Why the Rules Changed: Quick Background
The Income-tax Act 2025 restructured the entire statutory framework — renumbering sections, consolidating provisions and introducing a "Tax Year" concept. The Rules 2026 were framed to align with this restructured Act. The old Rules 1962 had accumulated over 130 rules and 125+ forms over six decades; the new Rules 2026 aim to streamline this into a cleaner framework, though many forms and procedures are carried over in substance with updated references.
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Parallel operation: Rules 1962 continue to apply for income years up to FY 2025-26 (pre-1 April 2026). Rules 2026 apply from Tax Year 2026-27 onwards. Practitioners must track which set of rules governs each return or proceeding.
Key Form Changes: Old vs New
| Purpose | Old Form (Rules 1962) | New Form (Rules 2026) | Notes |
|---|
| Opt out of default new regime (business/professional income) | Form 10-IEA | Renumbered equivalent under Rules 2026 (verify current number) — not Form 112, which is unrelated (see note below) | Filed at ITR stage; salaried employees with no business income don't use this form at all — they simply declare regime preference to their employer |
| NPO audit report | Form 10B / Form 10BB | Form 112 | Filed under Section 348 of the new Act by registered non-profit organisations — this is the actual identity of Form 112, unrelated to regime election or payroll |
| Opt into concessional corporate tax (22%) | Form 10-IC | Equivalent under new Rules — verify current form number against the official forms navigator before filing | Irrevocable; file before first return under new rate |
| New manufacturing company (15%) | Form 10-ID | Equivalent under new Rules — verify current form number | Eligibility: incorporated on or after 1 Oct 2019; production before 31 Mar 2024 (old Form 10-IB was actually the election form for the 25% turnover-based rate under old Section 115BA, not the 15% manufacturing rate — don't confuse the two) |
| TDS certificate (salary) | Form 16 (Part A + B) | Form 130 | For FY 2025-26: old Form 16 applies; for TY 2026-27: Form 130 |
| TDS certificate (non-salary) | Form 16A | Renumbered equivalent under Rules 2026 (verify current number) | New section numbers (392/393) in certificate |
| TDS return (non-salary) | Form 26Q | Renumbered equivalent under Rules 2026 (verify current number) | Section numbers updated |
| TDS return (salary) | Form 24Q | Form 138 | New regime as default; regime preference is a declaration to employer, not a separate notified form |
| Tax audit report | Form 3CA/3CB/3CD | Consolidated into a single unified Form 26 under Section 63 of the new Act, applicable from Tax Year 2026-27 for turnover/receipts above the audit threshold | New section cross-references throughout |
| Declaration for no-TDS on interest income | Form 15G / 15H | Form 121 | Filed under Section 393(6) of the new Act; substance unchanged |
| Lower/nil TDS certificate | Form 13 | Renumbered equivalent under Rules 2026 (verify current number) | Reference to new consolidated TDS sections |
| Updated return | ITR-U (under Section 139(8A)) | ITR-U (retained; new Act equivalent) | Window extended to 48 months from end of relevant tax year, effective 1 April 2025 |
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CBDT notifications are the final authority. The Income-tax Rules 2026 have been notified and are already in force as of the date of this article, with most forms confirmed (not merely "awaited" as practitioners sometimes assume from outdated commentary). Always verify the exact current form number against the official forms navigator before filing, since some practitioner references still circulate stale or incorrect form-number claims (most commonly, conflating the unrelated NPO audit report Form 112 with regime-election forms). This article reflects the Rules as understood from the Act's structure and CBDT circulars available as of June 2026.
Due Date Changes Under Rules 2026
| Filing | Old Due Date (Rules 1962) | New Due Date (Rules 2026) | Applicable From |
|---|
| ITR — non-audit individuals/HUFs | 31 July | 31 August | Tax Year 2026-27 onwards |
| ITR — audit cases | 31 October | 31 October | No change |
| ITR — transfer pricing cases | 30 November | 30 November | No change |
| TDS deposit (govt deductors) | Same day | Same day | No change |
| TDS deposit (other deductors) | 7th of next month | 7th of next month | No change |
| TDS return (quarterly) | 31 July / 31 Oct / 31 Jan / 31 May | Same | No change |
| Advance tax — 1st instalment | 15 June (15%) | 15 June (15%) | No change |
| Advance tax — 2nd instalment | 15 September (45%) | 15 September (45%) | No change |
| Advance tax — 3rd instalment | 15 December (75%) | 15 December (75%) | No change |
| Advance tax — 4th instalment | 15 March (100%) | 15 March (100%) | No change |
| Form 16 issuance to employees | 15 June | 15 June | No change |
TDS Consolidation: New Section Numbers for Finance Teams
The most operationally impactful change for accounts payable and payroll teams is the consolidation of TDS sections. The old Act had over 30 individual TDS sections (192, 193, 194, 194A, 194B… 194S etc.). The new Act consolidates these into two master sections:
- Section 392(1) — Salary TDS (equivalent to old Section 192)
- Section 393 — Non-salary TDS (equivalent to old Sections 193, 194, 194A through 194S and all variants)
The rates and thresholds are prescribed in Schedule IV of the Act and carry forward the old rates. The Rules 2026 prescribe updated challan codes and TDS return formats reflecting these new section numbers. Finance teams must update:
- Accounting software TDS section drop-downs
- Vendor master TDS section fields
- Payroll software for Form 138 (renumbered Form 24Q) filing
- TDS payment challans (Challan 281 updated)
Case Study: Payroll Team Transition at a 500-person Tech Company
Scenario — Bengaluru SaaS Company, April 2026
Pradeep, CFO of a 500-person tech company, had to migrate payroll from the old Act to the new Act for the first salary run in April 2026. Key steps his team took:
Step 1
Collected regime-preference declarations from employees wanting the old regime (no notified election form for this purpose — just a declaration to the employer)
Step 2
Updated HRMS: "Section 192" → "Section 392(1)"
Step 3
Updated standard deduction to ₹75,000 for new regime employees
Step 4
Verified Form 138 (renumbered Form 24Q) format with payroll vendor for Q1 TY 2026-27
The team set a 15 April 2026 internal deadline for all regime-preference declarations to ensure April salary TDS was computed correctly from the first run.
Document Checklist: What to Collect for Tax Year 2026-27
For Salaried Employees (Payroll / HR Teams)
- Regime preference declaration (a simple statement to the employer, not a notified election form — Form 112 is unrelated; it is the NPO audit report under Section 348)
- Home loan interest certificate (old regime employees only — Section 26(b) equivalent)
- HRA rent receipts and landlord PAN (old regime employees)
- LIC / PPF / ELSS investment proofs (old regime Chapter VI-A deductions)
- NPS self-contribution proof (Section 80CCD(1B) equivalent — additional ₹50,000 deduction, old regime only; this is distinct from the employer's NPS contribution under the Section 80CCD(2) equivalent, which remains deductible under both regimes up to 14% of salary)
- Medical insurance premium proofs (Section 80D — old regime only)
- Previous employer Form 16 (for joiners mid-year)
For Business Taxpayers and CAs
- Tax audit report under revised Form 3CD (new section references)
- Depreciation schedule updated with new Section 33 block rates
- Disallowance workings under new Section 37 (old 43B) for MSME payments, PF, ESI — deductions allowed only on actual payment basis
- Partner remuneration computation under the new Act's renumbered equivalent of old Section 40(b) (cap formula: ₹3,00,000 or 90% of the first ₹6,00,000 of book profit, whichever is higher, plus 60% of the balance) — verify the exact new section number against the current Act text before citing it in client communications
- TDS reconciliation with new section numbers (393 instead of old 194C, 194J etc.)
- Form 10-IC equivalent (if claiming concessional 22% corporate rate)
- MSME payment status at 31 March 2027 (actual-payment disallowance check under the new Act's equivalent of old Section 43B, now Section 37)
Depreciation: New Rules vs Old Rules
The Income-tax Rules 2026 carry forward block rates from Appendix I of the old Rules 1962. The key changes are in section cross-references:
| Item | Old Rules Reference | New Rules Reference | Rate |
|---|
| Buildings (non-residential) | Rule 5, App I | New Rules equivalent | 10% |
| Plant and machinery | Rule 5, App I | New Rules equivalent | 15% |
| Computers and software | Rule 5, App I | New Rules equivalent | 40% |
| Motor vehicles | Rule 5, App I | New Rules equivalent | 15% (30% for certain vehicles) |
| Unabsorbed depreciation carry forward | Section 32(2) of old Act | Section 33(2) of new Act | Unlimited carry forward; no 8-year limit |
| Additional depreciation | Section 32(1)(iia) | New Act equivalent | 20% in year of acquisition |
Key Procedural Changes for CA Firms
Tax Audit (Form 3CD)
The revised Form 3CD under Rules 2026 replaces old section references throughout. Auditors must update their audit software templates. Key clauses affected:
- Clause on Section 43B disallowances → now references Section 37 (actual-payment deductions)
- Clause on Section 40(a)(ia) → now references the equivalent disallowance section in Chapter on Business Deductions
- Clause on depreciation (Section 32) → now Section 33
- New clause on TDS section mapping required for consolidated section 393 reporting
Assessments and Proceedings
Scrutiny assessments for Tax Year 2026-27 will cite new Act sections. Practitioners must update their notice-response templates. Limitation periods:
- Regular assessment: 12 months from end of relevant Tax Year (same substance)
- Reassessment: 3 years (routine) / 10 years (income exceeding ₹50L escaped) — new Act framework
- Faceless assessment scheme continues; NFAC serves notices citing new Act sections
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Positive change: The new Rules 2026 streamline the number of prescribed forms and consolidate several overlapping certificates. CA firms that update their practice management software in Q1 of Tax Year 2026-27 will benefit from reduced errors in cross-referencing.
Filing Workflow: Tax Year 2026-27 Timeline
| Month | Action | Form / Reference |
|---|
| April 2026 | Collect regime preference declarations from employees (a simple statement to the employer, not Form 112 or any other notified election form); update payroll to new regime defaults | No notified form — declaration only |
| June 2026 | Issue Form 16 for FY 2025-26 (old Act); Advance tax 1st instalment TY 2026-27 | Old Form 16; Challan 280 |
| July 2026 | File ITR for FY 2025-26 (non-audit, due 31 July) — old Act | Old ITR forms |
| September 2026 | Advance tax 2nd instalment TY 2026-27; Q2 TDS return | Challan 280; Form 26Q revised |
| October 2026 | File ITR for FY 2025-26 (audit cases, due 31 Oct) — old Act | Old ITR forms + Form 3CA/3CB/3CD |
| November 2026 | File ITR for FY 2025-26 (transfer pricing cases, due 30 Nov) — old Act | Old ITR forms |
| December 2026 | Advance tax 3rd instalment TY 2026-27; mid-year regime switch review | Challan 280 |
| March 2027 | Advance tax 4th instalment; year-end tax planning under new Act | Challan 280 |
| August 2027 | File ITR for Tax Year 2026-27 (non-audit, due 31 August) — new Act/Rules | New ITR forms |
✅ Practitioner Summary
- Rules 2026 in force from 1 April 2026; Rules 1962 survive for FY 2025-26 and earlier years
- Form 112 is the NPO audit report under Section 348, unrelated to regime election; for payroll, regime preference remains a simple declaration to the employer, while business/professional taxpayers continue to use the renumbered equivalent of old Form 10-IEA at ITR-filing stage (verify current form number)
- TDS section 393 covers all non-salary TDS; section 392(1) covers salary TDS
- ITR due date for non-audit cases extended to 31 August from Tax Year 2026-27
- Form 3CD revised with new section cross-references — update audit software templates
- Depreciation block rates unchanged; carry forward rules improved (unabsorbed depreciation: unlimited)
- FY 2025-26 ITR still due 31 July 2026 — no extension for old Act returns
FAQ
When did the Income-tax Rules 2026 come into force? +
1 April 2026, alongside the Income-tax Act 2025. They replaced the Income-tax Rules 1962 for income years from Tax Year 2026-27 onwards. The old Rules 1962 continue to apply to proceedings relating to FY 2025-26 and earlier.
What is Form 112 and who needs to file it? +
Form 112 is not a regime-election form — that's a common misconception. Under the Income-tax Rules 2026, Form 112 is the audit report filed by registered non-profit organisations under Section 348 of the Income-tax Act 2025 (replacing old Forms 10B and 10BB), and has nothing to do with payroll or regime choice. For salaried employees, regime preference is simply declared to the employer with no notified form involved. Business and professional taxpayers who want to opt out of the default new regime continue to use the renumbered equivalent of old Form 10-IEA at ITR-filing stage — a completely separate form from Form 112.
Is old Form 16 valid for FY 2025-26? +
Yes. Form 16 for FY 2025-26 is governed by the old Rules 1962 and must be issued by 15 June 2026. The new Rules 2026 and revised Form 16 format apply from Tax Year 2026-27 onwards (to be issued by 15 June 2027).
Has the tax audit form (3CD) changed under the new Rules? +
Yes. The revised Form 3CD under Rules 2026 updates all section cross-references to match the new Act. For example, the disallowance clause previously citing Section 43B (actual-payment basis deductions for MSME, PF, ESI, etc.) now cites the new Act's renumbered equivalent, Section 37. CA firms should update their audit software templates before beginning Tax Year 2026-27 audits.
What is the ITR due date for Tax Year 2026-27 under the new Rules? +
For non-audit individuals and HUFs: 31 August 2027. For audit cases: 31 October 2027. For transfer pricing cases: 30 November 2027. These extended dates apply from Tax Year 2026-27 — the FY 2025-26 return is still due 31 July 2026.
Calculate Your Tax Under the New Act
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