{"id":268,"date":"2026-03-02T05:53:35","date_gmt":"2026-03-02T05:53:35","guid":{"rendered":"https:\/\/www.tiwariv.com\/blog\/?p=268"},"modified":"2026-03-02T05:58:42","modified_gmt":"2026-03-02T05:58:42","slug":"draft-income-tax-new-rule-2026","status":"publish","type":"post","link":"https:\/\/www.tiwariv.com\/blog\/draft-income-tax-new-rule-2026\/","title":{"rendered":"Draft Income-tax Rules 2026 | Key Highlights &amp; Impact"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">The Government has introduced the Draft Income-tax Rules, 2026 to align procedural and valuation provisions with the new Income-tax framework effective from 1 April 2026. While the Act lays down the law, the Rules explain how it will be implemented in real-life situations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For businesses, salaried individuals, non-residents, and investors, understanding these Rules is essential for proper compliance and tax planning.<\/p>\n\n\n\n<div data-wp-interactive=\"core\/file\" class=\"wp-block-file\"><object data-wp-bind--hidden=\"!state.hasPdfPreview\" hidden class=\"wp-block-file__embed\" data=\"https:\/\/www.tiwariv.com\/blog\/wp-content\/uploads\/2026\/03\/draft-Income-tax-Rules-2026-compressed.pdf\" type=\"application\/pdf\" style=\"width:100%;height:600px\" aria-label=\"Embed of draft-Income-tax-Rules-2026-compressed.\"><\/object><a id=\"wp-block-file--media-8a557d0b-94ee-45f3-bdff-adfaba52d359\" href=\"https:\/\/www.tiwariv.com\/blog\/wp-content\/uploads\/2026\/03\/draft-Income-tax-Rules-2026-compressed.pdf\">draft-Income-tax-Rules-2026-compressed<\/a><a href=\"https:\/\/www.tiwariv.com\/blog\/wp-content\/uploads\/2026\/03\/draft-Income-tax-Rules-2026-compressed.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-8a557d0b-94ee-45f3-bdff-adfaba52d359\">Download<\/a><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Applicability and Commencement<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The Draft Rules will come into force from 1 April 2026 and will apply in conjunction with the new Income-tax Act.<\/p>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-7dcd76b3c01c14a15348adc39463d314 wp-block-paragraph\"><strong>What this means:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>All tax computations from FY 2026\u201327 onward must follow these procedural guidelines.<\/li>\n\n\n\n<li>Valuation, perquisite calculation, and attribution rules will be governed strictly as prescribed.<br><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Recognition of Stock Exchanges<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The Rules prescribe conditions for a stock exchange to be treated as a recognised stock exchange for tax purposes.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Key Conditions:<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>SEBI approval is mandatory.<\/li>\n\n\n\n<li>Proper recording of client details including PAN.<\/li>\n\n\n\n<li>Complete audit trail of transactions for 7 tax years.<\/li>\n\n\n\n<li>Monthly reporting to the tax department.<br><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Practical Impact:<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Ensures transparency in derivatives and securities transactions.<\/li>\n\n\n\n<li>Protects investors from tax disputes related to off-market trades.<br><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Determination of Period of Holding of Capital Assets<\/strong><\/h2>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-9bfce3c8084058e625fa59f3dc9f46a8 wp-block-paragraph\">The Rules clarify how to calculate the holding period in specific cases such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Conversion of debentures into shares<\/li>\n\n\n\n<li>Assets declared under Income Declaration Scheme<\/li>\n\n\n\n<li>Assets transferred to Indian subsidiaries<br><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Why It Matters:<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The holding period determines whether a gain is short-term or long-term, which directly impacts tax rates.<\/p>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-2e5f7aca516baad992ece643f749ea90 wp-block-paragraph\">Example:<br>If debentures are converted into shares, the earlier holding period may be included. This may help the taxpayer qualify for long-term capital gains treatment.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Fair Market Value (FMV) Rules for Foreign Entities<\/strong><\/h2>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-4ada97a3d14d5bce2d2032f5ec5263f1 wp-block-paragraph\"><strong>The Rules provide a structured mechanism for determining FMV of:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Listed shares<\/li>\n\n\n\n<li>Unlisted shares<\/li>\n\n\n\n<li>Partnership interests<\/li>\n\n\n\n<li>Foreign company assets<br><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Key Valuation Methods:<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Market capitalisation approach (for listed entities)<\/li>\n\n\n\n<li>Merchant banker valuation (for unlisted shares)<\/li>\n\n\n\n<li>Book value of liabilities adjustment<br><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\">Impact on Non-Residents:<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">If foreign shares derive substantial value from Indian assets, Indian tax authorities can attribute income proportionately.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>5. Income Attribution to Assets Located in India<\/strong><\/h2>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-8580d5330d1c6eb283362ca66d565360 wp-block-paragraph\"><strong>A formula is prescribed:<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Income from transfer \u00d7 (FMV of Indian assets \/ FMV of global assets)<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Who Is Affected?<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Foreign investors<\/li>\n\n\n\n<li>Multinational corporations<\/li>\n\n\n\n<li>Offshore holding companies<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">This strengthens taxation of indirect transfers involving Indian assets.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-left\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Significant Economic Presence (SEP)<\/strong><\/h2>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-cd3810b8545e879e330a7e2711ae0e94 wp-block-paragraph\"><strong>To tax digital and non-resident businesses, thresholds are prescribed:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-heading-color has-text-color has-background has-link-color has-fixed-layout\" style=\"background-color:#a3b7e6\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Criteria<\/strong><\/td><td><strong>Threshold<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Payment from Indian users<\/td><td>\u20b92 crore<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Number of users<\/td><td>3 lakh<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Practical Meaning:<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Even without physical presence in India, a foreign entity crossing these limits may become taxable in India.<\/p>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-358f26dd7d622e930cee111d1749117f wp-block-paragraph\"><strong>This impacts:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Digital platforms<\/li>\n\n\n\n<li>SaaS companies<\/li>\n\n\n\n<li>E-commerce operators<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Perquisite Valuation for Salaried Employees<\/strong><\/h2>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-bbc2519ad118b52531487244db90e87f wp-block-paragraph\"><strong>The Rules extensively detail valuation of:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Rent-free accommodation<\/li>\n\n\n\n<li>Motor car usage<\/li>\n\n\n\n<li>Interest-free loans<\/li>\n\n\n\n<li>Club memberships<\/li>\n\n\n\n<li>Gifts above \u20b915,000<\/li>\n\n\n\n<li>ESOP valuation<br><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Example: Motor Car Perquisite<\/strong><\/h3>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-heading-color has-text-color has-background has-link-color has-fixed-layout\" style=\"background-color:#b0c1e6\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Situation<\/strong><\/td><td><strong>Monthly Taxable Value<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Official use only (with records)<\/td><td>Nil<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Mixed use (small car)<\/td><td>\u20b95,000 (+ chauffeur \u20b93,000)<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Mixed use (big car)<\/td><td>\u20b97,000 (+ chauffeur \u20b93,000)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Why This Is Important:<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Employers must maintain documentation. Improper calculation can result in additional tax liability for employees.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Zero Coupon Bond Guidelines<\/strong><\/h2>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-bd17f70e1d7b435fbeddefd010ffa721 wp-block-paragraph\">Entities like infrastructure companies must:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Apply 3 months before issuance<\/li>\n\n\n\n<li>Maintain minimum 10-year maturity<\/li>\n\n\n\n<li>Obtain investment grade ratings<\/li>\n\n\n\n<li>Invest proceeds within prescribed timelines<br><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\">Impact:<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Ensures disciplined use of funds and transparency in infrastructure financing.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Voluntary Retirement Scheme (VRS) Guidelines<\/strong><\/h2>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-9a8aaf3fbd2be8704799b240f8b0898d wp-block-paragraph\"><strong>Tax deduction for VRS compensation is allowed only if:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Employee completed 10 years of service or 40 years of age<\/li>\n\n\n\n<li>Overall workforce reduction is intended<\/li>\n\n\n\n<li>Vacancy is not refilled<\/li>\n\n\n\n<li>Compensation limit formula is satisfied<br><\/li>\n<\/ul>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-257e6fbf6805e1654b723f1ad9972a6d wp-block-paragraph\"><strong>Formula:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>3 \u00d7 completed years of service \u00d7 salary<br>OR<\/li>\n\n\n\n<li>Remaining months of service \u00d7 salary<br><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Whichever is lower.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This prevents misuse of tax exemptions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Summary Table Key Provisions at a Glance<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-heading-color has-text-color has-background has-link-color has-fixed-layout\" style=\"background-color:#b8c6e7\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Provision<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>What the Rule Says<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Who is Affected<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Practical Impact<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Recognised Stock Exchange<\/td><td class=\"has-text-align-center\" data-align=\"center\">SEBI approval &amp; audit trail required<\/td><td class=\"has-text-align-center\" data-align=\"center\">Traders, brokers<\/td><td class=\"has-text-align-center\" data-align=\"center\">Reduces litigation risk<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Capital Asset Holding<\/td><td class=\"has-text-align-center\" data-align=\"center\">Specific inclusion rules<\/td><td class=\"has-text-align-center\" data-align=\"center\">Investors<\/td><td class=\"has-text-align-center\" data-align=\"center\">Affects LTCG\/STCG classificatio<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">FMV Rules<\/td><td class=\"has-text-align-center\" data-align=\"center\">Structured valuation method<\/td><td class=\"has-text-align-center\" data-align=\"center\">Foreign entities<\/td><td class=\"has-text-align-center\" data-align=\"center\">Prevents tax avoidance<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">SEP Threshold<\/td><td class=\"has-text-align-center\" data-align=\"center\">\u20b92 crore or 3 lakh users<\/td><td class=\"has-text-align-center\" data-align=\"center\">Digital businesses<\/td><td class=\"has-text-align-center\" data-align=\"center\">Expands tax base<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Perquisite Valuation<\/td><td class=\"has-text-align-center\" data-align=\"center\">Fixed computation methods<\/td><td class=\"has-text-align-center\" data-align=\"center\">Salaried employees<\/td><td class=\"has-text-align-center\" data-align=\"center\">Accurate TDS compliance<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">VRS Deduction<\/td><td class=\"has-text-align-center\" data-align=\"center\">Strict eligibility conditions<\/td><td class=\"has-text-align-center\" data-align=\"center\">Retiring employees<\/td><td class=\"has-text-align-center\" data-align=\"center\">Controlled exemption claims<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Zero Coupon Bonds<\/td><td class=\"has-text-align-center\" data-align=\"center\">Rating &amp; investment conditions<\/td><td class=\"has-text-align-center\" data-align=\"center\">Infra companies<\/td><td class=\"has-text-align-center\" data-align=\"center\">Regulatory discipline<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The Draft Income-tax Rules, 2026 focus on clarity, transparency, and prevention of tax avoidance. While many provisions formalize existing practices, areas like digital taxation, indirect transfer rules, and perquisite valuation demand careful compliance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Businesses, foreign investors, startups, and salaried professionals should review their tax structures before April 2026 to avoid disputes and penalties.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For professional advisory, tax planning, compliance management, and impact assessment under the new Income-tax framework, <a href=\"https:\/\/tiwariv.com\/\">consult Vivek Tiwari &amp; Company<\/a>. Our team ensures that your tax position remains legally sound and strategically optimized under evolving regulations.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>Frequently Asked Questions&nbsp;<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>1. When will the Draft Income-tax Rules, 2026 become applicable?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The Rules are proposed to come into effect from <strong>1 April 2026<\/strong>. All tax computations and compliance for Financial Year 2026\u201327 onwards must follow these provisions.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>2. How do the new Rules affect capital gains taxation?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The Rules clarify how to calculate the <strong>period of holding<\/strong> in special cases such as conversion of debentures into shares or indirect transfers. This directly impacts whether gains are treated as short-term or long-term, which affects tax rates.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>3. What is Significant Economic Presence (SEP) under the new Rules?<\/strong><\/h3>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-e6509a8d606c0003b2eb5b89ae0aef80 wp-block-paragraph\"><strong>A non-resident entity may become taxable in India if:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It receives more than \u20b92 crore from Indian transactions in a tax year, or<\/li>\n\n\n\n<li>It has 3 lakh or more Indian users.<br><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">This primarily affects digital platforms, SaaS companies, and online service providers operating in India without physical presence.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>4. How is Fair Market Value (FMV) determined for foreign entities?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">FMV is calculated based on:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Market capitalisation (for listed shares)<\/li>\n\n\n\n<li>Merchant banker valuation (for unlisted shares)<\/li>\n\n\n\n<li>Adjustment for liabilities<br><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">This ensures proper taxation of indirect transfers involving Indian assets.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>5. Will salaried employees see changes in perquisite taxation?<\/strong><\/h3>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-fc0cc98114a6cc5da9f54bdfd7985d00 wp-block-paragraph\"><strong>Yes. The Rules provide detailed methods for valuing:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Rent-free accommodation<\/li>\n\n\n\n<li>Motor car usage<br>Interest-free loans<\/li>\n\n\n\n<li>ESOPs<\/li>\n\n\n\n<li>Gifts exceeding \u20b915,000<br><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Employers must maintain proper documentation to avoid tax disputes.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>6. What are the new conditions for Voluntary Retirement Scheme (VRS) tax benefits?<\/strong><\/h3>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-231084d085ee6932fc2abd01321a52a4 wp-block-paragraph\"><strong>VRS tax benefits are available only if:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The employee has completed 10 years of service or 40 years of age<\/li>\n\n\n\n<li>The scheme results in workforce reduction<\/li>\n\n\n\n<li>Vacancies are not refilled<\/li>\n\n\n\n<li>Compensation is within prescribed limits<br><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Non-compliance may lead to denial of tax deduction.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>7. How do the Rules impact non-resident investors?<\/strong><\/h3>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-6672d60e909c15f5735b29143e74a1fb wp-block-paragraph\"><strong>Non-resident investors may face taxation in India if:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Their foreign entity derives substantial value from Indian assets<\/li>\n\n\n\n<li>They cross SEP thresholds<\/li>\n\n\n\n<li>They fail to provide required valuation or attribution documentation<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Proper reporting and valuation certification will be essential.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>8. What is the impact on infrastructure companies issuing Zero Coupon Bonds?<\/strong><\/h3>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-0b3c2534318b9e2b98578144410893f8 wp-block-paragraph\"><strong>Such entities must:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Obtain investment-grade ratings<\/li>\n\n\n\n<li>Follow strict investment timelines<\/li>\n\n\n\n<li>Comply with notification procedures<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Failure to meet conditions may lead to withdrawal of tax benefits.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>9. Do these Rules increase compliance requirements?<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Yes. Documentation, valuation certification, audit trails, and reporting obligations have been strengthened. Businesses and employers must ensure accurate record-keeping.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" style=\"font-size:clamp(16.293px, 1.018rem + ((1vw - 3.2px) * 0.898), 25px);\"><strong>10. Should taxpayers take action now?<\/strong><\/h3>\n\n\n\n<p class=\"has-heading-color has-text-color has-link-color wp-elements-a73623f343881c15014e2bf958cb7f32 wp-block-paragraph\"><strong>Although the Rules apply from April 2026, it is advisable to:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Review cross-border structures<\/li>\n\n\n\n<li>Reassess compensation structures<\/li>\n\n\n\n<li>Examine digital business exposure<\/li>\n\n\n\n<li>Plan capital transactions carefully<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Early planning reduces future litigation and tax risk.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Government has introduced the Draft Income-tax Rules, 2026 to align procedural and valuation provisions with the new Income-tax framework effective from 1 April 2026. While the Act lays down the law, the Rules explain how it will be implemented in real-life situations. For businesses, salaried individuals, non-residents, and investors, understanding these Rules is essential [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":270,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_breezi_meta_title":"Draft Income-tax Rules 2026 | Key Highlights & Impact","_breezi_meta_description":"Explore key highlights of Draft Income-tax Rules 2026, including SEP, FMV, capital gains, and perquisite rules with practical insights for taxpayers.\n","_breezi_meta_keywords":"Draft Income-tax Rules 2026 , Income tax new rule, income tax new rule 2026","_breezi_meta_author":"Shivani","_breezi_meta_publisher":"Shivani","footnotes":""},"categories":[48],"tags":[49,50,51],"class_list":["post-268","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income-tax","tag-draft-income-tax-rules-2026","tag-income-tax-new-rule","tag-income-tax-new-rule-2026"],"_links":{"self":[{"href":"https:\/\/www.tiwariv.com\/blog\/wp-json\/wp\/v2\/posts\/268","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tiwariv.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tiwariv.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tiwariv.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tiwariv.com\/blog\/wp-json\/wp\/v2\/comments?post=268"}],"version-history":[{"count":5,"href":"https:\/\/www.tiwariv.com\/blog\/wp-json\/wp\/v2\/posts\/268\/revisions"}],"predecessor-version":[{"id":276,"href":"https:\/\/www.tiwariv.com\/blog\/wp-json\/wp\/v2\/posts\/268\/revisions\/276"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tiwariv.com\/blog\/wp-json\/wp\/v2\/media\/270"}],"wp:attachment":[{"href":"https:\/\/www.tiwariv.com\/blog\/wp-json\/wp\/v2\/media?parent=268"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tiwariv.com\/blog\/wp-json\/wp\/v2\/categories?post=268"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tiwariv.com\/blog\/wp-json\/wp\/v2\/tags?post=268"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}