India Enacts Income-Tax Act 2025

The Income-Tax Act, 2025 is now enacted and will be effective from 1 April 2026. It replaces the existing Income Tax Act, 1961, introducing targeted amendments that define "business connection" and refine the scope of "associated enterprise", while also expanding tax authorities' powers to inspect virtual digital spaces during search and seizure operations. The new Income-Tax Act, 2025 intends to preserve the existing principles of taxation without any major tax policy changes or modification to the tax rates.

For previous reporting and further details, see Income Tax Bill In Depth: India Defines 'Business Connection', Refines AE Rules, Targets Virtual Spaces (18 August 2025) and Lower House Passes New Income Tax Bill Re-Introducing Deduction for Inter-Corporate Dividends, Rationalizing Transfer Pricing Provisions (12 August 2025).

Report from our correspondent Urvi Asher, Chartered Accountant, India. Follow our reporting on this via our Tax News Service (subscribers only).