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The new Income Tax Act 2025 shall replace the Income Tax Act 1961 and will come into effect from April 1 2026. In one of its biggest tax reforms India will soon usher in a new direct tax regime. The revamped tax regime will bring in much-needed simplicity and clarity in tax laws with the intention of lowering tax litigation and making compliance simpler for individual taxpayers and businesses alike. Key features of the new income tax law Speaking to FinanceBuzz tax experts highlight that instead of revamping tax rates the focus of the new Income Tax Act is to simplify tax provisions and retire redundant laws to make way for clear and less ambiguous tax regulations going forward. This will reduce litigation and tax compliance costs in the long run. Replacing terms like “previous year” and “assessment year” common to the old tax regime taxpayers filing their returns and being assessed thereafter will now see a “tax year”. This new terminology will apply to all taxpayers including individuals and companies. Will Income Tax Slabs Change With New Tax Law? Taxpayers can expect most provisions like income tax slabs to remain unchanged with implementation of the new Income Tax Act. Current income tax slabs under the old tax regime and recently announced tax regime will continue to apply. “We can expect tax rates to remain unchanged with the new law. Taxpayers will have time to get accustomed to the new regime before future governments examine whether tax rates should change in the coming budgets” added tax experts. Also Read: Income Tax department to have your bank account and email access from April 1? Modi government issues clarification says... How the New Tax Regime Benefits Salaried Individuals and Businesses At present people who choose the new tax system pay income tax in steps based on their income. Income up to 4 lakh is tax free. Both salaried employees and business owners benefit the most from this system. Taxpayers could see clearer tax provisions focusing on digital-friendly tax compliance well-defined documentation standards and lower litigation. The new tax law also aims to enhance compliance while bringing in clarity for businesses especially startups MSMEs and corporates. Industry reactions to the new tax regime Industry experts have welcomed the move signalling a business-friendly approach which could increase participation improve India’s ease of doing business rankings and attract investors. Ahead of the Union Budget 2026 industry leaders have suggested some changes for taxpayers. These include increasing the standard deduction adding new tax deductions and making changes to TDS and related tax rules. Before April 1 2026 taxpayers should… For now experts advise businesses and individuals to revisit their tax planning strategies speak to their tax advisors and get their tax documents in order before April 1.