Government releases draft rules for valuing gold and property under Income Tax Act
New Delhi (The Uttam Hindu): The Income Tax Department has taken a significant step towards major reforms in the country's tax system. The department has made public the draft of the "Income Tax Rules, 2026," which, after receiving Parliament's approval, will replace the existing income tax rules in force since 1962. Additionally, the new "Income Tax Act, 2025" will come into effect on April 1, 2026. A new framework of rules and tax forms has been developed to effectively implement these new provisions.
The Income Tax Department, in an effort to maintain transparency, has placed this draft in the public domain to solicit suggestions from citizens, taxpayers, and other stakeholders. The department clarified that interested individuals can submit their opinions and suggestions until February 22, 2026.
Tax forms will be simpler and "smarter"
The new draft places special emphasis on simplifying tax filing. The language of the rules has been simplified, and formulas and tables have been used to facilitate calculations. Redundant and repetitive provisions in the old rules have been removed.
The new tax forms have been designed to be "smart," incorporating features such as pre-filled data and automated reconciliation. This will not only simplify the tax filing process but also significantly reduce the likelihood of errors. The department believes this will strengthen centralized processing and technology-based services.
Rule 57: A new formula for determining the fair market value of properties
A key provision in the draft is Rule 57, which will determine the fair market value (FMV) of various properties. According to Sandeep Jhunjhunwala, partner at Nangia Global, the old rules 11UA, 11UAA, and 11UAB have now been consolidated into a single rule.
Jewellery: Only the price obtained in the open market will be considered as value. An invoice will be valid for jewellery purchased from a registered dealer. A report from a registered valuer will be mandatory for jewellery received as a gift or otherwise exceeding ₹50,000.
Paintings and Artefacts: The same rules will apply to artworks, sculptures and archaeological collections.
Land and Building: For immovable property, the stamp duty value fixed by the Central or State Government on the relevant date will be considered as the fair market value.
Other assets: Valuation will be based on the likely price in the open market.
Rule 6: Clear holding period
– Clarity has also been brought in the new rules regarding calculation of holding period for capital gains tax.
Shares, Bonds and Debentures: If the bonds or debentures are subsequently converted into shares, the period held as bonds/debentures will also be included in the holding period.
Properties covered under Income Declaration Scheme, 2016: For immovable property with registered deed, the period will be counted from the date of purchase, while in other cases the holding period will be considered from June 1, 2016.
Assets acquired from branch of foreign company: In case of conversion, the period held by the previous owner or foreign branch will also be added.
The Income Tax Department says that these changes will make the tax system more simple, transparent and technology-based, which will provide great relief to taxpayers.