Digital Tax Governance and Legislative Simplification: Income Tax Act, 1961 vs. 2025 — A Study in the Context of Viksit Bharat 2047

Abstract

The most significant legislative change in India’s direct tax system since independence is the passage of the Income Tax Act, 2025 (ITA 2025) which revokes and replaces the Income Tax Act, 1961 (ITA 1961) after over six decades of service. The paper undertakes a comparative analytical study of the provisions of digital tax governance and legislative simplification measures embedded in ITA 2025 vis-à-vis the corresponding framework of ITA 1961 in the context of India’s developmental vision of Viksit Bharat 2047. The research design is descriptive and analytical. Secondary data is used and obtained from statutory texts, official government documents, white papers from professional bodies, peer-reviewed academic journals and expert commentary from leading institutions. This inquiry is undertaken with three central research objectives: (i) to compare the digital governance architecture of ITA 2025 vis-à-vis ITA 1961; (ii) to analyse legislative simplification in terms of structural, procedural and linguistic reforms; and (iii) to evaluate the reforms in light of the Viksit Bharat 2047 developmental framework. The research uses a SWOT model as well as a systematic comparative matrix. The findings reveal that the ITA 2025 brings about a real paradigm shift through faceless assessment, AI-enabled audits, mandatory e-recordkeeping, codified provisions for virtual digital assets and clear alignment with the OECD’s Base Erosion and Profit Shifting (BEPS) framework. The new Act is almost fifty per cent shorter in word count, introduces a unified tax year replacing the previous year and assessment year dichotomy and substantially reduces procedural ambiguity. The paper finds ITA 2025 to be a strong fiscal governance architecture aligned to India’s 2047 aspirations and recommends specific strategies for digital infrastructure, taxpayer education and transitional dispute management to unlock its potential.