From 1961 to 2025: India's New Income Tax Act Is Reshaping Tax Returns

India's New Income Tax Act (via the Income-tax Bill, 2025) doesn't primarily change rates; it changes how the law is written, mapped, and consumed by systems.

That directly reshapes tax-return work: section references will shift, tables/formulae will replace long provisos, and return prep will become more "mapping + data-validation" than "reading + interpretation."

What Most Tax Pros Get Wrong

The common miss: people treat the New Income Tax Act like a "fresh code with new tax rules." The government's stated intent is different: no significant tax policy changes or modifications to tax rates, but a significant simplification of language and structure.

Why that matters for returns: when the Act changes its shape, your return workflow changes: section mapping, schedules, notices, and software logic start to move, even if the tax outcome often doesn't.

Also, remember what you're replacing: the Income-tax Act, 1961 has been amended nearly 65 times with 4,000+ amendments over time, so return preparation has become a patchwork of cross-references and exceptions.

Think "Return-first", Not "Law-first"

If you view the New Income Tax* Act through a return-prep lens, three shifts explain almost everything:

1) Drafting is Becoming Machine-Friendly (And that Changes Compliance)

The Bill's simplification replaces long carve-outs with structure: far fewer sections/chapters/words, but far more tables and formulae.

For return work, that typically means:

• fewer "hidden" conditions buried in provisos
• cleaner logic to convert into ITR schedules, validations, and audit workpapers
• heavier reliance on mapping utilities to translate "old section → new clause/schedule."

2) Citations and Periods Get Cleaner, But the Transition Will be Messy

The FAQs on the Bill describe removing about 1,200 provisos and ~900 explanations, and also call out eliminating the dual concepts of "previous year" and "assessment year" (a big documentation and form-label change if implemented in the ecosystem).

Practically: your client letters, computation formats, and templates will need dual-language during transition (old references for legacy matters + new references for future filings).

3) Returns are Already "System-Led"; the Law is Catching Up

Return processing became centralized and tech-driven long before 2025:

• e-filing project notified in 2006–2007
• CPC Bengaluru approved in Feb 2009, with average processing time cited as 47 days vs older manual timelines
• Modern return preparation is data-first: AIS is designed to show complete info before filing, enable prefilling, and deter non-compliance
• Utilities shifted to JSON for prefilled/utility files from AY 2021–22 onwards

So the New Income Tax Act is landing inside an ecosystem where your "best work" is often reconciliation + evidence + audit trail, not just computation.

What Changes vs What Stays the Same

What’s changing (2025 Bill)	1961 Act	Proposed (Bill 2025)	Return-prep impact for CAs
Total words	512,535	259,676	Less interpretive hunting; more structured referencing
Chapters	47	23	Fewer scattered provisions; cleaner navigation
Sections	819	536	Section numbers will move → update computation/notes/templates
Tables	18	57	More “schedule/table-driven” logic: good for validations, but mapping-heavy
Formulae	6	46	Computations become standardized and easier to system-check
Tax rates / major policy	—	“No modifications of tax rates” / “No major tax policy changes”	Your advisory shifts from “new rates” to “new references + process controls”

Practical Steps: How to Update Your Tax-Return Workflow

Step 1: Build a "Section Mapping Layer" (Don't Rely on Memory)

Your fastest win under the New Income Tax Act is a durable mapping sheet.

Do this in your computation template:

• Column A: Legacy reference (e.g., "Section X / Rule Y")
• Column B: New reference (Bill clause/section/schedule)
• Column C: Evidence link (notification/circular/case note/internal memo)
• Column D: "Return touchpoint" (ITR schedule, disclosure, audit report clause)

Why: even if the substance is intended to stay aligned, the handles (numbers/structure) change, and those handles power notices, responses, and review checklists.

Step 2: Rewrite your Internal Checklists Around "Data Sources", not "Documents"

AIS is explicitly intended to support prefilling and voluntary compliance, and it encompasses more than just classic TDS/TCS.

So build your checklist like this:

• AIS/TIS review + feedback (first pass)
• Form 26AS (TDS/TCS view) as a confirmation layer
• Bank interest/dividend/capital gains reconciliation
• GST turnover / SFT flags where applicable (from AIS categories)

Step 3: Assume "Volume + Standardization" will Increase (Plan Capacity)

For AY 2023–24 return statistics, the department's dataset is built from about 7.97 crore e-returns checked against consistency rules, with 7,97,12,145 returns used for analysis.

That scale is precisely why law + returns trend toward structured tables, validations, and centralized processing.

Step 4: Update your Filing Tech Process (JSON-first Reality)

If your internal process still thinks in "XML upload," it's outdated: from AY 2021–22 onwards, offline utilities moved to JSON for prefilled data and uploads, and even support importing drafts from online mode.

Action: refresh staff SOPs and client instructions to avoid "format friction" from turning into deadline friction.

Step 5: Prepare your Client Communication for the Practical Date Reality

The Bill was tabled on 13 February 2025, and references indicate it is proposed to be brought into effect from 1 April 2026.

So: build a two-year communication plan:

• "This year: data hygiene + AIS discipline"
• "Next year: reference/mapping change management"
• "Go-live year: template + training + response playbooks"

Examples: What Changes in Day-to-Day Return Handling

Example 1: Salaried + Capital Gains Client (the "AIS mismatch" case)

What happens now: client's broker reports transactions; AIS/TIS shows capital gains/dividend values; prefill pulls it in. AIS also supports taxpayer feedback.

Your upgraded workflow under the New Income Tax Act:

1. Lock AIS/TIS snapshot (date-stamped)
2. Reconcile with broker statement + Form 16 + bank interest
3. If mismatch: submit AIS feedback and document it
4. Only then finalize ITR schedules (capital gains, other income, etc.)

Example 2: Small Firm / Presumptive Profile (the "system validation" case)

CPC-era processing is built for scale; older departmental notes cite capacity constraints pre-CPC and faster processing post-centralization.

What you change: stop treating presumptive cases as "light review." Do:

• AIS review (SFT/GST-related info where relevant)
• turnover reasonableness check
• evidence folder completeness (so responses to automated mismatches are fast)

Example 3: "Section-Heavy" Computation (exemptions/deductions narrative)

With the Bill's push toward tables and removal of large volumes of provisos/explanations, expect exemptions/deductions logic to become more "table-driven" in how it's referenced and explained.

So your computation notes should evolve from: long paragraph citations

to: short citation + table row reference + working note.

What to Internalize Before the Switch Flips

The New Income Tax Act is less about "new taxation" and more about "new operating system."

Your edge as a tax professional will come from:

(1) Clean mapping, (2) AIS-led reconciliation, and (3) Airtight documentation that survives automated checks and fast central processing.

FAQ

1) Does the New Income Tax Act change tax rates or rewrite the whole tax policy?

The government's executive summary explicitly states that no significant tax policy changes and no modifications to tax rates are guiding principles.

2) When is it expected to apply for taxpayers and return filing?

References around the Bill indicate it is proposed to be brought into effect from 1 April 2026.

3) What's the most considerable practical risk for CAs during transition?

Broken references. As sections/structure change (819 → 536 sections; more tables/formulae), legacy templates and review notes can silently become wrong unless you maintain a mapping layer.

4) Will AIS/TIS matter more under the New Income Tax Act?

AIS is explicitly designed to display complete information before filing, enable prefilling, and deter non-compliance, so its role in the return workflow is foundational regardless of how the law is renumbered.

5) What single process change should I implement this quarter?

Standardize your "prefill + reconciliation" SOP: lock AIS/TIS, reconcile, document feedback/actions, then finalize ITR. That prevents most late-stage surprises in a system-led filing world.