With less than two months to go before India’s biggest direct tax overhaul in six decades takes effect, the income-tax (I-T) department has invited public and stakeholder feedback on the draft Income-tax Rules and Forms, 2026, signalling the final phase of preparations for the new Income-tax Act (I-T Act), 2025.
In a post on X, the department says the draft rules and forms have been placed in the public domain to make the rule-making process 'more participative and effective', ahead of the new law coming into force from 1 April 2026. Navigators mapping the existing rules and forms with their draft counterparts have also been shared to help taxpayers and professionals track changes more easily.
The invitation follows a formal release issued by the central board of direct taxes (CBDT), which confirmed that the I-T Act, 2025 received presidential assent in August last year and is now set for implementation from the next financial year.
“Before final notification of the Income-tax Rules and Forms, to encourage wider stakeholder participation, the proposed Rules and Forms have been uploaded on the official website,” the department says, urging taxpayers, professionals and industry bodies to study the drafts and submit suggestions.
CBDT has identified four broad areas where inputs are being sought: simplification of language, reduction of litigation, reduction of compliance burden, and identification of redundant or obsolete rules and forms. Officials say the objective is to ensure that the subordinate legislation reflects the spirit of the new Act, which aims to make tax law clearer and easier to comply with.
To facilitate the process, a dedicated utility has been launched on the I-T e-filing portal. Stakeholders can submit their suggestions after entering their name and mobile number, followed by OTP-based verification. The utility went live on 4 February 2026 and is open to all members of the public.
The department has asked that all suggestions clearly specify the relevant provision of the draft rules or the form number, including the specific rule, sub-rule or form, under which the recommendation is being made.
The consultation on rules comes months after Parliament cleared the Income-tax Bill, 2025 during a stormy Monsoon Session in August last year. As
reported by Moneylife at the time, the Bill was passed by voice vote amid loud opposition protests over the special intensive revision (SIR) of electoral rolls, with slogans raised inside the House even as the treasury benches pressed ahead with the legislative agenda.
Moved by Union finance minister Nirmala Sitharaman, the Bill, 2025 replaces the six-decade-old Income-tax Act, 1961. According to the government, the new law incorporates more than 285 recommendations of a Parliamentary select committee chaired by Bharatiya Janata Party (BJP)'s member of Parliament (MP) Baijayant Panda.
The legislation seeks to simplify tax language, improve internal cross-referencing and remove long-standing ambiguities that have often led to disputes. It brings clearer treatment of income from house property, including standard deductions and the handling of pre-construction interest on home loans, according to the Moneylife report.
The new Act also introduces sharper definitions for key terms such as ‘capital asset’, ‘micro and small enterprises’ and ‘beneficial owner’, while aligning tax treatment for pension contributions and scientific research expenditure.
Alongside it, Parliament also cleared the Taxation Laws (Amendment) Bill, 2025, which made targeted changes to existing provisions. These included extending tax exemptions to subscribers of the unified pension scheme (UPS) in line with benefits under the new pension scheme (NPS), granting tax relief to the Public Investment Fund of Saudi Arabia and its subsidiaries under Section 10(23FE), and streamlining provisions related to block assessments in income-tax search cases, says the Moneylife report.
With the parent legislation already in place, attention has now shifted to the rules and forms that will determine how the law operates on the ground. Tax experts have long argued that ambiguously drafted rules and frequent changes to forms add to compliance costs and litigation, particularly for small businesses and individual taxpayers.
By opening the draft rules for comments, the department appears to be attempting to pre-empt such issues. Officials say the feedback received will be compiled and reviewed before the final notification of the rules and forms.
The use of navigators to map old and new provisions is also being seen as a nod to taxpayers and professionals grappling with the scale of the transition. Once implemented, the new Act will require changes across return forms, reporting formats and compliance workflows.
However, the tight timeline leaves little room for error. With the law set to apply from the start of the 2026–27 assessment cycle, any delays or confusion around the final rules could have ripple effects during the return-filing season.
