No major change in ITR forms for AY26-27; new Income Tax rules to be notified by early March: CBDT sources

Income tax returns to be filed in the upcoming assessment year 2026-27 will continue to be governed by the existing rules and return forms, with no immediate change for taxpayers, Central Board of Direct Taxes (CBDT) sources said.

“The returns to be filed in the upcoming assessment year will be governed by the existing rules and forms. There is no change for taxpayers in terms of return forms for AY 2026–27,” a CBDT source said, clarifying that the transition to the new Income Tax Act will be phased in, with an interplay of both the old, and existing rules.

CBDT sources said the new Income Tax rules and rationalised tax forms announced by Finance Minister Nirmala Sitharaman will be notified by the first week of March. These rules will facilitate the implementation of the Income Tax Act, 2025, which comes into force from April 1, replacing the six-decade-old Income Tax Act, 1961.

The broader objective of the new law and rules is to widen the tax base while simplifying compliance. While nearly 9 crore income tax returns are currently filed, around 12 crore individuals are estimated to be paying taxes through various channels, indicating a significant gap in formal return filing.

“The objective is to gradually bring more taxpayers into the filing net without easing compliance standards,” the source said.

As part of the phased transition, crypto exchanges and other intermediaries are expected to begin furnishing transaction data to the tax department in line with the new Income Tax Act for the relevant financial year and submit them in 2027.

Several key forms, including Form 60, Form 49A and Form 49EA, have already been rationalised under the draft framework.

CBDT officials stressed the importance of stakeholder consultations, which are open until February 22. “If we get good consultations, we need not make changes repeatedly throughout the year,” a source said, adding that real-time feedback mechanisms are also being considered, allowing taxpayers to raise issues and receive quicker responses.

According to the Income Tax Department, the draft rules significantly reduce complexity. The number of rules has been cut from 511 under the earlier framework to 333, while the number of forms has been reduced from 399 to 190. Procedures have been slashed by nearly a third, and ‘smart forms’ with pre-fill and automated reconciliation capabilities have been introduced.

The department said the language of both rules and forms has been simplified to eliminate redundancy, reduce ambiguity and lower compliance burdens, while preserving the core policy framework. The changes are expected to improve ease of compliance, enhance user experience and support data-driven, centralised processing of returns.