New Income-tax Act 2025 to ease compliance, offer big relief to small businesses: FM Sitharaman

New Delhi — Finance Minister Nirmala Sitharaman announced that the new Income-tax Act, 2025 is set to significantly simplify tax rules, reduce compliance burden, and minimise disputes—especially benefiting small businesses and professionals.

Speaking at the launch of the nationwide awareness campaign PRARAMBH 2026, Sitharaman emphasised that the new legislation has been designed keeping the needs of small enterprises in focus, recognising their critical role in the economy.

One of the most notable provisions is that businesses with turnover up to ?10 crore—subject to certain conditions—will no longer be required to maintain detailed books of accounts or undergo mandatory audits. This move is expected to substantially ease compliance requirements for smaller firms.

The minister also highlighted that several long-standing grey areas, such as the treatment of pre-construction interest on housing loans, have now been clearly defined, reducing ambiguity and the scope for litigation.

Stressing the need to curb tax disputes, Sitharaman noted that frequent tribunal cases indicate systemic gaps. The new law aims to address this by reducing errors, simplifying procedures, and promoting a more transparent tax environment.

Alongside the reform, the government has introduced Income Tax Website 2.0, a revamped digital platform that will enable taxpayers to file returns, raise queries, and communicate seamlessly with authorities.

Officials have also been directed to expand outreach efforts beyond metro cities and actively engage with diverse groups, including students, to improve awareness and compliance.

The new Act replaces the decades-old Income-tax Act, 1961, which had grown complex due to numerous amendments over the years. The updated framework significantly streamlines the structure—reducing sections from around 819 to 536 and chapters from 47 to 23, while nearly halving the overall length of the law.

In a major structural reform, the distinction between “previous year” and “assessment year” has been removed, introducing a single, simplified tax year system—making it easier for taxpayers to understand and comply with regulations.