The Central Board of Direct Taxes (CBDT) has gone beyond the call of duty to provide a seamless transition to the new taxation regime in India by providing extensive FAQs, a detailed guidance note and clarifications on new forms under the Income-tax Rules, 2026. These resources are meant to assist the taxpayers, professionals, and businesses to move seamlessly through the Income-tax Act, 1961 to the Income-tax Act, 2025.
A Structured Transition with Clarity
The newly released FAQ compendium emphasizes that the transition is not merely a legal replacement but a carefully managed process. The primary objective of introducing the Income-tax Act, 2025 is to create a simpler, more transparent, and modern tax system. Importantly, the CBDT clarifies that the new law does not introduce additional taxes or increase the tax burden; instead, it focuses on improving readability, reducing disputes, and enhancing compliance.
One of the key highlights from the FAQs is that while the 1961 Act will be repealed from 1st April 2026, existing rights, liabilities, and proceedings will continue under the old law. This ensures that taxpayers are not adversely affected during the transition phase.
Continuity of Processes and Compliance
The CBDT has taken continuity in a number of areas to ensure nothing is interrupted. The systems that are already in place like PAN, TAN, faceless assessments, and digital compliance frameworks will still exist under the new Act.
The FAQs also explain that the pending proceedings, appeals and reassessments involving the previous years will still be carried on under the provisions of the 1961 Act. As an example, an assessment that was initiated prior to April 2026 will be determined under the old law and will be consistent and legally certain.
Simplified Compliance and New Forms
Together with the FAQs, the CBDT has also released a guidance note regarding new forms, to make the compliance straightforward and user-friendly. It has made the system more efficient and less cumbersome since the number of rules and forms have been greatly minimized.
For example, several PAN and TAN applications forms have been redesigned into leaner and easier to use. Also, such forms as Form 15G and 15H will be unified into one form (Form 121) in order to decrease the confusion and duplication. These modifications indicate a high demand toward digitization, automation, and compliance ease, which are beneficial to both the taxpayers and administrators.
Dual Compliance During Transition
The FAQs point out that the old and new tax regimes would run concurrently during the transition process. Under the old Act (AY 2026-27), taxpayers will end the year with FY 2025-26 returns and they will also have to meet their advance tax and other requirements under the new Act at the end of FY 2026-27.
This two-fold structure will provide continuity with a gradual transition of taxpayers to the new regime.
Conclusion
The FAQs and the guidance notes released by the CBDT are important in the demystification of the transition to the Income-tax Act, 2025. These resources will offer a solid base on which the effective transition to the modern taxation system in India will not only be smoother but also more efficient by considering the practical issues and clarifying where the law stands or by providing simple methods of compliance to the new legal regulations.
