Navigating India’s new income tax framework

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India’s tax framework is set to embrace the new Income-tax Act 2025, effective 1 April, 2026, replacing the Income-tax Act 1961 after more than six decades. The revamped Act focuses on simplification of language, removal of redundant provisions, consolidation and restructuring of provisions.

The corresponding Rules and Forms would also be effective 1 April 2026. The transition from the 1961 regime to 2025 regime would entail system level adjustments, changes in SOPs, client and vendor communications and employee compensation restructuring to imbibe these changes.

Taxpayers must quickly familiarise themselves with these changes so that they are able to easily navigate through and comply with the new tax framework.

Starting preparation early will make it easier to adapt to the new framework and transitional challenges

What’s changing under the new income tax rules

Simplification and restructuring of the Income Tax Act

Consolidation of rules and forms

Changes in exempt allowances and perquisite taxation

Enhanced reporting for select sectors and businesses

Greater focus on documentation, governance, and transparency

How Grant Thornton Bharat can help

With the new income tax rules coming into effect soon, organisations have a narrow window to assess impact, update systems, and ensure compliance. Grant Thornton Bharat helps you navigate this transition with speed and clarity.

Our support includes:

Impact assessment

Evaluate how the changes affect your tax positions, business operations, and compliance requirements, and identify priority areas for action.

Technology readiness

Update ERP systems, tax engines, and reporting tools to align with new formats, disclosures, and compliance requirements.

Process alignment

Review and redesign workflows, controls, and documentation to meet revised standards and ensure consistency across functions.

Stakeholder communication

Support communication with employees, vendors, and customers to enable smooth adoption of the new framework.

Ongoing advisory

Provide continuous insights as rules evolve and interpretations mature.

Implementation support

Assist with execution across functions, including coordination between tax, finance, HR, and technology teams.

With an implementation window of only 1–1.5 months, it is imperative for organisations to initiate preparations without delay. Timely mobilisation, clear prioritisation of compliance actions, and coordinated execution across functions are essential to ensure full readiness and a smooth transition to the Income Tax Act 2025.