[BREAKING] Income Tax Act, 2025 notified in Official Gazette for General Information by Ministry of Law and Justice [Read Act]

The Ministry of Law and Justice has notified the Income Tax Act, 2025 in the Official Gazette after it received the President’s assent on Thursday. The Act consolidates and amends India’s existing income tax law, formally replacing the Income Tax Act, 1961, and will come into effect from April 1, 2026.

The legislation marks the most comprehensive tax overhaul in more than sixty years. Drafted as Bill No. 104-F of 2025, the Act has been enacted in the seventy-sixth year of the Republic of India. It introduces fresh provisions to align the taxation framework with a digital and globalised economy.

One of the most recent changes in the income tax law is the explicit inclusion of virtual digital assets such as cryptocurrencies, NFTs, and other blockchain-based tokens under the definition of income. These assets, which previously operated in a legal grey zone, will now be taxed.

For companies, the new Income Tax Act, 2025 provides clearer rules for amalgamations, demergers, and slump sales, ensuring smoother taxation of corporate restructuring. The definition of “income” has been broadened to include perquisites, subsidies, winnings from online games, and various digital economy gains.

Tax experts believe that the fresh codification will initially increase compliance requirements for taxpayers, but over time it will reduce ambiguity and litigation. The Finance Ministry is expected to notify detailed rules and compliance guidelines before the law comes into force.

The notification of the Income Tax Act, 2025, effectively closes the chapter on the Income Tax Act, 1961, which guided India’s taxation system for more than six decades.

The new framework will apply from the financial year beginning April 1, 2026, giving taxpayers less than a year to prepare for the transition.

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