: Government introduces new Income Tax Rules 2026 to strengthen compliance, transparency, and simplify procedures nationwide
New Delhi
The Centre has notified the Income Tax Rules, 2026, which will take effect from April 1, 2026, bringing major changes to direct tax systems. The rules are framed under the Income-tax Act, 2025 and replace older procedures with updated compliance frameworks and reporting standards.
Dividend-related norms have been tightened. Companies must now maintain proper share registers, hold general meetings, and ensure dividend payments are made only within India. Stock exchanges will also face stricter rules, including maintaining audit trails for seven years, preventing deletion of records, and submitting monthly reports on revised transactions to improve transparency.
The rules clarify capital gains classification, especially in cases like debenture conversions, offshore restructuring, and income disclosure schemes. A new framework for zero coupon bonds has been introduced, requiring applications three months before issuance, ratings from two agencies, and clear timelines for fund use.
Tax authorities have been given wider powers for cross-border taxation. They can estimate non-resident income using global profit ratios or reasonable methods. For digital businesses, significant economic presence is defined as transactions of Rs 2 crore or 3 lakh users.
The rules also standardise valuation methods for listed and unlisted shares, foreign entities, and partnerships. A clear formula has been set to calculate income linked to Indian assets in offshore deals.
Further, expense exemptions will follow a simplified capped method, while housing benefits will depend on factors like city, salary, and ownership status.
