NEW DELHI — Sixty-five years after the Income Tax Act of 1961 was enacted, India’s direct tax architecture has undergone its most sweeping structural modernisation. Drafted by the internal review committee of the Central Board of Direct Taxes (CBDT), the New Income Tax Act 2026 cuts the volume of statutory text by nearly half, eliminates hundreds of obsolete provisos, and introduces tabular computation schedules designed so individual taxpayers can file returns without complex legal interpretation.
Replacing “Previous Year” and “Assessment Year” with a Single “Tax Year”
For decades, first-time taxpayers and small business owners struggled with the statutory distinction between the Previous Year (the 12-month period in which income is earned) and the Assessment Year (the following 12-month period in which that income is assessed). The 2026 statute abolishes this dual terminology altogether, aligning India with international tax administration norms by adopting a single Tax Year running from April 1 to March 31.
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