Income Tax Act, 2025: Which is the First Form Introduced under the IT Rules 2026?

India has moved from the old Income-tax Act of 1961 to a new version: the Income-taxAct, 2025. Along with this, a new set of rules, the Income-tax Rules, 2026 is entering in to make tax work more modern, digital, and hopefully a lot simpler.

Taxpayers and accountants have spent decades getting used to the old form numbers, but this new system completely changes how things are organized. Form No. 1 is not just a random starting point; it’s a specific, mandatory report that helps keep the financial markets transparent.

So what’s Form No. 1 under Income Tax Rules?

What is Form No. 1?

Form No. 1 is a monthly statement required to be furnished by stock exchanges. Its primary purpose is to report transactions in which client codes have been modified after being registered in the system.

Under the previous regime of the Income-tax Rules, 1962, this requirement was fulfilled through Form No. 3BB. With the commencement of the 2026 Rules, Form No. 1 has officially replaced Form No. 3BB.

The Legal Backing

The requirement to file Form No. 1 is rooted in the following statutory provisions:

• Act: Section 66(33) of the Income-tax Act, 2025 (formerly Section 43(5) of the 1961 Act).
• Rule: Rule 4 of the Income-tax Rules, 2026 (formerly Rule 6DDA of the 1962 Rules).

Purpose of Form 1

In the stock market, every trade must be linked to a specific client via a unique code. If these codes are modified after a trade has been executed, it could be used as a tool for "profit shifting" or tax evasion where gains or losses are moved from one individual to another to minimize tax liability. Therefore, Form No. 1 provides the Income Tax Department with oversight regarding the modification of client codes.

Who is Required to File Form No. 1?

The responsibility for filing this form lies solely with the Stock Exchanges. Within the meaning of Section 2(92) of the Income-tax Act, 2025, any recognized stock exchange operating in India must comply with this filing requirement.

Individual investors or individual brokers do not file Form No. 1; rather, the exchange aggregates the data regarding client code modifications occurring within its platform and submits the consolidated report to the tax authorities.

Also read: New Income Tax Form 32:Audit Reports for Deductions Under Income-tax Act, 2025, A Comprehensive Guide

Frequency and Deadlines

Form No. 1 is an event-based, monthly statement. Unlike annual returns, this form requires constant vigilance throughout the tax year.

• Frequency: Monthly.
• Time Limit: The form must be filed within 15 days from the last day of the month to which the statement relates. For example, the statement for transactions occurring in April must be submitted by May 15th.
• Mandatory Nature: Filing is compulsory for stock exchanges if any client code modifications have occurred during the month.

Correction on Form 1: Once Form No. 1 is submitted and acknowledgment is generated, it cannot be edited. Ensure all details are correct before submission.

Brief Note on broad or qualitative changes proposed as per the Income Tax Department:

The department says that “The format of the form has been designed in smart form format as far as the details of the stock exchanges are concerned. (The basic details regarding Name, PAN and Address etc.). The details related to Form 3BC (viz. commodity derivative name has been added along with scrip name in the Scrip Name column of Derivative Market Table. This has been done in view of the entities which were earlier filing Form 3BC are now supposed to file Form 3BB.

Form 3BC has been rendered redundant in view of abolition of Forward Market Commission (in 2015). Accordingly, the entities which were earlier covered under the provisions of Rule 6DDC of Income-tax Rules, 1962 are covered under Rule 6DDA itself and are already filing Form 3BC which is apparent from the data of Form filing details.

No other changes have been proposed in the fields being captured in the tables under “Cash Market” and “Derivative Market”.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates