The IT Department issues draft rules and models for the new income tax law; Seeks public input

The Tax Department on Saturday (February 7, 2026) released draft rules and forms under the new Income Tax Act, 2025, which proposes to simplify the provisions and reduce the burden of compliance for ease of understanding and making it taxpayer-friendly.

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

Is the new income tax law easier? | He explained

The Income Tax Department has sought feedback from stakeholders on the draft Income Tax Rules 2026 and forms by February 22. Thereafter, rules and forms will be notified under the new law.

The Income Tax Rules, 1962 contain 511 rules and 399 forms. While inviting comments from stakeholders, the I-T Department said that as a result of the proposed changes in rules and new forms, including removing redundancy and consolidation of rules wherever possible, the draft Income Tax Rules 2026 contain 333 rules and 190 forms.

Regarding the new income tax forms, she said that they have been greatly simplified in order to make it easier for taxpayers. The information shared across forms has been standardized to reduce the compliance burden on taxpayers.

“The forms have been intelligently designed to provide automated reconciliation as well as pre-fill capabilities to make filing easier and less error-prone. These smart forms will greatly facilitate the filing process and enhance the user experience,” she said.

She added that the language of the forms has also been simplified to avoid any operational, administrative or legal ambiguity.

The rationalizations implemented in the rules are expected to simplify the provisions, which will help in ease of comprehension and understanding. The tax department said the simplification of the proposed process will help in overall ease of living and ease of business across all sectors of taxpayers.

Along with the draft rules and new models, two navigators are provided – one providing mapping of the old rules and draft new rules and a second providing mapping of the old models and draft new models as well to guide stakeholders and the public.

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

“Taken together, these measures indicate a thoughtful and forward-looking approach to legislative implementation,” he said.

Mr. Jhunjhunwala also said that a notable difference also appears to have been made in the definition of an accountant for the purpose of various certifications under the new Income Tax Act, which has now been revised to include individual professionals with at least 10 years of experience and annual receipts in the year preceding the certification to be more than INR 50 lakh.

For associates, if any entity engaged in providing accounting or valuation services has annual receipts in the year preceding the certification exceeding Rs 3 lakh crore.

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