- By Aditya Pratap Singh
- Tue, 10 Feb 2026 05:55 PM (IST)
- Source:JND
Income Tax Rule 2025 Draft: India's income tax system is set to undergo a major structural change after the Income Tax Act 2025 comes into effect on April 1, 2026, as announced by Finance Minister Nirmala Sitharaman in her budget speech. The new act will replace the six-decade-old Income Tax Act 1961. Meanwhile, the government has prepared the draft Income Tax Rules 2026 with revised tax forms, including the ITR (Income Tax Return) form.
These draft rules and forms are being put in the public domain, seeking feedback from taxpayers, professionals, and other stakeholders, before bringing them into operation. As per information, the draft rules will remain open for comments for 15 days, until February 22, 2026, after which they may be notified.
Meanwhile, taxpayers, who are wondering what changes the new act will bring to ITR-1 to ITR-7, need not worry as the ITR structure will remain familiar with the removal of some irrelevant terms.
Taxpayers will continue to use forms ITR-1 to ITR-7, which broadly fall into the same categories (salaried individuals, business owners, companies, firms, and trusts).
Also Read: New Income Tax Rules: From PAN, ITR To Crypto Disclosure; Here’s What All Changes From April 1
ITR Forms Under New Income Tax Rule
ITR-1 form, which is also known as Sahaj, is for those who have a source of income through salary, one house property, and other sources such as interest. However, the draft noted that electronic filing is the default, and paper filing is allowed only for super senior citizens aged 80 years and above. This means digital filing (whether through Electronic Verification Code (EVC) or digital signature) is the norm.
ITR-2: Individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession will continue to file ITR-2. Under the new rules, ITR-2 is explicitly intended as a fallback return when a taxpayer does not qualify for ITR-1. With the new capital gains framework and stricter foreign asset rules under the Income-tax Act, 2025, disclosures in ITR-2 are expected to become more detailed.
ITR-3: Taxpayers earning income from business or profession will continue to file ITR-3. According to the draft rules, once a taxpayer moves out of presumptive taxation or simplified returns, ITR-3 becomes mandatory. Given the new changes in capital gains and special income categories, ITR-3 is likely to be more disclosure-heavy.
ITR-4: The for which is also known as Sugam form, will see some concrete changes. As per the draft rules, while ITR-4 is still available for presumptive taxation matters, the draft rules clearly state who cannot use this form. Taxpayers including who have foreign assets or foreign income, who are directors in a company, who have unlisted equity shares during the year, who earns more than Rs 50 lakh, who have more than two houses, who have carried-forward losses and who have agricultural income exceeding Rs 5,000 can not use ITR 4.
ITR-5 and ITR-6: The structure of ITR-5 (for firms, LLPs, AOPs, and BOIs) and ITR-6 (for companies) will remain largely unchanged. However, the draft rules strengthen digital compliance, audit linkages, and reporting requirements.
ITR-7: The form, which is used by political parties, charitable trusts, and exempted institutions, clearly represents a push for greater transparency and electronic compliance. Under the draft, audit reports, donation disclosures, and fund utilization are closely linked to the return.