising returns has been extended from 31 December to 31 March.
A six-month foreign asset disclosure window is offered to small taxpayers like students, tech professionals and NRIs for income or assets below a specified threshold.
TCS reduced to 2% on overseas tour packages and on remittances for education and medical purposes under the Liberalised Remittance Scheme.
For property transactions involving non-residents, TDS can be deducted using the buyer’s PAN-based challan instead of requiring a TAN.