Income Tax--Income Tax Act, 2025

An Overview of Income Tax Act, 2025 : Part 1

V.K. Subramani

Income-tax Act, 2025 has come into force w.e.f. 01.04.2025 and every person associated with the Act as a professional or taxpayer or administrator or researcher whatever be, has to update with the new version of the tax legislation to keep abreast with the developments to remain relevant as before. Beginners may understand the new legislative piece better than the seasoned persons who have familiarity with the Income-tax Act, 1961 because it would be difficult for the later to overcome the habit of referring to the erstwhile provisions.

This refresher gives bullet points of some of the changes:

-- Section 2 of the Income-tax Act (hereinafter referred to as 'ITA, 2025') contains definition similar to the erstwhile Income-tax Act, 1961 (hereinafter referred to as 'ITA, 1961'). However, one notable difference is that the definition has aggregated whatever was defined elsewhere in the previous legislation. For example, the term 'accountant' was defined previously in section 44AB and now it is section 2(1). There are about 112 definitions and each of the definition set in the alphabetical order is not something radical to change our perception. However, one may take note of the definition of the term short-term capital asset which says any capital asset held for not more than 24 months shall be called as such. However, clause (b) of section 2(101) says in the case of listed shares/units of UTI/units of equity-oriented fund/zero coupon bonds would be called as short-term capital asset if held for not more than 12 months. Thus, the category of capital assets which was previously 12 months/24 months/36 months is reduced to 24 months and 12 months respectively. Thus, the reference to 36 months has to be forgotten in the days to come.