New Delhi, 20 March (H.S.): The Central Board of Direct Taxes (CBDT) has notified the Income‑tax Rules, 2026 for the new Income‑tax Act, 2025, which will be implemented from 1 April 2026 and will apply to the financial year 2026–27 and onwards. The new law is designed to replace the six‑decade‑old Income‑tax Act, 1961, with the declared objective of simplifying direct taxation, reducing litigation and cutting down regulatory clutter rather than increasing tax rates.
The new Act substantially reduces the structural complexity of the existing statute. The 1961 Act’s 819 sections have been trimmed to 536, and the number of chapters has been reduced from 47 to 23.
The legislative text has also been cut from around 5.12 lakh words to 2.6 lakh, with the introduction of 39 tables and 40 clarificatory schematics to make provisions clearer and easier to interpret.CBDT has clarified that the concurrently notified provisions are formally governed by the title “Income‑tax Rules, 2026”.
The new framework retains the existing statutory slab rates and does not introduce new tax burdens but revises the language and classification logic to streamline compliance and reduce disputes.
Among the key changes for salaried taxpayers is an enhanced House Rent Allowance (HRA) regime, with a higher tax‑benefit cap of 50% of salary for employees based in Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru, while all other locations remain at 40%.
However, the new rules also make full disclosure of landlord–tenant details mandatory, including PAN where applicable.The new rules also tighten provisions on capital gains, stock‑market transactions and taxation of non‑resident entities, while simplifying other disclosure formats.
More than 150 revised official forms are being introduced for e‑filing, audits and information reporting. The rules further increase the responsibility of chartered accountants and companies in documenting foreign‑income tax credits and verifying PAN duplication and adverse audit remarks that may trigger additional tax liabilities.The Income‑tax (Amendment) Bill, 2025, which introduced the Income‑tax Act, 2025, was passed by Parliament on 12 August 2025.
The government has emphasised that the change is primarily a drafting and structural overhaul, not a tax‑rate revision, and that assessments for years prior to 1 April 2026 will continue to be governed by the 1961 Act.
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Hindusthan Samachar / Jun Sarkar
