The Income Tax department will notify the rules and tax return forms under the Income Tax Act, 2025 by the first week of March, said sources. 

All the rules and forms under the Act, which will take effect beginning April 1 this year, will be notified at one go. Through the new forms, the department aims to capture the data in a manner that auto reconciliation, and AI-enabled analytics are possible.   

It may be noted that the Central Board of Direct Taxes (CBDT) has unveiled the draft income tax (IT) rules and forms under the Act, and has invited suggestions from the stakeholders and public on the same. Tax department has sought suggestions on simplification of language, reduction of litigation, reduction of compliance burden, identification of redundant/obsolete rules and forms.

“The suggestion window is open till February 22nd. The department will need one week to review the suggestions and incorporate the changes suggested. The rules and forms are likely to be notified in the first week of March,” said a CBDT source.  

In line with the simplified provisions of the Act, the rules aim at ease of compliance, returns filing and overall processes. The number of rules under the Income Tax Act, 2025 has been brought down to 333 compared with 511 in the Income Tax Rules of 1962. Similarly the number of forms have also been brought down to 190 in the current statute compared with 399 in the previous law.

CBDT sources point out that there are three attributes of the revised rules and forms - simplification of language, ease of doing business, and reengineering of rules. For ease of doing business, compliance has been reduced and a major impetus has been given on standardization.

“The forms have been finalized with various tenets such as automated reconciliation, prefilled capabilities, centralized processing, and simple language. Pre-filled capabilities have been provided to make the forms less error prone,” sources said.

“The manner in which we will capture will be amenable to AI and analytics,” they pointed out, adding that multiple agencies, reporting authorities and government departments have been consulted while finalizing the forms.