Government Seeks Public Input on New Income Tax Rules for 2026

The government has announced that the current Income-tax Act, 1961, will be replaced by a new law called the Income-tax Act, 2025, which will come into effect from April 1, 2026. As part of this transition, the Central Board of Direct Taxes (CBDT) has invited public and stakeholder suggestions on the draft Income-tax Rules and Forms that will support the new law. This initiative aims to make the tax process clearer and easier for taxpayers, reduce legal disputes, lessen the compliance load on taxpayers, and remove outdated rules that are no longer useful. The draft rules and forms related to the Income-tax Act, 2025, are now available on the official website of the Income Tax Department. Stakeholders are encouraged to review these documents and submit their ideas or concerns. The online portal for submitting these inputs has been open since February 4, 2026. The government requests suggestions in four main areas. First, it seeks simplification of language used in the rules and forms to make them more understandable. Second, it aims to identify ways to reduce litigation, which refers to legal disputes related to tax matters. Third, it looks for ways to decrease the compliance burden on taxpayers, making it easier to follow tax rules. Lastly, it invites suggestions to identify and eliminate rules or forms that are redundant or outdated. All suggestions must specify the exact rule, sub-rule, or form number they refer to, helping the authorities understand the context clearly. Participants are asked to submit their inputs by February 22, 2026. The new draft Income-tax Rules contain 333 rules and 190 forms, which is fewer than the 511 rules and 399 forms in the older Income-tax Rules, 1962. This significant reduction reflects efforts to streamline tax procedures and simplify compliance for taxpayers. The primary objective of these changes is to facilitate a smoother tax environment, reduce legal disputes, and eliminate unnecessary or obsolete regulations. This move is taken to ensure that tax processes are more transparent, accessible, and efficient for all stakeholders. The government has also launched a utility tool on the e-filing portal to make it easier for stakeholders to submit their suggestions. The initiative aligns with the broader goal of improving clarity and reducing the burden of compliance for taxpayers and entities involved in tax administration. In summary, the government is actively seeking the input of taxpayers, tax professionals, and other stakeholders to shape the final version of the Income-tax Rules. This collaborative approach aims to refine the tax framework, making it more straightforward and less burdensome, in line with the objectives of the new Income-tax Act, 2025, set to replace the current law on April 1, 2026.