The income tax department has released new draft rules for 2026 to simplify the provisions and reduce the compliance burden on taxpayers. The rules will come into effect from April 1, and the government is seeking public opinion and feedback on these draft rules until February 22, 2026. Here’s what will change.
New Income Tax Draft Rule to Simplify Tax Filing in 2026
After the Finance Minister Nirmala Sitharaman hinted at a new income tax draft rule in her 2026-27 Union Budget speech, they were finally released on Saturday, February 7, 2026.
Back then, she revealed that new simplified income tax rules and forms would be notified shortly, easing the people’s burden of compliance and the tax system.
“The forms have been redesigned such that ordinary citizens can comply without difficulty,” said Sitharaman.
The draft rules operationalise under the Income-tax Act, 2025, and are set to replace the 1961 Act.
What Changes with the New Income Tax Draft Rule?
The ITD rules have brought significant changes, which will be really helpful for the people. CBDT chairman Ravi Agrawal told TOI that the new rules would simplify the income tax filing processes, and the forms would be smarter. Additionally, these will be aligned with tax returns or audit reports to take care of disconnects and discrepancies, if any.
Fewer Rules and Forms
The biggest highlight of this is the reduction of the number of rules from 511 to 333 and forms from 399 to 190. Additionally, the draft uses simple language, formulas, and tables to reduce legal ambiguity and the compliance burden of the taxpayer.
“Redundancy in the Income-tax Rules, 1961 has been sought to be eliminated. While preserving the larger content of the policy, certain changes have been introduced in line with the changes in the Income-tax Act, 2025,” it reads.
Changes in ITR Form
The Financial Express reports that on the broader level, the government has retained the existing ITR framework (same ITR-1 to ITR-7 for the same categories), but the eligibility conditions have changed.
| Form | Major Update / Eligibility Change |
| ITR-1 (SAHAJ) | Strictly for individuals with a simple income (Salary, one house). Mandatory digital filing for all (EVC or digital signature) except super senior citizens (80+). |
| ITR-2 | For individuals and Hindu Undivided Families (HUFs) without business or professional income.Taxpayers with capital gains, multiple house properties, or foreign income. |
| ITR-3 | For an individual earning income from a business or profession |
| ITR-4 (SUGAM) | For presumptive taxation cases.No longer allowed if you have foreign assets, foreign income, unlisted equity shares, or income exceeding ₹50 lakh. |
Smart Forms and Technology Integration
With the new income tax draft rules, the government is shifting towards a data-driven regime. The forms are now designed smartly so they can provide for automated reconciliation and also prefill capabilities. It will reduce manual entry and errors.
“Forms have been designed smartly so as to provide for automated reconciliation and also prefill capabilities so as to make filing more intuitive and less error-prone. These smart forms would considerably ease the filing and enhance the user experience.”
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Also, two navigators were added to guide the stakeholders and the public. One navigator provides the mapping of the old rules and the new draft rules, and the second provides the mapping of the old form and the new draft forms.
Lastly, a 15-day window, ending on February 22, has been provided to the public to review and provide their feedback on these rules.