The new Income Tax Rules will come into effect from April 1, 2026. A major change has been introduced for taxpayers.
If your actual income is not clear or your documents are incomplete, the Income Tax Department can now estimate your income on its own and decide how much tax you need to pay.
This rule is very important for people who:
Do not file their Income Tax Return (ITR) on time
Do not respond to notices from the department
When Can the Officer Estimate Your Income?
Under the new Rule 9, the Assessing Officer (AO) can estimate your income if it cannot be “clearly determined.”
This can happen when:
You have not filed your ITR
You have ignored or not replied to a notice from the Income Tax Department
According to CA Abhinandan Pandeya, if your income documents are incomplete, unclear, or if there is no proper data about an NRI’s income in India, then the AO can calculate tax using a best judgment assessment.
How Will Your Income Be Estimated?
According to CA Ajay Bagadia, if your income details are not clear, the officer may use different methods to estimate it, such as:
A percentage of your total turnover
Global profit ratio
Any reasonable estimate based on available information
This means the department will calculate your tax based on its own methods if your records are not proper.
Who Is Most at Risk?
According to CA Santosh Mishra, this rule can affect certain people more seriously, such as:
NRIs (Non-Resident Indians)
People earning income from abroad
Business owners with poor record-keeping
People who file ITR late or do not file it at all
How to Avoid Problems
To stay safe from this rule:
File your ITR on time
Keep all your documents complete and organized
Reply quickly to any notices from the Income Tax Department
Be transparent about your income
