SRINAGAR: The Ministry of Finance has notified the Income Tax Rules, 2026, which will take effect from next month, introducing stricter disclosure norms while streamlining tax procedures by reducing the number of rules.
The new framework implements provisions of the Income-tax Act, 2025 and replaces existing procedural systems with updated definitions, compliance structures, and reporting mechanisms. Companies will now be required to maintain share registers, conduct general meetings, and distribute dividends only within India, strengthening domestic oversight.
The rules also tighten compliance requirements for stock exchanges, mandating audit trails for seven years, prohibiting deletion of transaction records, and requiring monthly reports on modified transactions to improve transparency.
Tax authorities have been given enhanced powers in cross-border taxation, including the ability to estimate non-resident income using percentage-based methods, global profit ratios, or other reasonable approaches.
Additionally, the rules provide clearer guidelines for complex transactions such as debenture conversions, asset disclosure schemes, and cross-border restructuring. A framework for zero-coupon bonds has been introduced, requiring prior approval, investment-grade ratings from two agencies, and defined timelines for fund utilisation.
For employer-provided accommodation, exemptions will now be based on factors such as city population, salary levels, and whether the property is owned or leased.
Overall, the new rules aim to boost transparency, digitisation, and standardisation in the taxation system, reduce disputes, and strengthen enforcement.
