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Updated Feb 10, 2026 05:29 PM IST
The tax department on Saturday issued draft rules and forms under the new Income Tax Act, 2025, aiming to simplify provisions, cut compliance burdens, improve clarity, and make the tax framework more taxpayer-friendly.
Highlights
- The number of income tax rules will be significantly reduced from over 500 in old income tax act to about 310 in the new one.
- The new safe harbour rule for IT/ITS companies, allowing a cost-plus 15.5% safe harbour arm’s-length price, is expected to significantly reduce tax litigation at all levels.
- The tax department on Saturday released draft rules and forms under the new Income Tax Act, 2025.
As India gears up for the New Income Tax Act from April 2026, ET Now speaks with Sumit Singhania of Deloitte to decode what’s really changing. From massive simplification of tax rules and forms to automation, smart compliance and reduced litigation, especially in transfer pricing -- the conversation explains how the new regime aims to make taxation more transparent, efficient and taxpayer-friendly.
Singhania said, "It is a very progressive policy development. If you look back at when the Income Tax Act, 2025 was rolled out, an essential part of that legislation was the income tax rules and the set of forms that had to be notified. Now, the government has opened this process for public consultation. This is the first time the government is seeking public input at the very beginning of framing tax rules and drafting tax forms. An important aspect of this exercise is that it further advances the principles of simplicity and broader ease of tax administration."
Simplification of rules and forms
Singhania said that the number of income tax rules will be significantly reduced from over 500 in old income tax act to about 310 in the new one. He further said that the number of tax forms will decrease from around 400 to approximately 180-190 and multiple forms have been consolidated into single forms, making tax administration more transparent and reducing the compliance burden for taxpayers.
Automation and smart forms
Talking about the smart forms, Singhania mentioned that the introduction of “smart forms” will lead to fewer compliance steps. He explained with an example that the safe harbour rule for IT/ITS services now has a single application form, streamlining the process for both IT and non-IT companies.
Reduction in litigation
Transfer pricing is one of the most litigious areas of tax law, said the Deloitte executive adding that the new safe harbour rule for IT/ITS companies, allowing a cost-plus 15.5 per cent safe harbour arm’s-length price, is expected to significantly reduce tax litigation at all levels. Singhania said that consolidating fair valuation rules in one place is also expected to help reduce disputes related to asset valuation.
Draft rules, forms for new Income Tax Act released
The tax department on Saturday released draft rules and forms under the new Income Tax Act, 2025, which proposes to simplify the provisions and reduce compliance burden for ease of understanding and make it taxpayer-friendly. A new and simplified Income Tax Act, 2025, which will replace the over six-decade-old Income Tax Act of 1961, will come into effect from April 1.
The Income Tax department has sought comments from stakeholders on the draft Income-tax Rules, 2026, and forms by February 22. Thereafter, the rules and forms under the new Act will be notified.
End of article
PremiumUpdated Feb 10, 2026 01:36 PM IST
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