Transition to a new Income-Tax Act

• Income-Tax Act, 2025 introduced to replace the old 1961 Act. It simplifies language and structure, reorganises provisions, and aims to reduce compliance complexity.
• New Act effective 1 April 2026, with a single tax year instead of the previous dual previous/assessment year system.

Simplified Assessment & Compliance

• Returns/assessments won’t be invalid due to technical defects like missing computer generated DINs.
• Consolidation of all TDS rules under a single section for easier compliance (no change in rates by default).

Penalty & Decriminalisation

• Multiple penalties/prosecution provisions under the Income-Tax Act are decriminalised or softened.
• Rigorous imprisonment was replaced with simple imprisonment and lowered thresholds (e.g., under-payments below Rs. 50 lakh).

Corporate Tax Adjustments

• MAT (Minimum Alternate Tax) rate reduced (widely reported in media & market summaries).

Capital Gains & Investments

• Exemption of capital gains tax on Sovereign Gold Bonds if subscribed at issue price (as part of tax changes linked to the Finance Bill).

Foreign Investment & Remittances

• Liberalisation of limits for NRIs to invest (e.g., up to 24 %) to attract capital (reported broadly tied to tax and investment regime reforms).

• The Finance Bill amends customs, GST, and other indirect taxes consistent with budget priorities (e.g., targeted exemptions on certain goods, rationalisation of duties).

• Exemptions extended or introduced for critical items such as certain drugs and strategic imports.

• Securities Transaction Tax (STT) increased for futures, options, and exercise trades – impacting equity markets and derivatives trading.

• The Foreign Assets Disclosure Scheme for small taxpayers is proposed to widen the tax base and bring transparency.

• Provisions aligning with other incentive schemes like national semiconductor missions, MSME funds, and container manufacturing programmes are often embedded into the legal framework via Finance Bill clauses.

• Most provisions will come into force from 1 April 2026, subject to specific clauses and enactment processes prescribed in the Bill..