Income-Tax Act 2025 Replaces 1961 Law After President's Assent, Brings Simpler Tax Regime

President Droupadi Murmu has given her assent to the Income-tax Bill, 2025, the Finance Ministry announced on Thursday (21 August) .

The new law, which replaces the Income-tax Act of 1961, has been described as a “landmark reform” that promises a simpler, transparent, and compliance-friendly direct tax regime, The Business Line reported.

The Bill was earlier cleared by the Lok Sabha without debate and returned by the Rajya Sabha after a short discussion and Finance Minister Nirmala Sitharaman’s reply.

Among the key provisions, the new Act allows deductions under Section 80M for companies that have opted for the new tax regime.

It provides for family members to claim deductions on commuted pension and gratuity.

Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) have been clearly separated, with AMT now applicable only to non-corporates claiming deductions.

LLPs earning solely capital gains income are exempted from AMT if no deductions are claimed.

The law also introduces flexibility for refund claims in cases where returns are not filed on time and simplifies provisions on carry-forward and set-off of losses.

Rules on taxation of anonymous donations have been aligned with earlier provisions, while exemptions have been extended to mixed-object registered non-profits.

Also Read : Massive Indirect Tax Reforms On Cards As GST Council Set To Meet On 3-4 September