Feb 22, 2026
ABOUT:
On the final day of public consultation for the Draft
Income-tax Rules, 2026, I submitted structured, rule-specific feedback through
the official portal. The draft Rules represent a significant transition under
the Income-tax Act, 2025, with an emphasis on simplification, digitisation, and
reduction of compliance burden.
Given my long-standing interest in strengthening digital
transaction systems and reducing avoidable procedural friction, I focused my
responses on provisions that intersect with electronic payments, PAN-linked
reporting, and digital filing architecture.
The objective of the feedback was not policy advocacy, but
litigation minimisation, drafting clarity, and systemic certainty —
particularly in areas where digital processes interact with statutory
compliance.
Below is a summary of the four rules on which feedback was
submitted.
Rule 48 – Other Electronic Modes of Payment
Category: Litigation Reduction
The feedback suggested that clarity be provided on whether
- other electronic modes - automatically include RBI-regulated
payment systems or require separate notification. Absence of clarity could
result in technical disallowances where payments are made through newly
introduced regulated digital channels.
A dynamic recognition mechanism was suggested to prevent
interpretational disputes and compliance uncertainty.
Rule 159 – PAN Quoting for Transactions
Category: Litigation Reduction
It was highlighted that instances may arise where transactions
are incorrectly reported against a PAN due to reporting or data entry errors. A
structured mechanism allowing taxpayers to dispute or flag such transactions
before assessment proceedings was recommended.
Early correction at the reporting stage may reduce avoidable
notices, incorrect demands, and downstream litigation.
Rule 332 – Electronic Furnishing
Category: Simplification of Language
The submission recommended that the Rule specify which
timestamp determines filing validity — server receipt time, acknowledgement
time, or upload initiation time.
Ambiguity in electronic filing timestamps can trigger penalty
disputes and defective return classification. Clear specification would enhance
procedural certainty and uniform interpretation across jurisdictions.
Rule 333 – Electronic Payment of Tax
Category: Compliance Reduction
The feedback suggested prescribing a defined timeline for
reflection of electronically paid tax in the taxpayer ledger or AIS.
Delayed credit visibility often results in automated demand
notices and reconciliation disputes. A prescribed validation window would
reduce grievance load, minimise system-generated mismatches, and enhance
transparency in tax credit reconciliation.
Closing Reflection
The Draft Income-tax Rules, 2026 aim to simplify and modernise
the tax framework. As digital systems increasingly anchor compliance processes,
drafting precision becomes critical in preventing avoidable disputes.
Small clarifications in areas such as payment recognition, PAN
reporting accuracy, timestamp validity, and credit reflection timelines can
significantly reduce procedural friction for both taxpayers and tax
administration.
Public consultations offer an opportunity for constructive
engagement. My submissions were made in that spirit — focused on clarity,
certainty, and institutional strengthening.
Further participation may follow as the consultation process
continues.
Archival Note
This post documents feedback submitted through the official
public consultation portal on the Draft Income-tax Rules, 2026. The
observations reflect individual views shared in response to specific rule
provisions within the permitted submission framework. They are intended purely
for archival and transparency purposes.
No institutional affiliation or representation is implied. The
feedback was limited to procedural clarity, litigation minimisation, and
digital compliance aspects.
Nayakanti Prashant
Citizen Advocate — Digital Transaction Day (April 11)
The Joy of Digital Transactions
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