Introduction to Income Tax Act, 2025

The Income Tax Act, 2025 is a landmark reform in India's direct tax history. Enacted to replace the six-decade-old Income Tax Act, 1961, the new Act came into effect from 1st April 2026. It represents a comprehensive overhaul aimed at simplifying, modernising, and streamlining the direct tax framework of India. While the core principles of taxation remain largely unchanged, the new Act focuses on clarity, reduced compliance burden, and taxpayer-friendly provisions.

Why Was a New Income Tax Act Required?

The Income Tax Act, 1961 had become overly complex due to:

• Over 4,000 amendments over 65 years
• More than 800 sections, thousands of provisos, explanations, and notifications
• Scattered provisions leading to frequent litigation and interpretational disputes
• Outdated language and structure not aligned with modern business practices and digital economy

Key Objectives of the New Act:

• Simplify statutory language and structure
• Reduce the number of sections and eliminate redundancy
• Improve readability and logical flow of provisions
• Promote ease of compliance and voluntary tax payment
• Align with global standards and the vision of Viksit Bharat
• Reduce litigation by providing clearer definitions and fewer ambiguities

The new Act does not introduce new taxes or significantly alter tax rates — it is primarily a restructuring and simplification exercise.

Chapter-wise & Section-wise Comparison

Particulars	Income Tax Act, 1961	Income Tax Act, 2025	Key Change
Number of Sections	819+ sections	536 sections	Reduction of ~35%
Number of Chapters	~47 (fragmented)	23 Chapters	Major consolidation
Number of Schedules	14 Schedules	16 Schedules	2 additional schedules
Total Pages	~823 pages	~622 pages	Significant reduction
Provisos & Explanations	Over 2,000	Mostly integrated into main text	Cleaner drafting

Detailed Sections under Income Tax Act, 2025 with Cross-Reference to Income Tax Act, 1961

Section ITA, 2025	Section Heading (Income Tax Act, 2025)	Corresponding Section in ITA, 1961
CHAPTER I — PRELIMINARY (Sections 1 to 3)
1	Short title, extent and commencement	1
2	Definitions	2
3	Definition of “tax year”	3
CHAPTER II — BASIS OF CHARGE (Sections 4 to 10)
4	Charge of income-tax	4
5	Scope of total income	5
6	Residence in India	6
7	Income deemed to be received and dividend deemed to be income in a tax year	7, 8
8	Income on receipt of capital asset or stock in trade by specified person from specified entity	9B
9	Income deemed to accrue or arise in India [Read with Schedule I]	9, 9A
10	Apportionment of income between spouses governed by Portuguese Civil Code	5A
CHAPTER III — INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME (Sections 11 to 12)
11	Incomes not included in total income [Read with Schedules II to VII]	10
12	Incomes not included in total income of political parties and electoral trusts [Read with Schedule VIII]	13A, 13B
CHAPTER IV — COMPUTATION OF TOTAL INCOME (Sections 13 to 95)
A. Heads of Income
13	Heads of income	14
14	Income not forming part of total income and expenditure in relation to such income	14A
B. Salaries
15	Salaries	15
16	Income from salary	17
17	Perquisite	17
18	Profits in lieu of salary	17
19	Deductions from salaries	10(10), 10(10A), 10(10AA), 10(10B), 10(10C), 16
C. Income from House Property
20	Income from house property	22
21	Determination of annual value	23, 27
22	Deductions from income from house property	24, 25
23	Arrears of rent and unrealised rent received subsequently	25A
24	Property owned by co-owners	26
25	Interpretation	27
D. Profits and Gains of Business or Profession
26	Income under head "Profits and gains of business or profession"	28
27	Manner of computing profits and gains of business or profession	29
28	Rent, rates, taxes, repairs and insurance	30, 31, 38
29	Deductions related to employee welfare	36, 40A
30	Deduction on certain premium	36
31	Deduction for bad debt and provision for bad and doubtful debt	36
32	Other deductions	36
33	Deduction for depreciation	32, 38
34	General conditions for allowable deductions	37
35	Amounts not deductible in certain circumstances	40
36	Expenses or payments not deductible in certain circumstances	40A
37	Certain deductions allowed on actual payment basis only	43B
38	Certain sums deemed as profits and gains of business or profession	41
39	Computation of actual cost	43
40	Special provision for computation of cost of acquisition of certain assets	43C
41	Written down value of depreciable asset	43
42	Capitalising impact of foreign exchange fluctuation	43A
43	Taxation of foreign exchange fluctuation	43AA
44	Amortisation of certain preliminary expenses	35D
45	Expenditure on scientific research Read with Schedule XIII	35
46	Capital expenditure of specified business	35AD
47	Expenditure on agricultural extension project and skill development project	35CCC, 35CCD
48	Tea development account, coffee development account and rubber development account Read with Schedule IX	33AB
49	Site Restoration Fund [Read with Schedule X]	33ABA
50	Special provision in case of trade, profession or similar association	44A
51	Amortisation of expenditure for prospecting certain minerals [Read with Schedule XII]	35E
52	Amortisation of expenditure for telecommunications services, amalgamation, demerger, scheme of voluntary retirement, etc.	35ABA, 35ABB, 35DD, 35DDA
53	Full value of consideration for transfer of assets other than capital assets in certain cases	43CA
54	Business of prospecting for mineral oils	42
55	Insurance business [Read with Schedule XIV]	44
56	Special provision in case of interest income of specified financial institutions	43D
57	Revenue recognition for construction and service contracts	43CB
58	Special provision for computing profits and gains of business or profession on presumptive basis in case of certain residents	44AD, 44ADA, 44AE
59	Computation of royalty and fee for technical services in hands of non-residents	44DA
60	Deduction of head office expenditure in case of non-residents	44C
61	Special provision for computation of income on presumptive basis in respect of certain business activities of certain non-residents	44B, 44BB, 44BBA, 44BBB, 44BBC, 44BBD
62	Maintenance of books of account	44AA
63	Tax audit	44AB
64	Special provision for computing deductions in case of business reorganisation of co-operative banks	44DB
65	Interpretation for purposes of section 64	44DB
66	Interpretation	28 to 44DA
E. Capital Gains
67	Capital gains	45
68	Capital gains on distribution of assets by companies in liquidation	46
69	Capital gains on purchase by company of its own shares or other specified securities	46A
70	Transactions not regarded as transfer	47
71	Withdrawal of exemption in certain cases	47A
72	Mode of computation of capital gains	48
73	Cost with reference to certain modes of acquisition	49
74	Special provision for computation of capital gains in case of depreciable assets	50
75	Special provision for cost of acquisition in case of depreciable asset	50A
76	Special provision for computation of capital gains in case of Market Linked Debenture	50AA
77	Special provision for computation of capital gains in case of slump sale	50B
78	Special provision for full value of consideration in certain cases	50C
79	Special provision for full value of consideration for transfer of share other than quoted share	50CA
80	Fair market value deemed to be full value of consideration in certain cases	50D
81	Advance money received	51
82	Profit on sale of property used for residence	54
83	Capital gains on transfer of land used for agricultural purposes not to be charged in certain cases	54B
84	Capital gains on compulsory acquisition of lands and buildings not to be charged in certain cases	54D
85	Capital gains not to be charged on investment in certain bonds	54EC
86	Capital gains on transfer of certain capital assets not to be charged in case of investment in residential house	54F
87	Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking from urban area	54G
88	Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking from urban area to any Special Economic Zone	54GA
89	Extension of time for acquiring new asset or depositing or investing amount of capital gains	54H
90	Meaning of “adjusted”, “cost of improvement” and “cost of acquisition”	55
91	Reference to Valuation Officer	55A
F. Income from Other Sources
92	Income from Other Sources	56
93	Deductions	57
94	Amounts not deductible	58
95	Profits chargeable to tax	59
CHAPTER V — INCOME OF OTHER PERSONS INCLUDED IN TOTAL INCOME OF ASSESSEE (Sections 96 to 100)
96	Transfer of income without transfer of assets	60
97	Chargeability of income in transfer of assets	61, 62
98	"Transfer" and "revocable transfer" defined	63
99	Income of individual to include income of spouse, minor child, etc.	64
100	Liability of person in respect of income included in income of another person	65
CHAPTER VI — AGGREGATION OF INCOME (Sections 101 to 107)
101	Total income	66
102	Unexplained credits	68
103	Unexplained investment	69, 69B
104	Unexplained asset	69A, 69B
105	Unexplained expenditure	69C
106	Amount borrowed or repaid through negotiable instrument, hundi, etc.	69D
107	Charge of tax	–
CHAPTER VII — SET OFF, OR CARRY FORWARD AND SET OFF OF LOSSES (Sections 108 to 121)
108	Set off of losses under same head of income	70
109	Set off of losses under any other head of income	71
110	Carry forward and set off of loss from house property	71B
111	Carry forward and set off of loss from Capital gains	74
112	Carry forward and set off of business loss	72
113	Set off and carry forward of losses computed in respect of speculation business	73
114	Set off and carry forward of losses computed in respect of specified business	73A
115	Set off and carry forward of losses from specified activity	74A
116	Treatment of accumulated losses and unabsorbed depreciation in amalgamation or demerger, etc.	72A
117	Treatment of accumulated losses and unabsorbed depreciation in scheme of amalgamation in certain cases	72AA
118	Carry forward and set off of losses and unabsorbed depreciation in business reorganisation of co-operative banks	72AB
119	Carry forward and set off of losses not permissible in certain cases	78, 79
120	No set off of losses against undisclosed income consequent to search, requisition and survey	79A
121	Submission of return for losses	80
CHAPTER VIII — DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME (Sections 122 to 154)
A. General
122	Set off of losses under same head of income	80A, 80AB, 80AC, 80B
B. Deductions in respect of Certain Payments
123	Deduction for life insurance premia, deferred annuity, contributions to provident fund, etc.	80C, 80CCC, 80CCE
124	Deduction in respect of employer and assessee contribution to pension scheme of Central Government Read with Schedule XV	80CCD
125	Deduction in respect of contribution to Agnipath Scheme	80CCH
126	Deduction in respect of health insurance premia	80D
127	Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability	80DD
128	Deduction in respect of medical treatment, etc.	80DDB
129	Deduction in respect of interest on loan taken for higher education	80E
130	Deduction in respect of interest on loan taken for residential house property	80EE
131	Deduction in respect of interest on loan taken for certain house property	80EEA
132	Deduction in respect of purchase of electric vehicle	80EEB
133	Deduction in respect of donations to certain funds, charitable institutions, etc.	80G
134	Deductions in respect of rents paid	80GG
135	Deduction in respect of certain donations for scientific research or rural development	80GGA
136	Deduction in respect of contributions given by companies to political parties	80GGB
137	Deduction in respect of contributions given by any person to political parties	80GGC
C. Deductions in respect of Certain Incomes
138	Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.	80-IA
139	Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone	80-IAB
140	Special provision in respect of specified business	80-IAC
141	Deduction in respect of profits and gains from certain industrial undertakings	80-IB
142	Deductions in respect of profits and gains from housing projects	80-IBA
143	Special provisions in respect of certain undertakings in North-Eastern States	80-IE
144	Special provisions in respect of newly established Units in Special Economic Zones	10AA
145	Deduction for businesses engaged in collecting and processing of bio-degradable waste	80JJA
146	Deduction in respect of additional employee cost	80JJAA
147	Deductions for income of Offshore Banking Units and Units of International Financial Services Centre	80LA
148	Deduction in respect of certain inter-corporate dividends	80M
149	Deduction in respect of income of co-operative societies	80P
150	Interpretation for purposes of section 149	80P
151	Deduction in respect of royalty income, etc., of authors of certain books other than text-books	80QQB
152	Deduction in respect of royalty on patents	80RRB
D. Deductions in respect of Other Incomes
153	Deduction for interest on deposits	80TTA, 80TTB
E. Other Deductions
154	Deduction in case of a person with disability	80U
CHAPTER IX — REBATES AND RELIEFS (Sections 155 to 160)
155	Rebate to be allowed in computing income-tax	87
156	Rebate of income-tax in case of certain individuals	87A
157	Relief when salary, etc., is paid in arrears or in advance	89
158	Relief from taxation in income from retirement benefit account maintained in a notified country	89A
B. Double Taxation Relief
159	Agreement with foreign countries or specified territories and adoption by Central Government of Agreement between Specified associations for double taxation relief	90, 90A
160	Countries with which no agreement exists	91
CHAPTER X — SPECIAL PROVISIONS RELATING TO AVOIDANCE OF TAX (Sections 161 to 177)
161	Computation of income from international transaction and specified domestic transaction having regard to arm's length price	92
162	Meaning of associated enterprise	92A
163	Meaning of international transaction	92B
164	Meaning of specified domestic transaction	92BA
165	Determination of arm's length price	92C
166	Reference to Transfer Pricing Officer	92CA
167	Power of Board to make safe harbour rules	92CB
168	Advance pricing agreement	92CC
169	Effect to advance pricing agreement	92CD
170	Secondary adjustment in certain cases	92CE
171	Maintenance, keeping and furnishing of information and document by certain persons	92D
172	Report from an accountant to be furnished by persons entering into international transaction or specified domestic transaction	92E
173	Definitions of certain terms relevant to determination of arm's length price, etc.	92F
174	Avoidance of income-tax by transactions resulting in transfer of income to non-residents	93
175	Avoidance of tax by certain transactions in securities	94
176	Special measures in respect of transactions with persons located in notified jurisdictional area	94A
177	Limitation on interest deduction in certain cases	94B
CHAPTER XI — GENERAL ANTI-AVOIDANCE RULE (Sections 178 to 184)
178	Applicability of General Anti-Avoidance Rule	95
179	Impermissible avoidance arrangement	96
180	Arrangement to lack commercial substance	97
181	Consequences of impermissible avoidance arrangement	98
182	Treatment of connected person and accommodating party	99
183	Application of this Chapter	100, 101
184	Interpretation	102
CHAPTER XII — MODE OF PAYMENT IN CERTAIN CASES, ETC. (Sections 185 to 189)
185	Mode of taking or accepting certain loans, deposits and specified sum	269SS
186	Mode of undertaking transactions	269ST
187	Acceptance of payment through prescribed electronic modes	269SU
188	Mode of repayment of certain loans or deposits or specified advances	269T
189	Interpretation	269SS, 269ST, 269T
CHAPTER XIII — DETERMINATION OF TAX IN SPECIAL CASES (Sections 190 to 235)
A. Determination of tax in Certain Special Cases
190	Determination of tax where total income includes income on which no tax is payable	110
191	Tax on accumulated balance of recognised provident fund	111
192	Tax in case of block assessment of search cases	113
193	Tax on income from Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer	115ACA
194	Tax on certain incomes	115B, 115BB, 115BBF, 115BBG, 115BBH, 115BBJ
195	Tax on income referred to in sections 102 to 106	115BBE
B. Special Provisions relating to tax on Capital Gains
196	Tax on short-term capital gains in certain cases	111A
197	Tax on long-term capital gains	112
198	Tax on long-term capital gains in certain cases	112A
C. New Tax Regimes
199	Tax on income of certain manufacturing domestic companies	115BA
200	Tax on income of certain domestic companies	115BAA
201	Tax on income of new manufacturing domestic companies	115BAB
202	New tax regime for individuals, Hindu undivided family and others	115BAC
203	Tax on income of certain resident co-operative societies	115BAD
204	Tax on income of certain new manufacturing co-operative societies	115BAE
205	Conditions for tax on income of certain companies and cooperative societies	115BA, 115BAA, 115BAB, 115BAD, 115BAE
D. Special provisions relating to Minimum Alternate Tax and Alternate Minimum Tax
206	Special provisions for Minimum Alternate Tax and Alternate Minimum Tax	115JAA, 115JB, 115JC, 115JD, 115JE, 115JEE, 115JF
E. Special provisions relating to Non-residents and Foreign Companies
207	Tax on dividends, royalty and fees for technical services in case of foreign companies	115A
208	Tax on income from units purchased in foreign currency or capital gains arising from their transfer	115AB
209	Tax on income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer	115AC
210	Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer	115AD
211	Tax on non-resident sportsmen or sports associations	115BBA
212	Interpretation	115C
213	Special provision for computation of total income of non-residents	115D
214	Tax on investment income and long-term capital gains	115E
215	Capital gains on transfer of foreign exchange assets not to be charged in certain cases	115F
216	Return of income not to be furnished in certain cases	115G
217	Benefit to be available in certain cases even after assessee becomes resident	115H
218	Chapter not to apply if the assessee so chooses	115-I
219	Conversion of an Indian branch of foreign company into subsidiary Indian company	115JG
220	Foreign company said to be resident in India	115JH
F. Special provisions relating to Pass-through entities
221	Tax on income from securitisation trusts	115TCA
222	Tax on income in case of venture capital undertakings	115U
223	Tax on income of unit holder and business trust	115UA
224	Tax on income of investment fund and its unit holders	115UB
G. Special provisions relating to income of Shipping Companies
225	Income from the business of operating qualifying ships	115VA
226	Tonnage tax scheme	115VB, 115VE, 115VF
227	Computation of tonnage income	115VG, 115VH, 115VX
228	Relevant shipping income and exclusion from book profit	115V-I, 115V-J, 115V-O
229	Depreciation and gains relating to tonnage tax assets	115VK, 115VN
230	Exclusion of deduction, loss, set off, etc.	115VL, 115VM
231	Method of opting of tonnage tax scheme and validity	115VP, 115VQ, 115VR, 115VS
232	Certain conditions for applicability of tonnage tax scheme	115VT, 115VU, 115VV, 115VW, 115VZA
233	Amalgamation and demerger	115VY, 115VZ
234	Avoidance of tax and exclusion from tonnage tax scheme	115VZB, 115VZC
235	Interpretation	115V, 115VC, 115VD
CHAPTER XIV — TAX ADMINISTRATION (Sections 236 to 261)
A. Authorities, Jurisdiction and Functions
236	Income-tax authorities	116
237	Appointment of income-tax authorities	117
238	Control of income-tax authorities	118
239	Instructions to subordinate authorities	119
240	Taxpayer's Charter	119A
241	Jurisdiction of income-tax authorities	120
242	Jurisdiction of Assessing Officers	124
243	Power to transfer cases	127
244	Change of incumbent of an office	129
245	Faceless jurisdiction of income-tax authorities	130
B. Powers
246	Power regarding discovery, production of evidence, etc.	131
247	Search and seizure	132
248	Powers to requisition	132A
249	Reasons not to be disclosed	132, 132A
250	Application of seized or requisitioned assets	132B
251	Copying, extraction, retention and release of books of account and documents seized or requisitioned	132
252	Power to call for information	133
253	Powers of survey	133A
254	Power to collect certain information	133B
255	Power to inspect registers of companies	134
256	Power of certain income-tax authorities	135
257	Proceedings before income-tax authorities to be judicial proceedings	136
258	Disclosure of information relating to assessees	138
259	Power to call for information by prescribed income-tax authority	133C
260	Faceless collection of information	135A
261	Interpretation	131 to 135
CHAPTER XV — RETURN OF INCOME (Sections 262 to 267)
262	Permanent Account Number	139A, 139AA
263	Return of income	139, 139D, 194P
264	Scheme for submission of returns through tax return preparers	139B
265	Return by whom to be verified	140
266	Self-assessment	140A
267	Tax on updated return	140B
CHAPTER XVI — PROCEDURE FOR ASSESSMENT (Sections 268 to 301)
A. Procedure for Assessment
268	Inquiry before assessment	142
269	Estimation of value of assets by Valuation Officer	142A
270	Assessment	143
271	Best judgment assessment	144
272	Power of Joint Commissioner to issue directions in certain cases	144A
273	Faceless Assessment	144B
274	Reference to Principal Commissioner or Commissioner in certain cases	144BA
275	Reference to Dispute Resolution Panel	144C
276	Method of accounting	145
277	Method of accounting in certain cases	145A
278	Taxability of certain income	145B
279	Income escaping assessment	147
280	Issue of notice where income has escaped assessment	148
281	Procedure before issuance of notice under section 280	148A
282	Time limit for notices under sections 280 and 281	149
283	Provision for cases where assessment is in pursuance of an order on appeal, etc.	150
284	Sanction for issue of notice	151
285	Other provisions	152
286	Time limit for completion of assessment, reassessment and recomputation	153
287	Rectification of mistake	154
288	Other amendments	155
289	Notice of demand	156
290	Modification and revision of notice in certain cases	156A
291	Intimation of loss	157
B. Special Procedure for Assessment in Search Cases
292	Assessment of total undisclosed income as a result of search	158BA
293	Computation of total undisclosed income of block period	158BB
294	Procedure for block assessment	158BC
295	Undisclosed income of any other person	158BD
296	Time-limit for completion of block assessment	158BE
297	Certain interests and penalties not to be levied or imposed	158BF
298	Levy of interest and penalty in certain cases	158BFA
299	Authority competent to make assessment of block period	158BG
300	Application of other provisions of Act	158BH
301	Interpretation	158B
CHAPTER XVII — SPECIAL PROVISIONS RELATING TO CERTAIN PERSONS (Sections 302 to 355)
A. Association of Persons, Firm, Hindu Undivided Family, etc.
302	Legal representative	159
303	Representative assessee	160
304	Liability of representative assessee	161, 165, 166, 167
305	Right of representative assessee to recover tax paid	162
306	Who may be regarded as agent	163
307	Charge of tax where share of beneficiaries unknown	164
308	Charge of tax in case of oral trust	164A
309	Method of computing a member's share in income of association of persons or body of individuals	67A
310	Share of member of association of persons or body of individuals in income of association or body	86
311	Charge of tax where shares of members in association of persons or body of individuals unknown, etc.	167B
312	Executor	168, 169
313	Succession to business or profession otherwise than on death	170
314	Effect of order of tribunal or court in respect of business reorganisation	170A
315	Assessment after partition of a Hindu undivided family	171
316	Shipping business of non-residents	172
317	Assessment of persons leaving India	174
318	Assessment of association of persons or body of individuals or artificial juridical person formed for a particular event or purpose	174A
319	Assessment of persons likely to transfer property to avoid tax	175
320	Discontinued business	176
321	Association dissolved or business discontinued	177
322	Company in liquidation	178
323	Liability of directors of private company	179
324	Charge of tax in case of a firm	167A
325	Assessment as a Firm	184
326	Assessment when section 325 not complied with	185
327	Change in constitution of a firm	187
328	Succession of one firm by another firm	188
329	Joint and several liability of partners for tax payable by firm	188A
330	Firm dissolved or business discontinued	189
331	Liability of partners of limited liability partnership in liquidation	167C
B. Special provisions for registered non-profit organisation
332	Application for registration	11, 12A, 12AB, 80G
333	Switching over of regimes	11, 12, 13, 115BBC, 115BBI
334	Tax on income of registered non-profit organisation	11, 12, 13, 115BBC, 115BBI
335	Regular income	11, 12, 13, 115BBC, 115BBI
336	Taxable regular income	11, 12, 13, 115BBC, 115BBI
337	Specified income	11, 12, 13, 115BBC, 115BBI
338	Income not to be included in regular income	11, 12, 13, 115BBC, 115BBI
339	Corpus donation	11, 12, 13, 115BBC, 115BBI
340	Deemed corpus donation	11, 12, 13, 115BBC, 115BBI
341	Application of income	11, 12, 13, 115BBC, 115BBI
342	Accumulated income	11, 12, 13, 115BBC, 115BBI
343	Deemed accumulated income	11, 12, 13, 115BBC, 115BBI
344	Business undertaking held as property	2(15), 11
345	Restriction on commercial activities by a registered non-profit organisation	2(15), 11
346	Restriction on commercial activities by registered non-profit organisation, carrying out advancement of any other object of general public utility	2(15), 11
347	Books of account	11, 12A, 139
348	Audit	11, 12A, 139
349	Return of income	11, 12A, 139
350	Permitted modes of investment	11, 12A, 139
351	Specified violation	12AB, 13
352	Tax on accreted income	12AC, 115TD, 115TE, 115TF
353	Other violations	13
354	Application for approval for purpose of section 133(1)(b)(ii)	80G
355	Interpretation	2(15), 11, 12, 13, 115BBC, 115TD, 115TE, 115TF
CHAPTER XIX — COLLECTION AND RECOVERY OF TAX (Sections 390 to 430)
A. General
390	Deduction or collection at source and advance payment	190, 199, 206C
391	Direct payment	191
B. Deduction and Collection at Source
392	Salary and accumulated balance due to an employee	192, 192A
393	Tax to be deducted at source	193, 194, 194A, 194B, 194BA, 194BB, 194C, 194D, 194DA, 194E, 194G, 194H, 194-I, 194-IA, 194-IB, 194-IC, 194J, 194K, 194LA, 194LB, 194LBA, 194LBB, 194LBC, 194LC, 194LD, 194M, 194N, 194-O, 194P, 194Q, 194R, 194S, 194T, 195, 195A, 196, 196A, 196B, 196C, 196D, 197, 197A
394	Collection of tax at source	206C
395	Certificates	197, 195, 203, 206C
396	Tax deducted is income received	198
397	Compliance and reporting	203A, 206AA, 206CC, 200, 206A, 206C, 194-IA, 194-IB, 194M, 194S, 195
398	Consequences of failure to deduct or pay or, collect or pay	201, 206C
399	Processing	200A, 206CB
400	Power of Central Government to relax provisions of this Chapter	194A, 194BA, 194N, 194-O, 194Q, 194R, 194S, 195, 197, 197A, 206C
401	Bar against direct demand on assessee	205
402	Interpretation	192 to 206CB
C. Advance payment of tax
403	Liability for payment of advance tax	207
404	Conditions of liability to pay advance tax	208
405	Computation of advance tax	209
406	Payment of advance tax by assessee on his own accord	210
407	Payment of advance tax by assessee in pursuance of order of Assessing Officer	209, 210, 211
408	Instalments of advance tax and due dates	211
409	When assessee is deemed to be in default	218
410	Credit for advance tax	219
D. Collection and recovery
411	When tax payable and when assessee deemed in default	220
412	Penalty payable when tax in default	221
413	Certificate by Tax Recovery Officer and Validity thereof	222, 224
414	Tax Recovery Officer by whom recovery is to be effected	223
415	Stay of proceedings in pursuance of certificate and amendment or cancellation thereof	225
416	Other modes of recovery	226
417	Recovery through State Government	227
418	Recovery of tax in pursuance of agreements with foreign countries	228A
419	Recovery of penalties, fine, interest and other sums	229
420	Tax clearance certificate	230
421	Recovery by suit or under other law not affected	232
422	Recovery of tax arrear in respect of non-resident from his assets	173
E. Interest chargeable in certain cases
423	Interest for defaults in furnishing return of income	234A
424	Interest for defaults in payment of advance tax	234B
425	Interest for deferment of advance tax	234C
426	Interest on excess refund	234D
F. Levy of Fee in Certain Cases
427	Fee for default in furnishing statements	234E
428	Fee for default in furnishing return of income	234F
429	Fee for default relating to statement or certificate	234G
430	Fee for default relating to intimation of Aadhaar number	234H
CHAPTER XX — REFUNDS (Sections 431 to 438)
431	Refunds	237
432	Person entitled to claim refund in certain special cases	238
433	Form of claim for refund and limitation	239
434	Refund for denying liability to deduct tax in certain cases	239A
435	Refund on appeal, etc.	240
436	Correctness of assessment not to be questioned	242
437	Interest on refunds	244A
438	Set off and withholding of refunds in certain cases	245
CHAPTER XXI — PENALTIES (Sections 439 to 472)
439	Penalty for under-reporting and misreporting of income	270A
440	Immunity from imposition of penalty, etc.	270AA
441	Failure to keep, maintain or retain books of account, documents, etc.	271A
442	Penalty for failure to keep and maintain information and document, etc., in respect of certain transactions	271AA
443	Penalty in respect of certain income	271AAC
444	Penalty for false entry, etc., in books of account	271AAD
445	Benefits to related persons	271AAE
446	Failure to get accounts audited	271B
447	Penalty for failure to furnish report under section 172	271BA
448	Penalty for failure to deduct tax at source	271C
449	Penalty for failure to collect tax at source	271CA
450	Penalty for failure to comply with provisions of section 185	271D
451	Penalty for failure to comply with provisions of section 186	271DA
452	Penalty for failure to comply with provisions of section 187	271DB
453	Penalty for failure to comply with provisions of section 188	271E
454	Penalty for failure to furnish statement of financial transaction or reportable account	271FA
455	Penalty for furnishing inaccurate statement of financial transaction or reportable account	271FAA
456	Penalty for failure to furnish statement or information or document by an eligible investment fund	271FAB
457	Penalty for failure to furnish information or document under section 171	271G
458	Penalty for failure to furnish information or document under section 506	271GA
459	Penalty for failure to furnish report or for furnishing inaccurate report under section 511	271GB
460	Penalty for failure to submit statement under section 505	271GC
461	Penalty for failure to furnish statements, etc.	271H
462	Penalty for failure to furnish information or furnishing inaccurate information under section 397(3)(d)	271-I
463	Penalty for furnishing incorrect information in reports or certificates	271J
464	Penalty for failure to furnish statements, etc.	271K
465	Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc.	272A
466	Penalty for failure to comply with the provisions of section 254	272AA
467	Penalty for failure to comply with the provisions of section 262	272B
468	Penalty for failure to comply with the provisions of section 397	272BB
469	Power to reduce or waive penalty, etc., in certain cases	273A
470	Penalty not to be imposed in certain cases	273B
471	Procedure	274
472	Bar of limitation for imposing penalties	275
CHAPTER XXII — OFFENCES AND PROSECUTION (Sections 473 to 498)
473	Prosecution to be at instance of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner	279
474	Disclosure of particulars by public servants	280
475	Certain offences to be non-cognizable	279A
476	Punishment for failure to pay tax to the credit of Central Government under Chapter XIX-B or tax or penalty under section 398(4)	276B
477	Wilful failure to furnish returns of income	276CC
478	Wilful failure to furnish returns of income, fringe benefits or to produce accounts and documents	276D
479	False statement in verification, etc.	277
480	Falsification of books of account or document, etc.	277A
481	Abetment of false return, etc.	278
482	Punishment for second and subsequent offences	278A
483	Offences by companies	278B
484	Offences by Hindu undivided families	278C
485	Proof of entries in records or documents	278E
486	Punishment for failure to comply with provisions of section 245	276A
487	Punishment for failure to comply with provisions of section 248	276AB
488	Punishment for failure to pay tax collected at source	276BB
489	Wilful attempt to evade tax, penalty or interest	276C
490	Failure to furnish returns, statements or particulars	276CCC
491	Failure to comply with provisions relating to Permanent Account Number	276B, 272B
492	Failure to comply with provisions relating to Tax Deduction Account Number	276B
493	Failure to comply with provisions relating to statement of financial transaction	276D
494	Failure to furnish information or document under section 506	276D
495	Failure to furnish report under section 511	276D
496	Offences under this Act to be tried by Special Court	280A
497	Application of Code of Criminal Procedure to proceedings before Special Court	280B
498	Special Court to have powers of Court of Session	280C
CHAPTER XXIII — MISCELLANEOUS (Sections 499 to 536)
499	Appearance by registered valuer in certain matters	287
500	Appearance by authorised representative	288
501	Rounding off of income and tax, etc.	288A, 288B
502	Indemnity	293
503	Bar of suits in civil courts	293
504	Publication of information respecting assessees	287
505	Statement by non-profit organisation	285BA
506	Furnishing of information or document by prescribed reporting financial institution	285BA
507	Obligation to furnish statement or information or document by an eligible investment fund	285BAA
510	Power to tender immunity from prosecution	278AB
511	Reporting by producers of cinematograph films or persons engaged in specified activity	285B
512	Power of Central Government to make exemption, reduction in rate or other modification in respect of tax in favour of certain class of income or class of persons	295
513	Power of Board to issue orders, instructions and directions to income-tax authorities	119
514	Instructions to subordinate authorities	120
515	Jurisdiction of income-tax authorities	124
516	Power to transfer cases	127
517	Service of notice generally	282
518	Authentication of notices and other documents	282A
519	Requisitioning of services of police officers, etc.	132A
520	Disclosure of information in respect of assessee	138
521	Faceless jurisdiction of income-tax authorities	130
522	Faceless collection of information	133C
523	Faceless approval or registration	293D
524	Faceless enquiry or valuation	142B
525	Faceless proceedings before appellate authorities	250
526	Power to remove difficulties	298
527	Power to make rules	295
528	Laying of rules and notifications before Parliament	296
529	Repeal and savings	297
530	Power to exempt from operation of Act	294A
531	Validation of certain actions	292B
532	Return of income, etc., not to be invalid on certain grounds	292B
533	Notice, summons or other proceeding not to be invalid on certain grounds	292BB
534	Admissibility of micro films, facsimile copies of documents and computer printouts as documents and as evidence	282A
535	Act to have effect pending legislative provisions for charge of tax	294
536	Power to make adaptations and modifications	298

Schedules under Income Tax Act, 2025

Schedule	Subject Matter
Schedule I	Conditions for certain activities not to constitute business connection in India
Schedule II	Income not to be included in total income
Schedule III	Income not to be included in total income of eligible persons
Schedule IV	Income not to be included in total income of eligible non-residents, foreign companies and other such persons
Schedule V	Income not to be included in total income of certain eligible persons including investment funds, business trusts and their unit holders
Schedule VI	Income not to be included in total income of certain eligible persons in International Financial Services Centre or having income therefrom
Schedule VII	Persons exempt from tax
Schedule VIII	Income not to be included in the total income of political parties and electoral trusts
Schedule IX	Deduction for tea development account, coffee development account and rubber development account for computing income under the head "Profits and gains of business or profession"
Schedule X	Deduction for site restoration fund for computing income under the head "Profits and gains of business or profession"
Schedule XI	Recognised provident funds, approved superannuation funds and gratuity funds (see Parts A to C)
Schedule XII	Minerals (see Parts A and B)
Schedule XIII	List of articles or things
Schedule XIV	Insurance business
Schedule XV	Deduction in respect of life insurance premia, contribution to provident fund, subscription to certain equity shares, etc.
Schedule XVI	Permitted modes of investment or deposits by a registered non-profit organisation

Major Structural Improvements

• Provisions are now arranged in a more logical sequence
• Redundant and overlapping sections have been merged
• Language is simpler and modern
• Many explanations and provisos have been absorbed into the main section text
• Better cross-referencing and use of tables/formulas where possible

Key Highlights of Income Tax Act, 2025

• Introduction of "Tax Year" concept (replacing Previous Year & Assessment Year terminology in many places)
• Reorganized chapters covering everything from Preliminary provisions to Miscellaneous
• Enhanced focus on faceless compliance, digital processes, and reduced human interface
• Updated provisions for non-residents, international transactions, and anti-avoidance rules
• Clearer treatment for charitable organizations, business trusts, and pass-through entities

Conclusion

The Income Tax Act, 2025 marks the beginning of a new era in Indian taxation — one that prioritizes simplicity, transparency, and ease of doing business. While the transition may require some initial effort from taxpayers and professionals to understand the new structure and section mapping, the long-term benefits in terms of reduced compliance cost and fewer disputes are expected to be substantial.

For tax professionals and businesses, this is the right time to familiarize themselves with the new Act and update their systems and processes accordingly.

Key Takeaways:

• 35% reduction in number of sections (from 819+ to 536)
• Simplified language and better logical organization
• No tax rate changes — it's a restructuring exercise
• Enhanced digital focus with faceless procedures
• Effective from 1st April 2026 onwards