To ensure ease of living for taxpayers, the Union Budget 2026-27 on Sunday announced a range of proposals on direct taxes, saying that the Income Tax Act, 2025, is slated to come into effect from April 1, 2026.
The simplified rules and forms will be notified in due course, giving adequate time to taxpayers to acquaint themselves with their requirements. The forms have been redesigned for simpler understanding and compliance for ordinary citizens.
Finance Minister Nirmala Sitharaman also proposed that any 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.
The Budget 2026-27 proposes to reduce the TCS rate on the sale of overseas tour programme packages from the current 5 per cent and 20 per cent to 2 per cent without any stipulation of amount.
It also aims to reduce the TCS rate for pursuing education and for medical purposes under the Liberalised Remittance Scheme (LRS) from 5 per cent to 2 per cent.
"Supply of manpower services is proposed to be specifically brought within the ambit of payment to contractors for the purpose of TDS to avoid ambiguity. Thus, TDS on these services will be at the rate of either 1 per cent or 2 per cent only," the Budget document said.
Moreover, a scheme for small taxpayers is proposed wherein a rule-based automated process will enable obtaining a lower or nil deduction certificate instead of filing an application with the assessing officer.
"For the ease of taxpayers holding securities in multiple companies, the budget proposes to enable depositories to accept Form 15G or Form 15H from the investor and provide it directly to various relevant companies. It extends the time available for revising returns from 31st December to up to 31st March with the payment of a nominal fee," according to the Budget.
The Budget proposes to stagger the timeline for filing tax returns. Individuals with ITR 1 and ITR 2 returns will continue to file till July 31, and non-audit business cases or trusts are proposed to be allowed time till August 31.
TDS on the sale of immovable property by a non-resident is proposed to be deducted and deposited through the resident buyer’s PAN-based challan instead of requiring a TAN.
To address practical issues of small taxpayers like students, young professionals, tech employees, relocated NRIs, and such others, it aims to introduce a one-time 6-month foreign asset disclosure scheme for these taxpayers to disclose income or assets below a certain size.
“This scheme would be applicable for two categories of taxpayers, namely, (A) who did not disclose their overseas income or assets and (B) who disclosed their overseas income and/or paid due tax, but could not declare the assets acquired,” according to the Budget document.
Picture Courtesy: IANS
