The Income-tax Act, 2025

What it does

The Income-tax Act, 2025 is Act No. 30 of 2025 and it is the statute that taxes income in India. It sets the charge to tax, decides which receipts count as income and how they are computed, provides for the withholding of tax at source, and sets the machinery of returns, assessment, appeal and penalty. It was published in the Gazette of India on 21 August 2025.

Section 1(3) provides that, save as otherwise provided, the Act comes into force on 1 April 2026, and section 536(1) repeals the Income-tax Act, 1961. The 2025 Act is therefore a re-enactment and not an amendment of the earlier statute. It speaks of a single tax year, where the 1961 Act spoke of a previous year and an assessment year.

Who it binds

Every person with income that is taxable in India: individuals, companies, firms and other bodies, resident or not. Residence decides the reach of the charge, since a resident is generally taxed on world income and a non-resident only on income that arises or is received in India. The Act also binds payers, who must withhold tax on specified payments and deposit it with the Government.

What moved out of it

The 1961 Act is repealed, and what remains of it is governed by the repeal and savings provisions of the 2025 Act. The site's note on a sale of property by a non-resident states the consequence for one case: a sale in the tax year 2026-27 is governed by the 2025 Act and not by section 195 of the 1961 Act. For earlier years, assessments, appeals and penalties continue under the 1961 Act as the savings provisions allow, and an old judgment on a section of that Act remains the starting point only where the 2025 Act has carried the section across.

Income-tax Rules, 2026 sit beneath the Act and appear as a related instrument on the site.

What has changed, and when

The Act has already been touched by later legislation. The site's note reads the Act together with the Taxation and Other Laws (Amendment) Act, 2026 (No. 21 of 2026) of 17 August 2026, and records that the 2026 Act does not touch sections 197, 393, 395 or 397. The note does not cover the Finance Act, 2026, so the surcharge and the health and education cess that sit on top of the rates are not stated on the site.

What turns on it in practice

The renumbering is the practical difficulty. A provision that practitioners cite by its 1961 number has a new number and sometimes new words, and an argument that cites the wrong Act tells the forum the pleading was drafted for a different text. The site's note on property sales by non-residents gives the new references for one transaction: the buyer's duty to withhold tax on a payment to a non-resident is in section 393(2), and long-term capital gains are taxed at 12.5 per cent under section 197.

For the taxation and fiscal practice, two questions recur. Which Act governs the year in dispute, because the answer decides the text, the forum and the limitation. And whether a provision has been carried across unchanged or recast, since a recast provision may not carry the earlier decisions with it. The first is a matter of dates and the second of comparing the texts section by section.

A non-resident Indian or an overseas citizen of India who sells a flat and wishes to send the money abroad meets the Act on two fronts: the withholding by the buyer and the computation of the gain, and the foreign exchange rules on remittance, which are separate. The note on the site sets out how the two fit together for sales in the year that began on 1 April 2026.