Bombay Chamber recommendations on draft Income Tax Rules 2026

Shri Ravi Agrawal, I.R.S

Chairperson

Central Board of Direct Taxes

Department of Revenue

Ministry of Finance

Government of India

Kartavya Bhavan

New Delhi – 110 001

Sir,

Memorandum of Bombay Chamber on Draft Income Tax Rules and Forms, 2026 [Direct Tax]

The Hon’ble Finance Minister in her Budget Speech on 1^st February 2026 announced that with the Income Tax Act 2025 coming into effect from 1 April 2026 following the completion of comprehensive review of the Income Tax Act 1961, simplified Income Tax Rules and Forms will be notified shortly, providing adequate time to taxpayers to acquaint themselves with its requirements. We appreciate the Government initiative of placing these Rules and Forms in public domain for seeking feedback and comments from stakeholders.

From simplification perspective, the Bombay Chamber welcomes the changes proposed in the draft rules and forms in line with the changes in Income Tax Act 2025, including simplification of the language, provision of formulas and tables, removal of redundancy and consolidation of rules wherever possible. We appreciate the Government’s efforts to redesign and simplify the rules and forms such that taxpayers can comply without difficulty reducing their compliance burden and any operational, administrative or interpretational issues. Automated reconciliation and prefill capabilities in new forms will ease the filing and enhance the user experience considerably.

However, there are concerns on certain rules which appear to increase the compliance burden for taxpayers or create potential for litigation contrary to the Government’s objectives of reducing compliance burden and litigation. Furthermore, there are minor inadvertent drafting anomalies or cross referencing errors on certain rules and forms. Also, we believe that the notification of new rules complementing the new Income tax Act 2025 to come into effect from 1 April 2026 is the right opportunity to address all issues in existing rules which due to similarity of language & scope in the draft rules will continue to persist even in new rules. The time given for feedback from stakeholders of two weeks was very short. We understand that this is in view of new Act coming into effect from 1 April 2026.

On the basis of the responses received from our Members within the short time frame, a Memorandum containing suggestions of Bombay Chamber on the Draft Rules and Forms is attached for your kind consideration. This representation is made in three parts –

1. Part A – Recommendations on Key Issues in Draft IT Rules 2026 concerning substantive changes as compared to existing rules

1. Part B – Recommendations on inadvertent drafting anomalies/cross referencing errors in Draft IT Rules 2026

1. Part C – Recommendations on issues in existing IT Rules 1962 which continue to exist in Draft IT Rules 2026 in view of parity of provisions

We may send further supplemental suggestions on receipt of more inputs from our members.

Our representatives would deem it a privilege to participate in the meetings organised by the Department of Revenue for discussions on Rules and Forms and provide any further clarifications, if required, with regard to our suggestions.

Thanking you,

Yours faithfully,

Sandeep Khosla

Director General