The Income Tax Department has introduced a major overhaul in form numbering under the Income Tax Rules 2026, replacing several commonly used forms that were earlier prescribed under the Income Tax Act 1961 and IT Rules 1962. The changes affect tax audit reports, PAN applications, TDS returns, charitable trust filings, foreign remittances, and appellate forms, among others.

According to the updated list of frequently used forms, nearly 30 commonly used forms have been assigned new numbers, requiring taxpayers, chartered accountants, companies and trusts to use the revised formats going forward.

One of the most significant changes is in Tax Audit reporting, where the earlier Forms 3CA and 3CB have now been replaced by Form 26. The new form reportedly contains 55 segment-wise clauses, indicating a more detailed reporting structure.

The Income Tax Department has detected suppression of sales worth around Rs 408 crore by restaurants following a nationwide verification exercise conducted across the food and beverage (F&B) sector.

The probe stems from an investigation launched in November 2025 to examine possible tax evasion patterns among restaurants. During the exercise, the department found that several establishments were allegedly deleting bulk bills and making other alterations in their billing systems to understate actual sales.

Officials analysed transactional data from about 1.77 lakh restaurants using artificial intelligence-enabled analytical tools and compared it with the turnover declared in their income tax returns. The analysis pointed to large-scale under-reporting of income across several cases.

Geopolitical conflicts are usually analysed through the lens of diplomacy, security or energy markets. Yet, their ripple effects sometimes reach the everyday lives of ordinary individuals in unexpected ways. The ongoing tension involving the United States, Israel and Iran have periodically disrupted aviation routes across parts of West Asia. Major transit hubs such as Dubai and Abu Dhabi have experienced sudden airspace restrictions and flight cancellations, leaving many travellers stranded.

For Indians in the United Arab Emirates, including expatriates, professionals, and senior citizens from India visiting their children, such disruptions may initially seem little more than a travel inconvenience. However, in the realm of taxation, even a brief involuntary extension of stay can trigger consequences far beyond delayed flights. A deviation of just two or three days may alter a person's tax residency status, reshape compliance obligations, and potentially expose foreign income to taxation.

The explanation lies in the way our nation's tax system determines residential status.

The arithmetic
Under Section 6 of the Income Tax Act, residential status is determined primarily by the number of days spent in India during a financial year. The law lays down clear thresholds. An individual becomes a resident if they stay in India for 182 days or more during the year. Alternatively, residency may also arise if the individual stays in India for 60 days in that year and for 365 days or more during the four preceding financial years. These rules appear objective and straightforward. Under ordinary circumstances, they function smoothly. Yet, they are also rigid because the law counts days without examining the reasons behind them. This rigidity becomes evident when real-life travel disruptions collide with statutory thresholds.

The Income Tax Department has launched a pan-India verification drive targeting restaurants suspected of under-reporting sales, according to a report by CNBC-TV18.

The move comes after tax officials recently detected alleged manipulation of billing data that allowed some restaurants to suppress their actual sales and reduce tax liabilities.

Sources told CNBC-TV18 that the tax department has directed its field units across the country to carry out sample checks to identify cases where restaurants may have under-reported their revenue.

The Income Tax Appellate Tribunal (ITAT) Pune on February 19, 2026 gave full tax exemption to Mr Gugale from Baramati, Pune after he sold his land for Rs 3.21 and used this money to buy a house. He had to go and file a case in ITAT Pune as the Income Tax
Department had initially denied his tax exemption claim under Section 54F because he made a crucial technical mistake of not fully depositing the land's sale proceeds in a special bank account called 'Capital Gains Account Scheme (CGAS) before filing his income tax return (ITR).

ITAT Pune held that Section 54F exemption cannot be denied when sale proceeds are fully invested in a house, even if not fully deposited in the capital gains account before filing the return. The Karnataka High Court reached the same conclusion in a similar case (case no: CIT vs. Ramchandra Rao [2015] 56 taxman.com 163).

When 133 cr is involved, second thoughts are inevitable. But the I-T Appellate Tribunal's (ITAT) Delhi bench has reminded the tax administration that Sec 263 of I-T Act is not a statutory licence for second thoughts, especially when they arise after a completed scrutiny assessment.

Last month, in an order involving senior advocate Mukul Rohatgi's AY 2020-21 return, ITAT quashed the revisionary order under Sec 263 and restored the completed scrutiny assessment passed under Sec 143(3) read with Sec 144B. So, has ITAT reshaped Sec 263 law? No. It has firmly redrawn its boundaries at a time when those boundaries have been under pressure. For AY 2020-21, Rohatgi's return was scrutinised and assessed at about 2133 cr. Subsequently, the principal commissioner invoked Sec 263 on three grounds:
Characterisation of certain MF gains (long-term vs short-term).

Determination of annual letting value for properties in India and abroad.
Alleged failure to initiate penalty under Sec 271C for non-deduction of TDS.
Sec 263 allows a commissioner to revise an assessment only if it's both: erroneous, and prejudicial to interests of revenue. These are conjunctive conditions, not alternatives. The Supreme Court settled this in 'Malabar Industrial'. The tribunal found the principal commissioner lacked objective material demonstrating the completed assessment suffered from a legally sustainable error causing revenue prejudice. That finding proved fatal to the revision.

The Central Information Commission (CIC) has advised the Income Tax Department to "institutionalise a taxpayer-friendly mechanism", flagging that taxpayers are often made to run from "pillar to post" while seeking resolution of their grievances.

The observation came in an order passed by Information Commissioner Vinod Kumar Tiwari while disposing of a complaint related to 'discrepancies' in TDS credited to the applicant over several assessment years.

The commission noted that in several such cases, taxpayers are repeatedly forced to pursue authorities to reconcile discrepancies.

The Finance Bill, 2026 proposes several reforms aimed at encouraging voluntary compliance-including expanding the scope of updated returns and rationalising penal consequences for small taxpayers disclosing foreign assets and income under the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026.

The updated return mechanism was first introduced through Section 139(8A) of the Income-tax Act, 1961 by the Finance Act, 2022, allowing taxpayers to file an updated return within 24 months from the end of the relevant assessment year. The time limit was subsequently extended to 48 months by the Finance Act, 2025 (effective 1 April 2025), subject to payment of additional tax ranging from 25% to 70% of the aggregate of tax and interest payable under Section 140B.
From 1 April 2026, the framework is incorporated in Section 263(6)(a) of the Income-tax Act, 2025, with additional tax payable under Section 267.

Direct taxes now account for 58.5% of total tax collections, with non-corporate taxes the dominant contributor. In indirect taxes, GST is now the most buoyant revenue source. This suggests an improvement in the progressivity of the tax system, explain Richa Sawhney & Manoj Mishra

l Direct tax collection trends
INDIA’S TAX COLLECTIONS have exhibited a sustained upward trajectory over the past decade, increasing from Rs 12.45 lakh crore in FY15 to around Rs 44 lakh crore by FY25. While indirect taxes accounted for a relatively higher share of total tax revenues in FY17 and FY21, this pattern has reversed in recent years, with direct taxes’ share of total tax revenues being nearly 58.5% in FY25.

From a distributional perspective, this shift is significant as direct taxes are inherently progressive, as they are linked to income and profitability, whereas indirect taxes are considered to be regressive, disproportionately affecting lower-income households through consumption. The rising share of direct taxes suggests an improvement in the progressivity of the tax system, with positive implications for equity and the overall incidence of taxation.

Many Indians working overseas and earning their salaries abroad have to pay due taxes in that foreign country, be it Singapore, or the United States of America (USA). In cases, where a salaried employee has already paid taxes there, India offers a foreign tax credit (FTC). To take advantage of this, you need to submit Form 67 as per Rule 128 of the Income Tax Rules, 1962.

Although you must file Form 67 before the income tax return (ITR) filing deadline to receive the FTC, missing this deadline can lead to tax disputes. Some taxpayers have successfully contested these disputes in ITAT, but it's best to file Form 67 within the due date to secure the FTC credit in India and avoid double taxation.
However, under the draft Income Tax Rules, 2026, the rules have changed for Form 67 (re-numbered to Form 44 now). The draft income tax rules have not yet been approved by the Parliament.

Here comes a hitch for the taxman. Deported fugitives, truant bottowers slapped with lookout notices, extradited accused or even approvers singing like a canary before law enforcement agencies the long cast of characters who are unable to fly out of the country-cannot be readily forced to disclose their foreign bank accounts, companies, and properties.

This stems from a Delhi High Court order that has stayed the tax office's demand that Rajiv Saxena, the Dubaibased businessman who was extradited to India in January 2019 in connection Forced Stay? No BMA, says Court I-T Dept can't blindly impose law on involuntary residents' in India to get foreign asset info with the AgustaWestland case, must share the details of his foreign assets.
With this, the income tax authorities cannot blindly invoke the Black Money Act (BMA) simply because a person has unwillingly become a 'resident'-following his involuntary stay in India beyond 181 days. Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which came into effect on July 1, 2015, all residents must declare their overseas assets in the annual tax return.

The Income Tax Department has released the Draft Income Tax Rules, 2026 under the proposed new Income Tax framework, outlining changes to how Permanent Account Number (PAN) requirements apply to property transactions.

One of the key proposals is to raise the reporting threshold for mandatory PAN disclosure in immovable property deals.

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If notified, the changes are expected to take effect from April 1.

What is changing?

Currently, PAN must be furnished for the purchase or sale of immovable property—such as a house or plot—if the transaction value exceeds Rs 10 lakh.

The draft rules propose increasing this limit to Rs 20 lakh. If adopted, property transactions below Rs 20 lakh would not require mandatory PAN disclosure, while transactions at or above Rs 20 lakh would continue to fall within the reporting requirement.

On February 4, 2026, the Income Tax Appellate Tribunal (ITAT) Delhi ruled that a gift of property made under a Hindu family settlement does not fall under the definition of transfer and, therefore, is not subject to taxation under Section 56(2)(vii)(b) as deemed income

ITAT delivered this judgement in a case filed by Smt Aggarwal, who has challenged a tax notice issued by the Income Tax (1-T) department. The tax department had flagged her case after reviewing her file and ITR (Income Tax Return), in which she had declared an income of Rs 3,40,540. The review disclosed that she had received a property valued at Rs 33,43,440 by way of a gift deed. The tax department issued a notice stating that the donor did not qualify as "specified relatives" under Section 56(2) of the Income-tax Act, 1961. thereby making the gift taxable.
She argued that since she received the property as part of a family settlement deal, its value is not taxable. However, the income tax assessing officer (AO) rejected her argument and added the value of the property to her income and made her liable to pay tax on this additional income.

A Dubai-based NRI invested Rs 2 crore in a Mumbai property but did not file an Income Tax Return (ITR) in India for that year, as he had no taxable income here. The Income Tax Department treated the investment as “unexplained money” and reopened his case.

However, the Income Tax Appellate Tribunal (ITAT), Mumbai, ruled in his favour, making it an important case study for NRIs investing in India.

This case highlights a simple but critical principle: foreign salary savings remitted through proper banking channels cannot be treated as unexplained income in India merely because no ITR was filed.

The proposed changes to the Minimum Alternate Tax (MAT) regime, announced in the Union Budget for FY27, will significantly impact companies in capital-intensive sectors such as infrastructure, Special Economic Zone (SEZ) units and tax-holiday startups, analysts said. Electronics manufacturing units, power and renewables and automobile firms will also require to modify their tax planning.

The government proposed a major overhaul of MAT to simplify the corporate tax structure and encourage companies to shift to the concessional 22% corporate tax regime.

The key changes include reducing the MAT rate from 15% to 14% on book profits, treating MAT as a final tax under the old regime with no new credit accumulation from April 1, 2026, and restricting set-off of existing MAT credits (accumulated up to March 31, 2026) to 25% of tax liability per year only for companies transitioning to the new regime.

Cash gifts from relatives are generally tax-free under the Income Tax Act. But a recent case discussed by tax advisory platform TaxBuddy in a social media thread shows how exemption can fail without proper documentation. In this matter, Rs 10.43 lakh received as cash gifts on a marriage anniversary was ultimately taxed after the taxpayer failed to provide basic details of the donors.

According to the thread shared by TaxBuddy, the taxpayer had celebrated his 10th marriage anniversary and received multiple cash gifts from family members and relatives. Individual amounts ranged from Rs 2,100 to Rs 11,000, and the total cash deposited in his bank account came to Rs 10,43,998.

Since gifts from specified relatives are exempt under income tax law, the taxpayer claimed the amount was not taxable and described them as customary gifts received during a social function.

During the recent visit of the France President to India, the Indian Government and the Government of the French Republic have signed a Protocol amending the India-France Double Taxation Avoidance Convention, signed on 29 September 1992 ('India-France DTAC').

The Amending Protocol was signed by Ravi Agrawal, Chairperson, Central Board of Direct Taxes, Government of India, and Thierry Mathou, Ambassador of France to India, on behalf of their respective Governments.

The Ministry of Finance released a statement regarding that. It stated, "The Amending Protocol provides full taxing rights in respect of capital gains arising from sale of shares of a company, to the jurisdiction where such company is a resident."

If you are paying rent to your spouse, parents or any other family member to claim house rent allowance (HRA) under the old tax regime, you may have to soon disclose your relationship with your landlord under the changes proposed to new tax laws to verify the legitimacy of the claim.

The draft income-tax rules, 2026 requires salaried individuals to disclose their “relationship with the landlord” in Form 124, where the aggregate rent paid during the tax year exceeds Rs 1 lakh.

Tax experts clarify that draft rule does not bar tenants from paying rent to family members. Salaried individuals can continue to claim HRA for rent paid to parents, spouses or other relatives, provided the arrangement is genuine.

A routine inspection of biryani restaurants in Hyderabad has unexpectedly exposed what officials now describe as one of the largest suspected tax evasion rackets in the country, with concealed sales estimated at nearly Rs 70,000 crore. What began as a local compliance check has expanded into a nationwide investigation spanning thousands of eateries and multiple states.

The probe was initiated after officers of the Income Tax Department noticed inconsistencies in the reported revenues of several popular biryani outlets in Hyderabad. Initial surveys revealed significant gaps between actual customer footfall and the turnover declared in tax filings. These discrepancies prompted a deeper forensic examination of billing practices used by the restaurants, reports said.

Investigators soon identified a commonly used restaurant billing software as a key link. The platform, which services over one and a half lakh restaurants across India, was found to allow post-transaction manipulation of billing data. Tax officials accessed backend records and began analysing nearly 60 terabytes of data covering six financial years. The exercise revealed a systematic pattern of deleting or altering bills after payments were received, effectively erasing large volumes of sales from official records before tax returns were filed.

Many salaried employees with hefty salaries are getting income tax Nudge intimations, prompting them to correct errors like undisclosed property income, crypto gains, ESOP, and more.
The Income Tax Department is giving a last chance to these employees to fix their mistakes voluntarily before they take strict action against those with undisclosed incomes.

Also the Income Tax Department has identified a pattern where the same chartered accountant is being used by several taxpayers to make donations to a single political party, and various charitable institutions. As a result, the tax department has said they will initiate separate actions against those CAs as well.
As reported by ET (Anuradha Shukla), tax authorities have issued notices to these individuals, including CEOs and managing directors of multinational companies, urging them to rectify the anomalies before penalties are imposed, according to officials.