How Long Will the Old Tax Regime Continue? CBDT Chairman Speaks on Transition to New Income Tax Act

New Delhi — While the majority of taxpayers have already migrated to the new tax regime, the government has not yet officially phased out the old system. With the Income Tax Act 2025 set to replace the 1961 law starting April 1, 2026, many are asking: how long will the old tax regime continue?

Simplified forms and rules

In an exclusive interview with NBT, CBDT Chairman Ravi Agrawal confirmed that all forms and rules under the new Income Tax Act 2025 will be notified this month. “We first simplified the language and then updated the rules and forms,” Agrawal said. “Several forms have been made smarter, some have been discontinued. The objective is to make compliance easier while ensuring the data collected is better utilized.”

Key changes in forms

Agrawal noted that while most ITR forms will see minimal changes, several others—including Forms 15C, 15CC, 60, 61, 80G, 80GG, audit forms, foreign tax credit forms, and forms related to trusts and NPOs—will be updated. FAQs will also be issued alongside the new law for taxpayers’ reference. These forms will apply to returns filed for FY 2026-27.

No fixed timeline for phasing out old tax regime

When asked about ending the old tax regime, Agrawal clarified, “There is no current plan to discontinue it. However, for Assessment Year 2025-26, about 88% of taxpayers have opted for the new tax regime, up 12% from last year. Similarly, 97% of ITR-4 filers and 60% of corporate income is now under the new regime.”

Reporting foreign assets

On the issue of reporting overseas assets within six months—a provision highlighted in the budget—Agrawal explained that this is meant to provide taxpayers a one-time opportunity to correct inadvertent omissions. “Limits are set at ₹1 crore income (approx. $100,000) or ₹5 crore in foreign assets. Forgetting to report interest from foreign bank accounts or ESOPs is not considered black money, though defaults under the Black Money Act are treated differently.”

Compliance campaigns bear fruit

Agrawal also highlighted the success of the SAKSHAM initiative, a multi-faceted “nudge campaign” designed to encourage voluntary compliance. Over the past two years, it has helped generate an additional ₹8,800 crore in tax collections. “The campaign includes messaging, education, and assistance in complying with rules,” he said.