India’s income tax system is set to undergo a major overhaul from April 1, 2026, with the Income Tax Department releasing the draft Income-Tax Rules, 2026 along with proposed new income-tax return (ITR) forms.
The draft rules offer the first detailed view of how the Income‑tax Act, 2025 will be implemented in practice. The department has invited public comments on the proposals for 15 days, until February 22, 2026, encouraging taxpayers, professionals and industry bodies to share feedback.
Officials said the consultation exercise is aimed at making the rule-making process more transparent, participative and grounded in real-world compliance needs.
Transition to the New Tax Framework
While the new Act lays out the broad legal structure, the rules and return forms will determine how taxpayers interact with the system on a day-to-day basis. According to the tax department, the redesigned framework is built around four objectives: simpler compliance, reduced ambiguity, greater use of technology, and a lower burden on taxpayers.
The changes are intended to make tax filing more intuitive for individuals while improving efficiency and certainty for businesses.
Smarter ITR Forms and Pre-Filled Returns
One of the most significant changes proposed is a complete redesign of ITR forms. The department plans to introduce “smart forms” that rely heavily on pre-filled data, automated cross-verification and centralised processing.
Common information has been standardised across forms to reduce duplication, meaning taxpayers will no longer need to repeatedly enter the same details. For salaried individuals and small taxpayers, this could result in cleaner returns and fewer mismatches. For businesses, it may help reduce follow-up notices and shorten assessment timelines.
Officials also see this as a step towards data-driven tax administration with reduced manual intervention.
Clearer Language and User-Friendly Instructions
The draft rules and forms use simpler language, with explanatory notes rewritten to remove legal and operational confusion. The department believes clearer drafting will improve understanding of tax provisions and support both ease of living and ease of doing business.
To help users navigate the transition, two reference tools have been released. One maps the existing rules to the new draft rules, while the other links current ITR forms to the proposed ones. Feedback is being collected separately for each rule and form to allow structured evaluation.
Phasing Out Outdated Provisions
Tax experts note that the draft rules reflect a long-awaited clean-up of legacy provisions that no longer align with today’s digital economy. Across the proposed forms, electronic filing becomes the default, simplified returns are more narrowly defined, and disclosure requirements are more structured and detailed.
This shift signals a move toward greater standardisation and deeper data reporting across the tax system.
What Taxpayers Should Do Now
The government has stressed that the drafts are not final. Taxpayers and professionals have until February 22, 2026 to review the proposals and flag practical challenges or inconsistencies.
Although familiar ITR form numbers may remain when the new law comes into force on April 1, 2026, the way income is reported and returns are filed is expected to change in meaningful ways. The feedback gathered during this consultation period will play a crucial role in shaping the final version of India’s revamped income-tax framework.
Originally published on 24×7-news.com.
