Draft Income-Tax Rules 2026 Aim To Simplify Compliance, Cut Disputes

The Income Tax Department has released the draft Income-tax Rules, 2026, marking a major step towards simplifying tax compliance and improving ease of filing for both individuals and businesses. The draft rules, which will come into force from April 1 this year along with the new I-T Act and are set to be notified soon, place strong emphasis on faceless assessments, simplification, technology-driven processes and reduction of interpretational disputes.

Open for public consultation till February 22, the proposed framework significantly pares down the number of rules and forms, introduces simplified language, standardised disclosures and smart, pre-filled forms, and aims to make tax administration more transparent, intuitive and taxpayer-friendly.

According to CBDT, the drafting of new Income-tax Rules and forms has followed the same philosophy as that of the new Income-tax Act 2025. The language of the rules has been simplified to the extent possible.  Formulas and tables have been provided wherever necessary. Redundancy in the Income-tax Rules, 1961 has been sought to be eliminated.  While preserving the larger content of the policy, certain changes have been introduced in line with the changes in the Income-tax Act, 2025.  

Moreover, the forms - which are part of the draft rules - have also been simplified to a large extent for the ease of the tax payers. Standardization of common information has been done across the forms with a view to reducing the compliance burden of the tax payers.  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.  They would also enable centralised processing and data driven decision making so that the technology is used to provide better services to the taxpayers.  The language of the forms has also been simplified so as to avoid any operational, administrative or legal ambiguity.

It may be noted that the Income-tax Rules, 1962 contains 511 rules and 399 forms.  As a result of the changes proposed in new rules and forms, including removal of redundancy and consolidation of rules wherever possible, draft Income-tax Rules, 2026 contains 333 rules and 190 forms.

Commenting on the release of draft tax rules, Sandeepp Jhunjhunwala, Partner at Nangia Global, said the decision to release the draft rules well in advance for public consultation reflects a commendable commitment to participatory governance. Equally 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. A marked difference also appears to have been made in the definition of Accountant for the purpose of various certification under the new Income Tax Act, which now stands revised to individual professionals with not less than 10-year experience and annual receipt in the year preceding certification to be more than Rs 50 lakh and in case of Partners in any entity engaged in rendering accountancy or valuation services, the annual receipt of the entity in the year preceding certification, exceeds Rs 3 crore,” Jhunjhunwala added

Richa Sawhney, Partner Tax, Grant Thornton Bharat LLP, said in line with the New Income-Tax Act, the new rules have also been drafted to ensure they are simple to comprehend and easy to comply with, for all categories of taxpayers. 

“The number of rules and forms has been significantly reduced, as redundant ones have been removed. The use of tables will help in better navigation. The focus on technology in ensuring the forms are pre-filled and reconciled will reduce the time spent in compliances and reduce inadvertent errors. It is important that all stakeholders evaluate these rules and forms in detail and share their inputs with the government in a timely manner, so that any teething issues in implementation are mitigated and there is a smooth transition,” Sawhney said.

The draft Income Tax Rules 2026, thus, signal a clear shift towards simplification and certainty for taxpayers.

“For the common man, measures such as expanded use of pre-filled returns, clearer reporting thresholds, and faceless assessments can reduce errors and unnecessary personal interface with the tax department. For corporates, sharper rule-making and rationalised reporting requirements can help lower interpretational disputes, allowing businesses to focus more on growth rather than prolonged litigation,” said Riaz Thingna, Partner, Grant Thornton Bharat.