India announced an overhaul and implementation of a brand new Income Tax Act called Income Tax Act, 2025 in the Union Budget 2025-26. While the new tax code does not introduce any new slabs, what it intends to do is do away with redundancies and overlaps. The new tax code has 2,60,000 words, half of what the old code had. The agency charged with the implementation of the new tax code, the Central Board of Direct Taxes is now working overtime to overhaul forms and rules. The CBDT will begin a comprehensive review and revision of the Income Tax rules starting next month.
“Parallelly, with the select committee review, CBDT will start work on rules and forms,” a senior government official told Moneycontrol. “If the new Income Tax Act has to be implemented from April 1, 2026, then the rules and forms also have to be ready. So, we have to do that during this period.”
The review will involve a meticulous examination of the existing rules to remove redundant provisions and align section references with the revised Act. This exercise is expected to significantly reduce ambiguity, simplify compliance for taxpayers, and minimise the scope for litigation.
Highlighting the extent of the task, the official noted, “CBDT will start work on it next month. A lot of work will be there – all forms, all rules – because right now the Act has been simplified, and now the rules is another book; this also has to be simplified. Rules will also become concise and simpler. Yes, all these forms have to be aligned with the section numbers, and whatever redundancy exists has to go. So, this is again a mammoth amount of work to look at the rules and the forms.”
The Income Tax rules currently consist of multiple provisions addressing specific sections of the Act. The revision exercise is expected to make compliance procedures more transparent and user-friendly. With April 1, 2026, set as the target implementation date for the new Act, CBDT is aiming to complete the revision of rules and forms in a timely manner.
The simplification of tax laws has been a key policy objective of the government, with Finance Minister Nirmala Sitharaman emphasising ease of compliance and efficiency in tax administration. Experts believe that rationalising the rules in line with the revised Act will provide much-needed clarity to taxpayers and tax professionals alike.
While the legislative process for the new Income Tax Act is underway, the parallel exercise of amending the rules ensures that once the Act comes into force, the necessary procedural framework is already in place.
