The Central Board of Direct Taxes (CBDT), through Notification No. 55/2026 dated 31 March 2026, has amended Rule 128 of the Income-tax Rules, 2026, effective from 1 April 2026. The amendment clarifies the tax treatment of income arising from investments made before 1 April 2017. Specifically, income from the transfer of such pre-2017 investments is excluded from the applicability of Chapter XI provisions. Further, the revised sub-rule (2) provides that Chapter XI will apply to all arrangements, regardless of when they were entered into, if the tax benefit arises on or after 1 April 2017. However, a key exception is carved out for income derived from the transfer of investments made prior to 1 April 2017, which remains outside the scope of these anti-abuse provisions. The amendment ensures clarity on retrospective applicability while protecting genuine legacy investments from adverse tax implications under the new regime.
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
Notification No. 55/2026 – Income-Tax | Dated: 31st March, 2026
G.S.R. 241(E).—In exercise of the powers conferred by section 533 read with section 183 of the Income-tax Act, 2025 (30 of 2025), the Central Board of Direct Taxes hereby makes the following rules to amend the Income-tax Rules, 2026, namely: —
1. (1) These rules may be called the Income-tax (Amendment) Rules, 2026.
(2) They shall come into force on the 1st April, 2026.
2. In the Income-tax Rules, 2026, in rule 128, —
(a) for sub-rule (1)(d), the following shall be substituted, namely: —
“(d) any income accruing or arising to, or deemed to accrue or arise to, or received or deemed to be received by, any person from transfer of such investments which were made before the 1st April, 2017 by such person.”;
(b) for sub-rule (2), the following sub-rule shall be substituted, namely: —
“(2) The provisions of Chapter XI shall apply to any arrangement, irrespective of the date on which it has been entered into, in respect of the tax benefit obtained from the arrangement on or after the 1st April, 2017, except for that income which accrues or arises to, or deemed to accrue or arise to, or is received or deemed to be received by, any person from transfer of such investments which were made before the 1st April, 2017 by such person.”.
[Notification No. 55/2026/F. No. 370142/15/2026-TPL]
ROHIT SINGH, Under Secy. TPL-I, CBDT
Note : The Income-tax Rules, 2026 were published in the Gazette of India, Extraordinary, Part-II, section 3, sub-section (i) vide number G.S.R. 198(E), dated the 20th March, 2026.
