"The Income Act 2025 will come into effect from April 1, 2026," reassured Finance Minister Nirmala Sitharaman as she tabled the Union Budget 2026-27 in the Parliament on Sunday, February 1.
"The simplified income tax rules and forms will be notified shortly," Sitharaman said, stating that it would allow the common Indian to take the time to understand the rules better and therefore, increase compliance.
Here are some of the key announcements:
1. Income tax forms to be simplified for the common Indian to comply
2. Interest awarded by the motor-accident claims tribunal to a natural person will be exempt from income tax, and any TDS on this account will be done away with.
3. Reduce TCS rate on the sale of overseas tour packages from the current 5 and 20 per cent to 2 per cent without any stipulation of amount.
4. Reduce TCS rate for education and medical purposes under the liberalised remittance scheme (LRS) from 5 per cent to 2 per cent.
5. New scheme for small taxpayers for a rule-based automated process to obtain a low or nil deduction certificate instead of filing an application with officials.
6. For taxpayers holding securities in multiple companies, repositories to accept Form 15G or 15H from the investor and provide it directly to various relevant companies.
7. Time available for revising IT returns from December 31 to up to March 31, with a payment of a nominal fee.
8. Stagger the timeline for filing tax returns: ITR1 and ITR2 till July 31; non-audit business cases, trusts till August 31
9. TDS on sale of immovable properties by a non-resident Indian to be deducted and deposited through the resident buyer using their PAN-based challan instead of a TAN.
10. Small taxpayers like young professionals and students, tech employees, and relocated NRIs, and such others, a one-time six-month foreign asset disclosure scheme was proposed. This is valid for a specific limit for those who did not disclose overseas income or assets (up to Rs 1 crore), and who disclosed their overseas income and/or paid due tax but could not declare the assets acquired (up to Rs 5 crore).
[This story is being updated]