Income Tax Update 2026: A new era is about to begin in India’s direct tax history. The Income Tax Department has released the Draft Income Tax Rules, 2026, which will lay down a detailed framework for the Income Tax Act, 2025, which will come into effect on April 1, 2026. This move will replace the six-decade-old Income Tax Rules, 1962. The government has put these rules out for public discussion so that taxpayers and experts can understand them and provide feedback by February 22, 2026.
Only 333 Rules Compared to 511
The most important aspect of the new rules is their brevity and simple language. The 511 complex rules that have been in place for the past 60 years have been reduced to just 333. Similarly, the number of tax forms has also been reduced from 399 to 190. The government’s primary objective is to remove outdated provisions and merge rules to facilitate tax evasion and reduce litigation during tax filing.
Smart Forms and Modern Technology
Under the new rules, Income Tax Return (ITR) forms have been made “smart.” These forms will include advanced features like automated reconciliation and pre-fill. This means that most of the information related to your income, investments, and tax deductions will be pre-populated into the forms, minimizing the possibility of human error. Furthermore, the Central Processing Center (CPC) will now be able to make data-based decisions more quickly, significantly reducing the refund processing time.
Operational Clarity in Key Areas
The draft rules have focused on areas where disputes have often arisen. These include determining the fair market value (FMV) of assets (such as jewelry and property) and providing clear methods for calculating the holding period of capital assets.
Additionally, reporting rules for cryptocurrencies and digital assets have been tightened to align with international standards. The tax assessment rules for perks for salaried employees, such as housing, cars, and other amenities, have also been updated to eliminate any ambiguity.
Important Dates and Upcoming Steps
It is important to note that these rules are currently in draft form. Necessary amendments will be made based on feedback from the public, industry bodies, and tax professionals. They will then be finalized and implemented with the new law from April 1, 2026.
As per Budget 2026, the proposal to extend the return filing deadline for non-audited businesses from July 31 to August 31 is also part of this new framework, while the July 31 date for salaried employees will remain unchanged.
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Vikram Singh
Author at TimesBull covering breaking news and current affairs.
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