Income-tax Act 2025 to Replace 1961 Law from April 1, Reporting Rules Revamped, Meal Benefits and HRA Relief Expanded
New Delhi, March 30 (TNA) India is set to witness a major shift in its taxation framework as the six-decade-old Income-tax Act, 1961, will be replaced by the new Income-tax Act, 2025. The government has described the move as a complete rewrite of the law rather than a change in tax rates, emphasising that income tax slabs will remain unchanged.
The overhaul focuses on simplifying compliance while making tax reporting more precise, transparent, and system-driven. From April 1, salaried individuals will no longer receive Form 16 from employers. Instead, a new Form 130 will be introduced, offering detailed salary, deductions, and tax computation, directly validated with TDS filings. This shift aims to reduce discrepancies and ensure faster error detection during income tax return (ITR) filing.
The new framework also introduces significant changes in reporting requirements across categories. Investors and high-income individuals will face more detailed disclosures, while NRIs will need to comply with stricter cross-border asset reporting norms. The filing process itself will become more automated, with pre-filled and auto-validated forms improving accuracy but requiring taxpayers to be more cautious.
Overall, the new tax law signals a shift toward smarter compliance, improved transparency, and digitisation, making tax filing simpler yet more accountable for all categories of taxpayers.
Among the key highlights is a substantial increase in tax benefits on meal allowances. Employees receiving meal cards or vouchers such as Sodexo, Pluxee, or Zaggle can now claim exemption up to ₹200 per meal, compared to the earlier ₹50 limit. This means that for two meals a day, up to ₹400 can be tax-free, translating to an annual benefit of over ₹1 lakh, depending on employer structuring.
House Rent Allowance (HRA) rules have also been expanded. The 50% exemption category, previously limited to metro cities like Delhi, Mumbai, Kolkata, and Chennai, will now include Bengaluru, Hyderabad, Pune, and Ahmedabad.
Other cities will continue under the 40% exemption bracket. Additionally, stricter disclosure norms, including mandatory tenant-landlord relationship details, aim to curb fake claims.