The taxpayers of the country have also got many types of reliefs from the budget.Image Credit source: ChatGPT
Many relief announcements were made for the salaried and middle class in Budget 2026. However, there has been no change in the income tax slab and standard deduction for the upcoming financial years. Now the biggest question is that what are the announcements made in the budget, which can impact the pockets of the common people or rather the taxpayers and the middle class. Let us also tell you what are those 14 announcements…
1. New Income Tax Act
According to the budget speech, the new Income Tax Act will come into effect from April 1, 2026. Easy income tax rules and forms will be notified soon. The forms have been redefined in such a way that common citizens can easily follow them.
2. Nil Deduction Certificate
A new scheme has been proposed for small taxpayers under which they can automatically obtain low or nil deduction certificate under a rule based process. This will end the present process of filing applications with the Assessing Officer.
3. No tax on motor accident claim
The Finance Minister has proposed that any interest paid to an individual by the Motor Accident Claims Tribunal will be exempted from income tax and no TDS will be applicable.
4. Reduction in TCS rates
Two major announcements were made in the Budget 2026 speech; First, TCS on foreign travel packages has been reduced to 2% from the existing 5% and 20%, without any fixed amount. Secondly, TDS under the LRS scheme for education and medical purposes has been reduced from 5 percent to 2 percent.
5. TDS on Human Resource Supply
To avoid ambiguity, TDS on supply of human resources has been brought within the scope of payments made to contractors. Thus, the TDS rate on these services will be only 1 percent or 2 percent.
6. Deadline of revised ITR
It is proposed to extend the deadline for filing revised ITR from December 31 to March 31, for which a nominal fee will have to be paid.
7. Form 15G/Form 15H will be accepted
Taxpayers holding securities in more than one company will be able to have the depository accept Form 15G or Form 15H from the investor and provide it directly to the various respective companies.
8. No change in ITR deadline
The Finance Minister has not made any changes in the deadline for filing income tax returns for individuals. Income Tax Return 1 and Income Tax Return 2 can be filed till 31 July. However, non-audit business cases or trusts will be given time till August 31.
9. NRI property sale in India
As per the proposals of Budget 2026, it is proposed to use PAN based challan of the resident buyer instead of requiring TAN for deducting and depositing TDS on sale of immovable property by NRIs.
10. Foreign Assets Disclosure Scheme
A one-time 6-month Foreign Assets Disclosure Scheme has been announced for students, young professionals, technical employees, foreign nationals settled abroad and other such small taxpayers to disclose income or assets below a certain limit. This scheme will be applicable to two categories of taxpayers.
The first category is those who have not disclosed their foreign income or assets and the second category is those who have disclosed their foreign income and/or paid the tax due but could not declare the acquired assets.
For the first category, the limit of undisclosed income/assets is proposed to be Rs 1 crore. They will have to pay 30 percent of the fair market value of the property or 30 percent of the undisclosed income as tax and 30 percent as additional income tax in lieu of penalty and thus will be exempted from prosecution. Whereas for the second category, the value of property is proposed to be up to Rs 5 crore. Here, payment of a fee of Rs 1 lakh will provide exemption from both fine and prosecution.
11. Rationalization of fines and prosecution
Several announcements have been made to rationalize fines and prosecution; Some of them are as follows:
- In Budget 2026, it is proposed to integrate valuation and penalty proceedings through a uniform order. No interest will be charged on the penalty amount to taxpayers during the period of appeal before the first appellate authority, irrespective of the outcome of the appeal process. Apart from this, the amount of prepayment is being reduced from 20 percent to 10 percent and it will be calculated only on the original tax demand.
- Even after the initiation of revaluation proceedings, taxpayers will have to update their returns at 10 percent tax rate in addition to the rate applicable for the relevant year. The Assessing Officer will use only this updated return in his proceedings.
- It is proposed to convert the penalty into a fee for some technical defaults, such as non-audit of accounts, non-submission of transfer pricing audit reports and non-submission of details of financial transactions.
- There is already a framework in place for immunity from fines and prosecution in cases of under-reporting. I propose to apply this framework to misreporting as well. However, in such a case, the taxpayer will have to pay 100 percent of the tax amount as additional income tax in addition to the tax payable and interest.
- Non-production of accounting books and documents and requirement of TDS payment when payment is made in kind are being decriminalized. Moreover, only fines will be imposed on minor offences.
12. Share buyback will be treated as capital gain
Budget 2026 proposes to impose tax on buyback as capital gains for all types of shareholders. However, to discourage abuse of tax arbitrage, promoters will have to pay additional buyback tax. With this, the effective tax for corporate promoters will be 22 percent. The effective tax for non-corporate promoters will be 30 percent.
13. Custom duty halved on goods imported for personal use.
In amending the custom duty structure on goods imported for personal use, I propose to reduce the duty rate on all dutiable goods imported for personal use from 20 per cent to 10 per cent.
14. Increase in customs duty on F&O
Finance Minister Sitharaman has proposed to increase the customs duty on futures from the current 0.02 percent to 0.05 percent. It is proposed to increase the STT on option premium and option exercise to 0.15 per cent from the rates of 0.1 per cent and 0.125 per cent respectively.