CBDT Unveils Draft Income-tax Rules, 2026: Fewer rules, smarter ITRs, public consultation open

The Central Board of Direct Taxes (CBDT) has released the draft Income-tax Rules, 2026, and opened public consultations on the proposed framework, signalling the government’s push to simplify tax compliance ahead of the new Income-tax Act coming into force from April 1, 2026.

The draft rules, along with redesigned tax forms, will be available for public comments for 15 days till February 22, 2026. The tax department said the consultation exercise is aimed at involving stakeholders more closely in the process of finalising subordinate legislation.

According to officials, the proposed rules have been recast to match the framework of the Income-tax Act, 2025, with a focus on clearer language and streamlined provisions. The rules have been consolidated through the elimination of overlapping sections, which allows for the introduction of table and formula-based layouts in all applicable areas. The draft also lays down detailed procedures on issues such as determining the holding period of capital assets in specific scenarios, notification norms for zero coupon bonds and the processing of applications submitted by infrastructure entities.

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Also Read: Income tax slabs unchanged in Budget 2026; no extra relief for taxpayers

ITR forms redesigned to cut compliance burden

Alongside the rules, the CBDT has released a fresh set of income-tax return forms that have been reworked to make filing simpler and more user-friendly. The department said common data fields have been standardised across forms to avoid repetitive disclosures.

The new forms are designed to support pre-filled information and automated reconciliation, a move the tax department believes will significantly reduce errors and improve the overall filing experience. The language used in the forms has also been simplified to minimise interpretational or legal ambiguity.

Fewer rules, fewer forms

A key feature of the draft framework is the substantial reduction in the number of rules and forms. The existing Income-tax Rules, 1962 run into hundreds of provisions and formats, making compliance complex for taxpayers.

“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,” a CBDT note said.

To help users navigate the transition, the government has introduced two digital navigators — one mapping the current rules to the draft rules and another linking the existing forms with the proposed formats. The feedback mechanism has also been structured to allow submissions on individual rules and forms.

The tax department said inputs received during the consultation window will be examined before finalising the subordinate legislation under the new income-tax regime.

Also Read: New Income Tax Bill 2025: What changes, what remains, and how it may impact taxpayers

Foreign investments and digital presence under control

The new rules also tighten oversight of foreign companies and non-residents earning in India but previously avoiding taxation. If foreign assets derive their value from Indian assets, they will now be taxed in India using a specified formula. For digital businesses and online platforms, the criteria for “Significant Economic Presence” have been made stricter to ensure India collects its rightful taxes.

Medical relief for critical illnesses retained

Amid these stringent rules, the government has preserved humanitarian considerations. Medical exemptions for cancer, heart disease, neurological disorders, and severe burn cases will continue. Strict hospital eligibility criteria ensure that tax relief is granted only to those who genuinely need it.