The transition from the Income Tax Act, 1961 to the Income Tax Act, 2025 marks a historic reform in India’s tax system. Consequently, salaried individuals must adapt to new forms and renumbered sections. Although the essence of taxation remains similar, the government has simplified compliance, consolidated reporting, and aligned provisions with digital filing. Therefore, understanding the modified forms and sections for salaried persons is essential for accurate tax planning and filing.
Why the Change Matters
First, the old Act had scattered provisions, multiple overlapping forms, and complex numbering. As a result, taxpayers often struggled with compliance. However, the new Act streamlines processes, reduces duplication, and introduces clarity. Moreover, salaried employees—who form the largest group of taxpayers—benefit directly because their filing journey becomes smoother. Thus, the reform ensures fairness, transparency, and efficiency.
Modified Forms for Salaried Persons
The Income Tax Act, 2025introduces several new forms, replacing older ones. Importantly, these forms are digitally integrated with the e‑filing portal.
1. Form 130 (replaces Form 16): Employers issue this certificate for salary TDS. Consequently, employees use it while filing returns.
2. Form 168 (replaces Form 26AS): This consolidated annual statement displays tax credits, TDS, and other financial transactions. Therefore, taxpayers can verify compliance easily.
3. Form 121 (merges Form 15G and 15H): Salaried individuals and pensioners now submit one declaration for TDS exemption. Hence, duplication is eliminated.
4. Form 39 (replaces Form 10E): Employees claiming arrears relief under Section 157 must file this form. Consequently, relief is granted only if Form 39 is submitted before filing the return.
5. ITR‑1 and ITR‑2: These return forms remain but are restructured to align with new section references. Thus, salaried taxpayers continue using familiar formats with updated numbering.
Modified Sections for Salaried Persons
The renumbering of sections under ITA 2025 is equally significant. Although the substance remains, the references have changed.
· Section 392 (replaces Section 192): Employers deduct TDS on salary under this provision. Consequently, compliance becomes straightforward.
· Section 202 (replaces Section 115BAC): This section introduces the default tax regime. Therefore, employees automatically fall under the new regime unless they opt out.
· Section 123 (replaces Section 80C): Deductions for LIC, PPF, ELSS, and other investments are claimed here. Hence, savings continue to enjoy tax benefits.
· Section 125 (replaces Section 80D): Medical insurance premium deductions are allowed under this section. Consequently, health coverage remains incentivised.
· Section 128 and 129 (replaces Sections 80TTA and 80TTB): Interest deductions for savings accounts and senior citizens are covered here. Thus, small savings retain tax relief.
· Schedules II–IV (replaces Section 10 exemptions): Exempt allowances such as HRA, LTA, gratuity, and pension commutation are grouped under schedules. Therefore, exemptions are easier to locate.
· Section 157 (replaces Section 89): Relief on salary arrears is claimed here. Consequently, employees avoid excess tax due to lump‑sum arrears.
· Section 263 (replaces Section 139): Return filing requirements are specified here. Hence, compliance deadlines remain critical.
Practical Impact on Salaried Taxpayers
Because of these changes, salaried individuals must update their filing practices. For instance, they must request Form 130 instead of Form 16 from employers. Similarly, they must verify tax credits in Form 168 instead of Form 26AS. Moreover, pensioners and senior citizens must use Form 121 for TDS exemption. Therefore, awareness of new forms and sections is vital.
Furthermore, arrears relief now requires Form 39 under Section 157. Consequently, employees must file this form before submitting their return. Additionally, deductions under Section 123 (80C equivalent) continue to encourage savings. Thus, the new Act balances simplification with continuity.
Benefits of the Reform
The reform offers multiple advantages:
· Simplification: Consolidated forms reduce duplication.
· Clarity: Renumbered sections group similar provisions together.
· Digital Integration: All forms are available online, ensuring transparency.
· Fairness: Arrears relief and exemptions remain intact.
· Efficiency: Employers and employees save time during compliance.
Therefore, the Income Tax Act, 2025 strengthens trust between taxpayers and the system.
Common Mistakes to Avoid
Although the new Act simplifies compliance, taxpayers must remain cautious. For example, they should not forget to file Form 39 for arrears relief. Similarly, they must ensure that deductions are claimed under the correct renumbered sections. Moreover, they should verify that Form 130 matches salary slips. Consequently, careful attention prevents disputes during assessment.
Step‑by‑Step Filing Guide for Salaried Persons
1. Collect Form 130 from your employer.
2. Download Form 168 from the e‑filing portal.
3. Submit Form 121 if eligible for TDS exemption.
4. File Form 39 for arrears relief under Section 157.
5. Prepare ITR‑1 or ITR‑2 with updated section references.
6. Verify deductions under Sections 123, 125, 128, and 129.
7. Submit return under Section 263 before the due date.
Thus, compliance becomes structured and seamless.
Highlights for Salaried Taxpayers
· Standard Deduction: Raised to ₹75,000 under Section 202.
· Arrears Relief: Claimed via Form 39 under Section 157(1).
· TDS Compliance: Only 3 consolidated TDS sections (392–394) instead of 69 scattered provisions.
· Exemptions: All salary‑related exemptions (HRA, LTA, gratuity, pension) are now grouped under Schedules II–IV.
· Return Filing: ITR‑1 and ITR‑2 continue, but mapped to new section references.
Conclusion
In conclusion, the Income Tax Act, 2025 modernises taxation for salaried persons by introducing new forms (Form 130, Form 168, Form 121, Form 39) and renumbered sections (392, 202, 123, 125, 128, 129, 157, 263). Although the changes require adaptation, they ultimately simplify compliance, enhance transparency, and ensure fairness. Therefore, salaried individuals must familiarise themselves with these modifications to file returns accurately. Ultimately, the reform reflects the government’s commitment to equitable taxation, ensuring that salaried taxpayers experience a smoother, more efficient process.
