I-T dept releases draft rules, forms for new Income Tax Act; seeks public inputs

A new and simplified Income Tax Act, 2025, which will replace the over six-decade-old Income Tax Act of 1961, will come into effect from April 1.

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The Income Tax department has sought comments from stakeholders on the draft Income-tax Rules, 2026, and forms by February 22. Thereafter, the rules and forms under the new Act will be notified.

The Income-tax Rules, 1962 contains 511 rules and 399 forms. As a result of the changes proposed in the new rules and forms, including the removal of redundancy and consolidation of rules wherever possible, the draft Income-tax Rules, 2026 contains 333 rules and 190 forms, the I-T department said while inviting stakeholder comments.

With regard to the new income tax forms, it said that they have been simplified to a large extent for the ease of the taxpayers. Standardisation of common information has been done across the forms with a view to reducing the compliance burden of the taxpayers.

“Forms have been designed in a smart way so as to provide for automated reconciliation and also prefill capabilities so as to make filing more intuitive and less error-prone. These smart forms would considerably ease the filing and enhance the user experience,” it said.

The language of the forms has also been simplified so as to avoid any operational, administrative or legal ambiguity, it added.

Rationalisations carried out in the Rules are expected to simplify the provisions, which will help in the ease of understanding and comprehension. The process simplifications proposed will help in ease of living and general ease of business across all sections of taxpayers, the tax department said.

Along with the new draft rules and forms, two navigators – one providing the mapping of the old rules and the new draft rules and the second providing the mapping of the old forms and the new draft forms is also provided for the guidance of stakeholders and the public.

Nangia Global Partner Sandeepp Jhunjhunwala said what is noteworthy is the long-overdue rationalisation of archaic perquisite thresholds, such as tax-free at-work meal value, gift received from employer, etc. – a reform that has been widely sought and brings the income tax framework closer in line with contemporary economic realities.

“Together, these measures signal a thoughtful and forward-looking approach to legislative implementation,” he said.

Mr. Jhunjhunwala further said that a marked difference also appears to have been made in the definition of Accountant for the purpose of various certifications under the new Income Tax Act, which now stands revised to individual professionals with not less than 10 years of experience and annual receipts in the year preceding certification to be more than ₹50 lakhs.

For partners, if any entity engaged in rendering accountancy or valuation services has annual receipts in the year preceding certification that exceed ₹3 crore.

Grant Thornton Bharat LLP Partner Tax Richa Sawhney said the focus on technology in ensuring the forms are pre -filled and reconciled will reduce the time spent in compliance and reduce inadvertent errors.