The Income Tax Department has released the Draft Income-tax Rules, 2026, to implement the Income-tax Act, 2025 from April 1, 2026. The draft rules, now open for stakeholder consultation, lay out the compliance framework under the new law and introduce a comprehensive renumbering of income-tax forms.
Here’s a closer look at what changes and how it may affect taxpayers and businesses.
Under the draft framework:
1. Form 26AS will be renumbered as Form 168
2. Form 16 will be renumbered as Form 130
These changes will apply to tax years beginning on or after April 1.
Vikas Sharma, Lead – Personal Tax at AKM Global, said the renumbering is a structural and administrative move arising from the rationalisation of forms under the new legislative framework. He noted that for salaried taxpayers and employers, the core purpose, information content and timelines of these forms remain largely unchanged.
Brajesh Pranami, Founder and CEO of Fly Hi Financial Services Limited (Flyhi Finance), said the shift in numbering should not be interpreted as a substantive tax change. He said it does not alter tax policy or increase compliance burden, but instead standardises documentation under the new Act.
Reporting format remains the same
CA Mrinal Mehta, Joint Secretary of the Bombay Chartered Accountants’ Society, said the reporting formats of existing Forms 16 and 26AS and proposed Forms 130 and 168 remain the same. The changes primarily reflect updated references to sections under the Income-tax Act, 2025.
He added that filing procedures and timelines are subject to notification by the tax department, but no major procedural change is expected.
‘Tax year’ replaces earlier terminology
One notable structural reform under the 2025 Act is the removal of the distinction between “Previous Year” and “Assessment Year”. Both concepts are now unified under the term “Tax Year”.
Mehta said Forms 130 and 168 will reflect “Tax Year 2026–27” for income earned during that period, simplifying references in documentation and reducing interpretational confusion.
Greater digital integration, reduced mismatches
According to Mehta, the new forms are designed for higher digital integration. Much of the data in draft Form 130 is intended to be pre-filled from employers’ quarterly filings (Form 139). This could reduce discrepancies between the TDS certificate and the taxpayer’s annual tax statement — now referred to as the Tax Passbook under Form 168.
Pranami added that salary details, TDS credits and annual summaries will continue to flow in the same manner, with changes limited to nomenclature and system references.
Multiple employers: Clearer issuance norms
Mehta said that if an employee works with multiple employers during a tax year, each employer must issue both Part A and Part B of Form 130 for their respective period of employment. This is aimed at ensuring seamless reporting and reducing gaps during job transitions.
Transition phase may see parallel forms
Experts cautioned that the initial years could see coexistence of old and new form numbers. Forms relating to earlier tax years pending assessment will continue under the existing numbering, while new numbers will apply to running tax years from April 2026.
Sharma said this overlap may create confusion in communication, documentation and litigation if not carefully handled. Pranami noted that the key risk lies in delayed system upgrades and internal misalignment, rather than in any new compliance obligation.
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