ICAI releases Updated Income Tax Act, 2025 with Comparison of Sections with Old Act
ICAI actively partnered with the Ministry of Finance throughout the drafting process.
The Institute of Chartered Accountants of India (ICAI) has released the updated publication of the Income Tax Act, 2025, incorporating a comparative mapping of sections vis-à-vis the Income-tax Act, 1961. The new Act, which comes into effect from April 1, 2026, represents a major overhaul of India’s direct tax law. The exercise began with the Union Budget 2024-25 announcement of...
The Institute of Chartered Accountants of India (ICAI) has released the updated publication of the Income Tax Act, 2025, incorporating a comparative mapping of sections vis-à-vis the Income-tax Act, 1961.
The new Act, which comes into effect from April 1, 2026, represents a major overhaul of India’s direct tax law. The exercise began with the Union Budget 2024-25 announcement of a comprehensive review to simplify and modernise the 1961 Act. ICAI actively partnered with the Ministry of Finance throughout the drafting process. According to the foreword, more than 90 suggestions from ICAI were accepted and reflected in the final law.
The publication provides professionals with the bare text of the Income Tax Act, 2025 and a detailed tabular mapping to corresponding provisions of the 1961 Act. This mapping aims to make transition smoother by enabling tax practitioners, businesses, and academicians to easily correlate provisions across the old and new frameworks.
The Direct Taxes Committee of ICAI has highlighted simplification as the core feature of the 2025 law. Complex provisos have been eliminated, sentences made concise, and tables widely used for clarity. The Act also integrates corrigenda published in the Gazette of India on 3rd September 2025.
CA. Charanjot Singh Nanda, President of ICAI, noted that the Act will serve as a “valuable resource and empower professionals in their lifelong journey of learning.” CA. Piyush S. Chhajed, Chairman of the Direct Taxes Committee, underlined that the comparative structure will help members navigate provisions and strengthen advisory capacity for taxpayers.
Here are the notable technical changes in the Income Tax Act, 2025 compared to the 1961 Act, drawn from ICAI’s mapping:
Heads of Income: Section 13 of the 2025 Act reorganises “Heads of Income” (previously Section 14 of the 1961 Act). Exempt income and related expenditure are now consolidated under Section 14, replacing scattered provisions like Section 14A.
Salaries: Perquisites and profits in lieu of salary are retained but streamlined. Section 19 of the 2025 Act consolidates various exemptions and deductions for retirement benefits, gratuity, leave encashment, and voluntary retirement into one place, integrating provisions like 10(10), 10(10A), 10(10AA), etc. .
House Property: Sections 20–25 of the 2025 Act simplify determination of annual value, deductions, and treatment of arrears. Provisions previously spread across Sections 22–27 are merged into fewer sections, reducing cross-references .
Profits and Gains of Business or Profession: Sections 26–36 of the 2025 Act consolidate deductions like employee welfare, premiums, bad debts, depreciation, and general business expenditure. Earlier, these were scattered under Sections 28–40A .
Deductions under Chapter VI-A: Now covered in Chapter VIII (Sections 122–154).
Section 123 integrates life insurance, provident fund, and annuity deductions (old Sections 80C–80CCE).
Section 125 introduces a new deduction for contributions to the Agnipath Scheme (80CCH).
Electric vehicle loan interest (80EEB), medical treatment (80DD/80DDB), and donations (80G/80GGA/80GGB/80GGC) are grouped systematically.
Capital Gains: While detailed mapping beyond the snippets is not yet fully extracted, the Act restructures computation and exemptions into schedules, with sections aligned chronologically instead of fragmented provisions as under Sections 45–55A of the 1961 Act.
Anti-Avoidance & Transfer Pricing: Chapter X (Sections 161–177) and Chapter XI (Sections 178–184) bring all international taxation, GAAR, and limitation provisions into one framework, replacing Sections 92–94B and 95–102 of the 1961 Act .
TDS/TCS: Sections 390–402 consolidate provisions for deduction and collection at source. Instead of multiple section numbers (192–196D, 206C, etc.), they are now grouped under sequential numbers for easier navigation .
Since early 2025, ICAI has organised over 38 outreach programmes to familiarise stakeholders with the Bill and continues to hold awareness sessions across India. The Committee stated that the Act will ease compliance, boost transparency, and align Indian tax law with global standards.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
