The Income Tax Department has released the draft of the Income Tax Rules, 2026, aiming to make tax filing easier and more user-friendly for common taxpayers. The proposed rules were issued on Saturday and are scheduled to come into force from April 1, 2026, starting with the next financial year.
According to the draft, the government plans to significantly reduce complexity in the tax system by cutting down the number of rules and forms. At present, the Income Tax Rules of 1962 include 511 rules and 399 forms. Under the new draft, these will be reduced to 333 rules and 190 forms. Officials say unnecessary and outdated provisions have been removed, while similar rules have been merged to avoid confusion.
One of the major highlights of the draft is the simplification of language used in tax forms. The government wants ordinary taxpayers to understand tax rules without needing expert help. Forms and guidelines have been rewritten in clear and user-friendly language to reduce administrative and legal difficulties.
The Central Board of Direct Taxes (CBDT) has made the draft rules available for public review. Taxpayers and stakeholders can submit their suggestions and feedback until February 22, 2026. The government believes public consultation will help make the final rules more effective and practical. The final version will be notified after considering the responses received.
The proposed Income Tax Bill also introduces several structural changes. The term “Assessment Year” will be replaced with “Tax Year” to make terminology simpler. The number of pages in the bill has been reduced from 823 to 622, while the number of chapters remains the same at 23. However, the number of sections has increased from 298 to 536, and schedules have been increased from 14 to 16 to clearly present different provisions.
Another important change relates to digital assets. Undisclosed crypto assets will now be treated as undisclosed income, similar to cash, bullion, or jewellery. This move is aimed at ensuring transparency and proper regulation of digital transactions.
The bill also includes a Taxpayers’ Charter to protect the rights of taxpayers and improve transparency in tax administration. It clearly defines the powers and responsibilities of tax authorities while safeguarding taxpayer interests. In addition, salary-related deductions such as standard deduction, gratuity, and leave encashment will now be listed in one place, making them easier to understand.
