Government to notify rules under new tax law by December
What's the story
The government is working toward notifying all the rules under the new income tax law by December 31. This will be done through a single consolidated notification, a senior government official told Moneycontrol. The move is part of efforts to establish an operational backbone for the new Act, which will be supported by around 400 rules and 180 forms.
Simplification strategy
Major departure from previous structure
The new tax framework is a major departure from the previous structure, which had over 500 rules. The reduction in the number of rules and forms is aimed at simplifying compliance and streamlining administration. "By December 31, we will notify all the rules in one consolidated notification," said the official, adding that budget work will also start simultaneously with this process.
Operational core
Importance of rules and forms in tax administration
In tax administration, rules define detailed procedures to operationalize provisions in the main tax law. This includes how liabilities will be computed, refunds processed, or exemptions applied. Forms are standardized templates through which taxpayers and businesses furnish information, file returns, or make claims. Together, these rules and forms form the operational core of any tax regime.
System readiness
IT infrastructure readiness ongoing
After the rules are notified, extensive backend work will continue through the fourth quarter of FY25 to ready the IT infrastructure. The official said forms are being compiled and merged, with prototypes created and tested before being enabled on the system. "Before enabling the forms on the system, after notification utilities will be formed," they added.
Integration process
Transitioning to new tax regime
The systems integration exercise will run parallel to budget preparations, making the last quarter of the financial year a crucial phase in transitioning to this new regime. The government is overhauling the existing Income Tax Act, 1961, into a simplified and modernized legal framework. The new law aims at reducing litigation, improving ease of compliance, and aligning tax administration with contemporary economic realities.