New Delhi: The Indian government on Friday notified the Income-tax Rules, 2026, establishing the regulatory framework for the implementation of the new Income-tax Act, 2025, which is set to take effect on April 1.

The Central Board of Direct Taxes (CBDT) published the 2026 rules in the e-Gazette, officially replacing previous provisions for the upcoming 2026-27 financial year. The updated mandate emphasises transparency, rigorous disclosure requirements, and enhanced digital compliance.

The new regulations seek to streamline administrative procedures while significantly tightening reporting standards for stock market transactions, capital gains, and the taxation of non-residents. The final rules follow a series of draft proposals introduced earlier this year as part of a comprehensive modernisation of the nation’s fiscal system.

“The changes do not introduce new taxes but instead focus on better monitoring and transparency through enhanced disclosures and digital tracking,” the official notification stated.

Revised Disclosure for Rent and Trading

Under the 2026 framework, the existing structure for House Rent Allowance (HRA) remains intact. Salaried professionals residing in major metropolitan hubs, including Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Hyderabad, Pune, and Ahmedabad, may continue to claim up to 50 per cent of their salary as an exemption. The limit for all other cities remains at 40 per cent.

However, the new rules introduce a transparency layer requiring taxpayers to formally disclose their relationship with their landlord in a specific government form.

The government also established stricter eligibility criteria for stock exchanges seeking status as recognised platforms for derivatives trading. To qualify, exchanges must:

  • Secure formal approval from the Securities and Exchange Board of India (SEBI).
  • Maintain comprehensive transaction records, including client-specific data such as PAN and unique identifiers.
  • Preserve audit trails for a minimum of seven years.
  • File monthly reports with the tax department to ensure closer oversight of market activities.

Asset Valuation and Capital Gains

The notification provides further clarity on determining the holding periods used to classify capital gains as either short-term or long-term. For converted securities, the holding period will now officially include the duration for which the original asset was held.

The rules also specify that different calculation methods will apply to assets previously disclosed under the Income Declaration Scheme, 2016, depending on the asset class.

Furthermore, the government clarified that gains derived from self-generated assets, such as goodwill or other short-term assets, will be taxed as short-term capital gains. Other gains will be categorised based on the specific nature of the underlying investment.

With inputs from IANS