Passage of Income-tax Act, 2025
Why focus: Iron Law 4: Parliament passed new Act replacing 1961 law. GS2/GS3 overlap. Tests foundational changes vs retained rates in statement MCQs.
In News
What Happened
Why It Matters
Background
History & Context
What Changed
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Timeline Concepts: BEFORE, the law relied on the confusing dual concepts of 'previous year' (when income is earned) and 'assessment year' (when it is evaluated and taxed). NOW, it uses a single, simplified 'tax year' concept.
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Structural Bulk: BEFORE, the 1961 Act was bloated with 819 sections across 47 chapters, leading to interpretation issues. NOW, redundant provisos have been removed, condensing the law into 536 sections mapped to 23 chapters, utilizing modern formulas and tables for clarity.
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Faceless Mechanisms: BEFORE, faceless assessment rules were added piecemeal as amendments to the old framework. NOW, the Act natively empowers the central government to frame broad, technology-driven schemes for faceless inquiry, valuation, and tax recovery to eliminate human interface.
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Digital Asset Definition: BEFORE, undisclosed income in search cases was limited to physical assets like money, bullion, and jewellery. NOW, the definition explicitly includes virtual digital assets and cryptographically generated tokens, and authorities can override access codes during seizures.
Prelims Angle
NCERT Connection
Practice Questions
Q1
With Reference ToWith reference to the Income-tax Act, 2025, consider the following statements: 1. It introduces a new, higher tax slab for corporate taxpayers to boost direct tax collection. 2. It eliminates the dual concepts of 'previous year' and 'assessment year', replacing them with a unified 'tax year'. 3. The new Act was enacted after incorporating recommendations from a Parliamentary Select Committee. Which of the statements given above is/are correct?