Income tax.
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As per an initial reading of the Union Budget 2026, Finance Minister Nirmala Sitharaman has tried hard to make life easier for common taxpayers.
Income Tax return due dates
For the last few years, June to September was the most difficult period for both taxpayers and tax professionals as they were unable to file I-T Returns due to the I-T department portal’s technical glitches.
Fortunately, it has been proposed to stagger the timeline for filing the income tax returns. For individuals with ITR-1 and ITR-2 returns, the deadline of July 31 continues. In the case of non-audit business cases or trusts, an August 31 deadline has been proposed instead of July 31.
Similarly, the due date for revised returns has been proposed to be extended from the current December 31 to March 31 of the next year with a nominal fee.
Collection of tax at source
It has been proposed to reduce the TCS rate from 5% to 2% for LRS remittances made specifically for educational and medical purposes. Also, it has been proposed to reduce the TCS rate on the sale of overseas tour packages from 5% to 2%.
Buyback of shares
It has been proposed to tax share buybacks as capital gains for all categories of shareholders. This will align buyback returns with the capital gains regime and remove arbitrage between dividends and buybacks. Alignment comes with differential effective tax rates - 22% for corporate promoters and 30% for others.
Lower tax deduction
For small taxpayers, a rule-based automated process has been proposed. It will enable obtaining a lower or nil deduction certificate without filing an application with the assessing officer. This measure will reduce the compliance burden on small taxpayers.
Disclosure of foreign assets
A six-month foreign asset disclosure window for small taxpayers has been proposed. The latest proposal will help small taxpayers to declare their undisclosed assets and come clean.
The Union Budget 2026 is one of the best in recent years. The Finance Minister and her team have honestly tried their best to reduce the compliance burden for the middle class, senior citizens, decriminalise procedural lapses and rationalise penalty provisions.
(The author is a founder & CEO Shree Tax Chambers)
Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.
Prabhakar K S.