What Happened
- The draft Income-tax Rules, 2026, under the new Income-tax Act, 2025 (which takes effect 1 April 2026), propose to streamline tax compliance by increasing PAN application thresholds and raising meal allowances.
- The number of rules will be reduced from 511 (under the 1962 Rules) to 333, and forms from 399 to 190.
- Pre-filled income tax return forms will be introduced to simplify filing.
- CBDT has invited stakeholder feedback through the e-filing portal, with the feedback window opened on 4 February 2026.
Static Topic Bridges
Income-tax Act, 2025 — Replacing the 1961 Act
The Income-tax Act, 2025, received Presidential assent on 21 August 2025 and takes effect from 1 April 2026, replacing the Income-tax Act, 1961, which governed direct taxation in India for over six decades. The new Act contains 536 sections across 23 chapters and 16 schedules, compared to approximately 819 sections and 47 chapters in the 1961 Act. The word count has been reduced by nearly half (from 5.12 lakh to 2.60 lakh words), with all provisos and explanations converted into subsections and clauses.
- Old Act: Income-tax Act, 1961 (~819 sections, 47 chapters)
- New Act: Income-tax Act, 2025 (536 sections, 23 chapters, 16 schedules)
- Presidential assent: 21 August 2025
- Effective date: 1 April 2026
- Word count reduction: from 5.12 lakh to 2.60 lakh (approximately 49% reduction)
- Key innovation: "Tax Year" concept replaces both "Previous Year" and "Assessment Year"
- Digital-first: faceless assessment procedures to reduce human interface
Connection to this news: The draft rules being notified are the subordinate legislation that operationalise the new Act. The reduction from 511 rules to 333 and 399 forms to 190 is part of the broader simplification mandate of the 2025 Act.
Central Board of Direct Taxes (CBDT) and Tax Administration
CBDT is the apex body for administration of direct tax laws in India, functioning under the Department of Revenue in the Ministry of Finance. It is constituted under the Central Board of Revenue Act, 1963. CBDT is responsible for formulating policy, issuing notifications and circulars, and overseeing the Income Tax Department. It also frames the rules under the Income-tax Act, which require public consultation for significant changes.
- Statutory basis: Central Board of Revenue Act, 1963
- Functions: policy formulation, rules framing, tax administration oversight
- Parent ministry: Ministry of Finance, Department of Revenue
- Tax administration: ~62,000 officers across India
- Key digital initiatives: faceless assessment (2020), pre-filled ITRs, Annual Information Statement (AIS)
- E-filing portal: income tax return filing and compliance
Connection to this news: The invitation for stakeholder feedback on draft rules represents CBDT's consultative approach to rule-making, allowing taxpayers and professionals to suggest simplification before final notification in early March 2026.
Direct Tax Reforms and Simplification
India's direct tax reforms have followed a trajectory of simplification since the Direct Taxes Code (DTC) discussions began in 2009. Key milestones include the abolition of the Dividend Distribution Tax (2020), introduction of the new personal income tax regime with lower rates but fewer exemptions (2020), reduction in corporate tax rates to 22% (25.17% effective) under Section 115BAA (2019), and the introduction of faceless assessment and appeals (2020-2021). The 2025 Act represents the culmination of this simplification drive.
- DTC discussions: started 2009 (Akhilesh Ranjan Committee report: 2019)
- Corporate tax cut: September 2019 (to 22% under Section 115BAA; 15% for new manufacturing under 115BAB)
- New personal tax regime: Budget 2020 (optional); made default from FY2023-24
- Faceless assessment: launched 2020
- Faceless appeals: launched 2021
- Income-tax Act 2025: 536 sections vs 819 sections (1961 Act)
Connection to this news: The new rules reducing compliance burden (333 rules vs 511, 190 forms vs 399) are a direct outcome of the Akhilesh Ranjan Committee's recommendations for a simpler, more transparent tax code.
Key Facts & Data
- Income-tax Act, 2025: effective 1 April 2026 (replaces 1961 Act)
- Sections reduced: 819 → 536; Chapters: 47 → 23
- Word count: 5.12 lakh → 2.60 lakh (49% reduction)
- Rules reduced: 511 → 333 (under draft 2026 rules)
- Forms reduced: 399 → 190
- Stakeholder feedback window: opened 4 February 2026
- Key concept change: "Tax Year" replaces "Previous Year" and "Assessment Year"