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Draft Income Tax Rules: The Income Tax Department recently introduced the Draft Income Tax Rules 2026. These new rules are being prepared to comply with the Income Tax Act 2025, which will come into effect on April 1. This change will affect all taxpayers, especially salaried employees. The changes to various rules will also result in changes to tax forms and reporting.

Renaming of Forms 16 and 26AS
The most significant change is the renumbering of several commonly used forms:

Form 16 will now be called Form 130
Form 26AS will now be Form 168
Form 16 is a document issued to employed individuals by their employers by June 15th of each year. It contains information about their income, TDS, taxes, and deductions. Form 26AS contains information about all taxpayers' tax transactions for the year, such as TDS, TCS, advance tax, and tax refunds. Taxpayers can download it from the Income Tax Portal.

Are tax rules changing?
Many people may think that changing the form number will also change the tax rules, but this is not the case. Only the form number is changing, not the tax policy. This means that there will be no major impact on tax rules and compliance (such as tax filing deadlines).

A Single Term for Tax Year
The new rule will now use only one term for the tax year: tax year. Currently, there are two terms in tax: the previous year and the assessment year, which confuse many people. The new Forms 130 and 168 will use the tax year 2026-27, making it easier for taxpayers to understand.

What is the final process?

All taxpayers, CAs, and experts can provide their feedback on these draft rules until February 22nd. The department will then consider these suggestions and issue final rules. It is expected that the final rules will be released within the next one to two months.

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