India’s income tax system will undergo a major overhaul from April 1, 2026, according to various reports. The Income Tax Department has released the draft Income-tax Rules, 2026, along with draft income tax return (ITR) forms, offering the first clear view of how the Income-tax Act, 2025, will operate.

The drafts are open for public comments for 15 days, until February 22, 2026. Taxpayers, professionals and industry bodies have been invited to review the proposals and submit feedback.

Key shift towards the new tax regime

The draft rules mark a crucial step in implementing the new income tax law. While the Act sets the legal framework, the rules and forms determine how compliance will work in practice.

The government said the new framework aims to deliver simpler compliance, less ambiguity, better use of technology and a lower taxpayer burden.

Smarter ITR forms and more pre-filled data

The ITR forms have been completely redesigned. The department said the new forms will be “smart forms”, featuring:

  • Pre-filled data
  • Automated matching of information
  • Centralised processing

Common details have been standardised across forms to avoid repetition.

For salaried taxpayers and small filers, this means cleaner pre-filled returns and fewer errors. For businesses, it could reduce departmental queries and shorten assessment timelines.

Simpler language and clearer instructions

The draft rules use simpler language. Notes and instructions have been rewritten to reduce legal and operational confusion.

To help taxpayers adapt, the department has released two tools:

  • A navigator linking old rules to new draft rules
  • A mapping tool connecting existing forms to proposed forms

Feedback is being collected rule-wise and form-wise.

Removal of outdated provisions

Tax experts said the drafts signal a clean-up of outdated provisions. Electronic filing will become the standard. Simplified return options will be more clearly defined. Disclosure requirements will increase, with a shift towards structured and detailed data reporting.

What should taxpayers do?

The government stressed the drafts are not final. Taxpayers and professionals can submit suggestions until February 22, 2026.

When the new law takes effect on April 1, 2026, ITR form numbers may remain similar, but eligibility, income reporting and filing processes are expected to change significantly.