Income Tax Act 2025 Draft Rules: What They Mean for Salaried Professionals

India’s tax landscape is set for a major shift as the Income Tax Department unveils draft rules to operationalize the Income Tax Act, 2025 from April 1, 2026. While the intent is simplification, certain provisions unexpectedly put the old tax regime back in play.

Key Highlights:

• Simplification Drive: Rules reduced from 511 to 333; forms cut from 399 to 190, easing compliance.
• Old Regime Advantage: Expanded eligibility for 50% House Rent Allowance (HRA) exemption makes the old regime more appealing.
• Foreign Tax Credit: Stricter verification by chartered accountants required for claims, adding compliance rigor.
• Stakeholder Consultation: Draft rules open for public feedback until February 22, 2026.
• Taxpayer Impact: While the new regime offers streamlined filing, allowances under the old regime may sway salaried professionals.

This development underscores the government’s balancing act: simplifying taxation while keeping the old regime relevant for those benefiting from exemptions and allowances.

Sources: News18, The Economic Times, Indian Express, Department of Revenue (CBDT)