The Income Tax Department has released the Draft Income Tax Rules, 2026, offering taxpayers, professionals, and stakeholders a first look at how the upcoming New Income Tax Act, 2025 will be implemented in practice. The government has invited public suggestions and feedback on these draft rules until February 22, 2026, ahead of the law’s rollout from April 1, 2026.
The new legislation is set to replace the decades-old Income Tax Act, 1961, marking one of the most significant reforms in India’s direct tax framework in over 60 years. Finance Minister Nirmala Sitharaman announced the new Act during the Union Budget 2026 presented on February 1, emphasizing the government’s intent to simplify tax laws without altering their core principles.
While the Income Tax Act lays down the legal framework for taxation, the rules explain the practical process—how taxpayers will comply, how professionals will interpret provisions, and how authorities will enforce them. The newly released draft rules provide clarity on procedures, documentation, and implementation mechanisms under the proposed law.
One of the most notable changes is the significant reduction in the number of rules. The Income Tax Act, 1961, had 511 rules, which have now been streamlined to 323 rules in the new framework. According to experts, this rationalization is aimed at reducing complexity and making compliance easier for individuals and businesses alike.
The government has repeatedly clarified that the new Income Tax Act does not introduce major changes in tax rates or core tax policies. Instead, the emphasis is on simplifying language, removing ambiguities, and restructuring provisions in a more logical and user-friendly manner.
Tax experts believe that this approach will make the law more accessible, especially for individual taxpayers who previously struggled to understand technical provisions under the old Act.
Industry professionals expect that the new law, along with simplified rules, will make income tax return (ITR) filing smoother and less dependent on intermediaries. Under the old Act, many taxpayers had to rely heavily on chartered accountants and tax consultants due to the complexity of rules and interpretations.
Delhi-based Chartered Accountant Pratibha Goyal noted that the reduced number of rules and simplified drafting would help professionals and taxpayers better understand various aspects of the law. She added that the new framework appears far more structured compared to the previous Act, which had evolved through numerous amendments over decades.
It is important to note that the draft rules are not final. The government will review feedback received from tax professionals, industry bodies, and corporate entities before issuing the final notification. Any revisions or clarifications deemed necessary will be incorporated prior to implementation.
Once approved, the final rules will be notified along with the new Income Tax Act and will come into effect from April 1, 2026.
Experts also anticipate that following the finalization of rules, new income tax return forms aligned with the revised law will be released soon, giving taxpayers sufficient time to prepare for the transition.
Taxpayers and professionals are encouraged to review the draft rules carefully and submit their feedback within the stipulated deadline. Early engagement will help ensure smoother adoption of the new tax regime and reduce confusion during the initial phase of implementation.
