India's tax administration is gearing up for a significant overhaul in personal and corporate tax compliance with the introduction of the New Income Tax Act, 2025. The government has announced that new Income Tax Return (ITR) forms, aligned with this Act, will be notified before the financial year 2027-28. This move is designed to simplify income tax filing, reduce complexities, and create a more user-friendly framework for taxpayers across the country.
The Income Tax Act, 2025, enacted on August 21, is set to replace the Income Tax Act, 1961, which has been in place for over six decades. The older law had undergone numerous amendments, leading to increased complexity. The new act aims to provide clarity, reduce wordiness, and simplify interpretation, making it easier for individuals and businesses to understand and comply with tax regulations. The new act will officially come into force on April 1, 2026.
As part of the transition, all forms related to the Income Tax Act, including ITR forms and TDS quarterly return forms, are being reworked. A dedicated committee by the Central Board of Direct Taxes (CBDT) is leading a comprehensive review of the current filing structure. The committee is consulting with tax experts, industry bodies, chartered accountant associations, technology teams from the Income Tax Department, and field officers to ensure the new forms are taxpayer-friendly. The goal is to make ITR filing easier, more streamlined, and more intuitive. The committee is evaluating all existing ITRs, from ITR-1 (Sahaj) to ITR-7 (Trusts), with the aim of consolidating overlapping forms and minimizing duplication of entries.
The introduction of the New ITR Forms is not merely a procedural update but a broader shift in India's tax administration architecture. Key reasons for the overhaul include aligning with new definitions and income classifications under the Income Tax Act, 2025, improving taxpayer experience with simplified formats, enhancing digital compatibility for faster processing and AI-based verification, creating a unified structure to reduce the need for multiple return types, and integrating with pre-filled data.
According to Minister of State for Finance Pankaj Chaudhary, the ITR forms related to the Income Tax Act, 2025, will incorporate changes resulting from amendments made during Budget 2026. The ITRs pertaining to the first tax year 2026-27 will be notified prior to FY 2027-28. For income earned in FY26 (Assessment Year 2026-27), ITR forms will continue to be governed by the provisions of the Income Tax Act, 1961.
These changes are expected to reduce the compliance burden, particularly for small taxpayers, professionals, and senior citizens. The streamlined processes and reduction of legal jargon aim to encourage compliance and reduce errors in tax returns. The government hopes to deliver a more transparent, efficient, and user-friendly ITR filing experience for millions of taxpayers.
