New Delhi, Mar 20 (KNN) The Ministry of Finance, through the Central Board of Direct Taxes (CBDT), has notified the Income-tax Rules, 2026 under the provisions of the Income-tax Act, 2025. The new rules will come into force from April 1, 2026.
The rules set out detailed procedures, definitions, and compliance requirements across multiple areas of taxation, including capital gains, perquisites, stock exchange recognition, and taxation of non-residents.
Recognition Norms for Stock Exchanges
The notification specifies conditions for stock exchanges to qualify as ‘recognised stock exchanges’. These include mandatory approval from the Securities and Exchange Board of India (SEBI), maintenance of transaction audit trails for seven years, and adherence to strict data integrity and reporting standards.
A formal application process has also been introduced, with the government required to decide on recognition within six months.
Clarity on Capital Gains and Asset Holding Period
The rules provide clarity on the calculation of holding periods for capital assets in specific cases, such as conversion of securities, declared assets, and restructuring involving foreign entities.
They also prescribe methods for classifying gains as short-term or long-term in complex transactions.
Framework for Zero Coupon Bonds
A structured procedure has been introduced for notifying zero coupon bonds. Eligible entities must apply at least three months prior to issuance and meet conditions such as a minimum tenure of 10–20 years, investment-grade ratings, and mandatory listing on recognised stock exchanges.
The government retains the authority to approve, reject, or withdraw such notifications based on compliance.
Provisions for Non-Resident Taxation
The rules outline methods for determining taxable income of non-residents where exact income cannot be established. In such cases, tax authorities may estimate income based on turnover or proportional profits.
They also define thresholds for “significant economic presence,” including a Rs 2 crore transaction limit and a user interaction threshold of 3 lakh in India.
Valuation and Offshore Transactions
Detailed formulas have been prescribed for determining the fair market value of assets, including shares and partnership interests, particularly in cross-border transactions.
The rules also clarify the attribution and taxation of income arising from offshore transfers linked to Indian assets.
Guidelines on Perquisites
Comprehensive valuation guidelines have been introduced for employee benefits such as accommodation, vehicles, concessional loans, and other amenities.
The rules specify standard valuation methods along with exemptions, including thresholds for gifts, meals, and medical benefits.
(KNN Bureau)
