Draft Income-tax Rules, 2026 - Key changes and brief overview

 The Central Board of Direct Taxes (‘CBDT’) has released the Draft Income-tax Rules, 2026, along with accompanying Draft Forms, to operationalize the Income-tax Act, 2025, which is scheduled to come into force on April 1, 2026. These draft rules are currently in the public domain for feedback until February 22, 2026. The new framework aims to simplify compliance by reducing the number of rules from 511 to 333 and forms from 399 to 190. A comprehensive overview of key proposed changes, featuring combined common rules and forms, is tabulated below:

Taxability of Foreign Salary Credited to NRE Account

 As per Income Tax Law, the total income of a non-resident includes income from any source that is received or deemed to be received in India during the relevant previous year.

ITAT Chandigarh holds Stamp Duty value on Agreement for Sale date to prevail over Registration date for Income Tax purposes

 Recently, the Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) in the case of Monica Bibbly Sood, has ruled that for the purposes of Section 50C of the Income-tax Act (dealing with deemed valuation of immovable property), the “appointed date” for determining stamp duty valuation shall be the date of agreement to sell, and not the date of registration of the sale deed, where part consideration has been received through banking channels in accordance with the provisions of Section 50C.

Retrospective removal of provision permitting addition of non-relatives as Trust beneficiaries : Key to Gift-Tax Relief on Share Contribution under Indian Income Tax Act

 Chennai Tribunal held that where a trust has been retrospectively amended to eliminate the possibility of adding non-relatives as beneficiaries, contribution of shares by the settlor to the trust would not attract the gift tax provisions.

 

HC holds unutilised CGST and IGST credit can be transferred on business transfer between distinct persons

 This Tax Alert summarizes a recent ruling of the Andhra Pradesh High Court (HC) ^[1] on the Goods and Services Tax (GST) implications on business transfer between distinct persons.

The assessee transferred its Research and Development unit in Andhra Pradesh (AP) to its Karnataka unit. The Appellate Authority for Advance Ruling (AAAR^[2] held such transfer as taxable supply of goods and disallowed transfer of unutilized ITC. Aggrieved the assessee filed a writ petition before the HC.

Draft Income Tax Rules, 2026

 The Central Board of Direct Taxes (CBDT) released the Draft Income Tax Rules, 2026 on February 7, 2026. It has invited suggestions and opinions from all stakeholders. Tax professionals, experts, and the general public can share their views up to February 22, 2026. So, what are the Draft Income Tax Rules, 2026? Rules are detailed instructions linked to an Act. They explain the practical side of compliance, such as reporting requirements, monetary limits, procedures, and form-filing rules. If all these details were written directly in the Act, the Act would become very long and complicated. Instead, the Act lays down the main provisions, while the Rules provide the step-by-step guidance.

Gujarat HC disallows ITC refund in case of amalgamation due to statutory non-compliance

 This Tax Alert summarizes recent ruling of the Gujarat High Court (HC) ^[1] on refund eligibility of unutilized input tax credit (ITC) on account of exports, in case of amalgamation, where statutory provisions under Goods and Services Tax law (GST law) had not been complied with.

The key observations of the HC are:

Mumbai ITAT allows 'exemption' in reassessment proceedings which was not claimed in the original return of income

 In a significant and taxpayer-friendly ruling, the Hon’ble ITAT, Mumbai Bench in Sanjay Gopaldas Bajaj vs. ITO has held that a taxpayer is entitled to claim deduction under section 54 in a return filed pursuant to reassessment proceedings, even where no original return was filed. The ruling assumes importance for individual taxpayers facing reassessment proceedings involving capital gains, particularly in cases where exemption claims are made for the first time during reassessment proceedings.

In the present case, the assessee had not filed his original return of income within the timeline prescribed under the Act. Based on information available in TDS statements reflecting salary, rental income and property transactions, the Assessing Officer (AO) initiated reassessment proceedings. In response to the notice, the assessee filed his return of income declaring long-term capital gains arising from sale of a residential property and claimed deduction under section 54 on the ground that the entire capital gains had been reinvested in a new residential house within the prescribed time.

While the AO accepted the computation of capital gains, he denied deduction under section 54 solely on the ground that the assessee had not filed the original return. The Ld. CIT(A) upheld the disallowance by placing reliance on the Supreme Court’s decision in CIT v. Sun Engineering Works (P.) Ltd. Aggrieved, the assessee preferred an appeal before the Hon’ble ITAT.

The Hon’ble ITAT ruled decisively in favour of the taxpayer and allowed the claim, making the following important observations:

Export - Import Regulations revamped by RBI - Effective 1st October 2026

 The Reserve Bank of India (RBI) has overhauled the Foreign Exchange Management (Export and Import of Goods and Services) Regulations with the objective of simplifying cross-border trade compliance and establishing a more facilitative export-import regulatory framework.

In merger cases, transferor company assessment cannot be mechanically merged with transferee company through same re-assessment order of transferee company

 In a recent ruling, the Mumbai Bench of the Income Tax Appellate Tribunal (“ITAT”) held that income or disallowances relating to a predecessor company for a period prior to amalgamation cannot be assessed by clubbing them with the income of the successor entity through a single reassessment order. The ITAT categorically ruled that the Income-tax Act does not envisage a composite or consolidated reassessment of predecessor and successor incomes, even where the successor is liable for the predecessor’s tax dues.

 

The eBRC Revolution: Why Your Export Incentives Are at Risk From January 2026

 At first glance, DGFT Public Notice No. 42/2025-26 appears to be a mundane update—just three new fields to populate on the electronic Bank Realisation Certificate (eBRC): GSTIN, GST Invoice Number, and Date. Many exporters are dismissing it as a simple format tweak. This dismissal is a monumental, and potentially costly, error.

Effective 13 January 2026, this notice fundamentally rewires India’s export compliance machinery. The eBRC is being transformed from a confirmatory document into a live financial control instrument. The core shift is seismic: from Shipping-Bill-Centric to Invoice-Centric tracking of export realisations.