Most taxpayers are now under the new tax regime, but the government hasn’t yet abolished the old tax regime. The Income Tax Act 2025, which replaces the Income Tax Act 1961, will come into effect on April 1st of this year. The question is, how long will the old tax regime last?
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New Delhi: The Central Board of Direct Taxes (CBDT) will release all the forms and rules related to the new Income Tax Act 2025 this month. These will include several forms, including the Income Tax Return Form and 80G, which will be simplified for taxpayers’ convenience. CBDT Chairman Ravi Agarwal stated this in an exclusive interview with NBT on Wednesday. He said that the Income Tax Act 2025, which replaces the Income Tax Act 1961, will come into effect from April 1st this year.
Aggarwal said, “First, the language was simplified. Then, changes were made to the rules and forms. These rules and forms will be notified this February. There are many changes in it. Many forms have been made smart and many have been eliminated. The aim is to make the rules easier to follow and also to make better use of the data we get through them.”
There won’t be many changes to ITR forms, but there will be changes to forms 15C, 15CC, Forms 60, 61, 80G, 80GG, audit forms, foreign tax credit forms, and forms related to trusts and NGOs.
Ravi Agrawal, Chairman, CBDT
Old Tax Regime
The CBDT Chairman said, “These forms will be for filing income returns for the financial year 2026-27. There won’t be many changes to ITR forms, but there will be changes to 15C, 15CC, Forms 60, 61, 80G, 80GG, audit forms, forms related to foreign tax credit, and forms related to trusts and NGOs. FAQs will also be issued as the new law comes into effect.”
Regarding whether there’s a timeline for eliminating the old tax regime, Agarwal said, “There’s no plan, but for assessment year 2025-26, 88% of taxpayers have already moved to the new tax regime. This is a 12% increase from last year. Similarly, 97% of ITR4 filers have moved. 60% of corporate income is now covered by the new tax regime.”
The Foreign Assets Issue
Regarding whether the budget’s one-time opportunity to report assets abroad within six months is related to black money, Agarwal said, “The idea behind this is to provide an opportunity to those who have inadvertently missed something. That’s why the limit has been set as low as ₹1 crore (100,000 USD) of income or ₹5 crore (50 million USD) of assets. Forgetting to report interest on a foreign bank account or an ESOP isn’t considered black money, but it’s considered a default under the Black Money Act. Such individuals have been given this opportunity.”
Aggarwal explained that the NUDGE campaign, launched to encourage taxpayers to comply with the rules, has resulted in additional tax collections of approximately ₹8,800 crore (88 billion rupees) in the last two years. He said, “This campaign is based on seven aspects called SAKSHAM, which includes conveying messages, explaining, and then helping taxpayers comply with the rules and pay taxes.”
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