The Central Board of Direct Taxes (CBDT) is gearing up to ensure a seamless rollout of the new Income-tax Act from April 1, 2026, with Member (Legislation) RN Parbat emphasising that simplified rules, detailed FAQs, and upgraded IT systems will be in place well before the law comes into effect.
In an interview to Moneycontrol, Parbat said the new Act consolidates scattered provisions, removes redundancies, and uses tabular forms and formulae to make computation of income and taxes easier for taxpayers. He added that while the legal powers for search and seizure already existed, the new law makes them more explicit, including access to digital lockers and virtual digital assets to track tax evasion.
On the transitional roadmap, Parbat revealed that a drafting committee has already prepared draft rules and forms after public consultation, FAQs and mapping guides linking old provisions to the new ones will be released “at the earliest”, and capacity building of officers through the National Academy of Direct Taxes is already underway.
Q: There has been media speculation about the new provisions for search and seizure, especially regarding digital assets. What was the need for these changes? A: The powers for the search and seizure were already existing. Now it has been made more explicit. Search-seizure takes place only when we have concrete evidence of tax evasion. Now, the evidences of tax evaded income are being kept online. So, we have to have access to them. Similarly, the undisclosed income was earlier invested in physical assets, gold, bullion, jewellery, etc. Now they are being invested in virtual digital assets also. So, we need to have access to that also to determine how much tax has been evaded. And all these provisions are applicable only when a search and seizure action or survey action takes place against a particular assessee. In normal terms, they are not to be used.
Q: What tangible benefits will taxpayers feel after the new Act is implemented? A: Many parts in the Income Tax Act were redundant. So, what we have done in the new act, the redundant parts have been removed. The law has been simplified. They are written in a simple language. The provisions related to a particular subject which were scattered across different chapters have been consolidated, for example one chapter for non-profit organization. Salary related provisions have also been incorporated in one chapter. So, for any person who needs to know how to compute income or what is the taxability, what are the provisions, it will become very easy, we have used tabular form. It will be very easy to understand how to compute interest or how to compute tax on a particular income.
Q: Do you expect the new Act will curb disputes?
A: So far as the language is simplified, it will help in minimising the disputes. Because of the simplified language.
Q: The Act comes into effect from April 1, 2026. What transitional issues do you anticipate?
A: Transition involves many fields. First is you have to get new rules and forms. Then our system directorate has to be ready because our processes are online now. So, we have to be ready for that. Then the education of the taxpayers. Capacity building of our own officers. We are working on all of this. The day new bill was introduced in the parliament, on February 13, 2025, the same day the CBDT constituted a drafting committee for rules and forms. So, they are already working on that. They have done public consultation, received thousands of suggestions which have been scrutinised by them. They are ready with their draft rules and forms. So, this process is already going on. Again the same principle is being followed in them that it should be in simple language and lucid, concise. And forms also should facilitate the ease of doing business to the maximum extent. So, they are working on that. The systems in the back end will also be in place when the new Act comes into effect.
Q: Will guidelines or FAQs be issued for taxpayers?
A: Yes, FAQs and guidelines will be issued. We will also be coming with an information guide, mapping the provisions of the old Act with the provisions of the new Act. So, it will be very easy to find where the new provisions are. We are already in the process of formulating that. We will be releasing them at the earliest.
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