India’s new tax law simplifies compliance but complicates salaried tax choices

Subscribe to enjoy similar stories. Tax simplification should make us happy. After all, who wants a complicated tax law? That is precisely what the government set out to do by introducing the Income-tax Act, 2025—effectively a rewrite of the six-decade-old Income-tax Act, 1961 using clearer language and better-organized sections.

Following its passage, the government has now released the draft Income-tax Rules, 2026 for public consultation, with implementation scheduled from April 2026. The headline message is reassuring: consolidation, rationalization and smarter compliance through pre-filled returns. But scratch the surface and a familiar contradiction appears.

Administrative simplification may be advancing, but taxpayer decision-making, especially for salaried individuals, is quietly getting more complicated. That tension sits at the heart of the new draft rules. At a structural level, the draft rules deliver on their stated objective.

The number of rules and prescribed forms has been sharply reduced through consolidation and the removal of redundant provisions. From 511 rules and 399 forms under the old law, the draft Income-tax Rules, 2026 now contain 333 rules and 190 forms. Income-tax returns are being redesigned with extensive pre-filling, standardized data fields and automated reconciliation.

For the average taxpayer, this should mean less manual data entry and fewer inadvertent disclosure errors. In theory, it should also reduce notices triggered by clerical mismatches. Compliance is being nudged away from interpretation and towards verification.

This is, without doubt, a step in the right direction. But simplification of administration is not the same as simplification of choice. And that distinction matters