UPSC Prelims Practice Questions — Tax Dept. releases draft rules, forms for new Income Tax Act

Q1. Which one of the following is the apex statutory authority that released the draft Income-tax Rules, 2026 and the related Forms for stakeholder consultation prior to the commencement of the Income-tax Act, 2025?

  • A. Central Board of Indirect Taxes and Customs (CBIC)
  • B. Central Board of Direct Taxes (CBDT)
  • C. Department of Revenue, Ministry of Finance
  • D. Directorate General of Income Tax (Systems)

Q2. How many sections does the new Income-tax Act, 2025 contain?

  • A. 298 sections
  • B. 536 sections
  • C. 720 sections
  • D. 819 sections

Q3. With reference to the structural features of the Income-tax Act, 2025, consider the following: 1. 536 sections 2. 23 chapters 3. 16 schedules 4. 298 sections Which of the above is/are NOT correct?

  1. 536 sections
  2. 23 chapters
  3. 16 schedules
  4. 298 sections
  • A. 1 only
  • B. 4 only
  • C. 1 and 4
  • D. 2 and 3

Q4. Regarding the draft Income-tax Rules, 2026 released by the CBDT for public consultation, consider the following as stated objectives on which stakeholder inputs were invited: 1. Simplification of language of the rules and forms 2. Reduction of litigation 3. Revision of slab rates and surcharge under the new tax regime 4. Identification of redundant or obsolete rules and forms Which of the above is/are correctly identified?

  1. Simplification of language of the rules and forms
  2. Reduction of litigation
  3. Revision of slab rates and surcharge under the new tax regime
  4. Identification of redundant or obsolete rules and forms
  • A. 1, 2 and 4
  • B. 1, 3 and 4
  • C. 2 and 3 only
  • D. 1, 2, 3 and 4

Q5. With reference to the Income-tax Act, 2025 vis-à-vis the Income-tax Act, 1961, consider the following statements: 1. The Income-tax Act, 2025 has fewer total sections than the Income-tax Act, 1961. 2. The Income-tax Act, 2025 introduces a major overhaul of substantive tax policy, including new income-tax slab rates distinct from the 1961 regime. 3. Unlike the Income-tax Act, 1961, the Income-tax Act, 2025 received Presidential assent in August 2025 and came into force on 1 April 2026. Which of the statements given above is/are correct?

  1. The Income-tax Act, 2025 has fewer total sections than the Income-tax Act, 1961.
  2. The Income-tax Act, 2025 introduces a major overhaul of substantive tax policy, including new income-tax slab rates distinct from the 1961 regime.
  3. Unlike the Income-tax Act, 1961, the Income-tax Act, 2025 received Presidential assent in August 2025 and came into force on 1 April 2026.
  • A. 1 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3