Draft of Income Tax Rules 2026 released
New income tax rules 2026: The Income Tax Department has completed preparations for major changes in the tax system of the country. The department has released the draft of ‘Income Tax Rules, 2026’, which after being passed by the Parliament, will replace the existing tax rules of 1962. The new ‘Income Tax Act, 2025’ is going to come into effect from April 1, 2026. To implement this law, the department has prepared the outline of these new rules and forms.
Maintaining transparency, the department has placed this draft in the public domain so that the general public and stakeholders can give their opinion on it. If you want to understand these rules or want to give any suggestion, you have time till February 22, 2026.
Tax forms will now be ‘smart’
Taxpayers often complain that the income tax rules and forms are very complex. This time while preparing the draft, the department has laid emphasis on simplifying the language of the rules. Formulas and tables have been used to make calculations easier. Also, the things which had become redundant or redundant in the 1961 rules have been removed.
The new tax forms have been made ‘smart’. These will have the facility of automated reconciliation (automatic matching) and pre-fill (pre-filled information). This will not only make tax filing easier, but will also reduce the scope for mistakes. The department believes that this will help in centralized processing and better facilities can be provided to taxpayers by using technology.
Rule 57: How will the ‘Fair Market Value’ of your property be determined?
The most important part of this draft is ‘Rule 57’. This rule tells how the ‘Fair Market Value’ (FMV) of your property will be calculated for tax purposes. According to Sandeep Jhunjhunwala, partner of Nangia Global, the old rules 11UA, 11UAA and 11UAB have now been merged into a single rule. According to the draft, the valuation rules are as follows.
- Jewellery: If jewelery is sold in the open market, then the price received will be its value. If you have bought jewelery from a registered dealer, then the value of the bill (invoice) will be valid. If the jewelery is received in some other way (like a gift) and its value is more than Rs 50,000, then you will have to get a report from a registered valuer.
- Paintings and artefacts: The same rules as jewelery will apply to archaeological collections, paintings, sculptures or any art work. If the value is more than Rs 50,000, a registered valuer’s report will be required.
- Land and Building: In case of immovable property, the value fixed by the Central or State Government for stamp duty on the day on which the valuation is being done will be considered as fair market value.
- Other properties: For any property other than the above mentioned categories, the price that can be obtained in the open market will be considered as the value.
Rule 6: How will the holding period be calculated?
For capital gains tax, it is important to know for how long you have held an asset (Holding Period). ‘Rule 6’ of the new draft makes clear provisions for:
- Shares and debentures: If bonds, debentures or certificates of deposit of a company are later converted into shares, the holding period will also include the time you held them in the form of bonds or debentures.
- Properties under Income Declaration Scheme, 2016: If it is an immovable property and a registered deed exists, the time will be counted from the date of purchase. In any other case, the holding period will be counted from June 1, 2016.
- Branch of a foreign company: If an asset is acquired by an Indian subsidiary by conversion of a branch of a foreign company, the holding period will also include the period when the asset was held by the foreign branch or the previous owner.
New standards for accountants, valuers
It is also proposed to change the definition and qualification of ‘Accountant’ to increase the credibility of valuation. Under the new Act, only those professionals will be considered eligible for asset valuation certification.
- Those who have at least 10 years of experience.
- Whose last year’s annual receipt is more than Rs 50 lakh.
- If it is a partnership firm, then the annual receipts of the firm should be more than Rs 3 crore.