Tax Snapshot of Union Budget 2026

Ease of Doing Business & Ease of Living through Union Budget 2026

1. Reliefs & Rationalisation

Income tax

• Insurance compensation received by a natural person from a motor accident tribunal is fully exempt from income tax, and no TDS will apply.
• Due date for filing revised returns shifted from 31 December to 31 March (with a nominal fee).
• ITR‑1 & ITR‑2 filing due date remains 31 July for individuals; for business/non‑audit cases, proposed to be 31 August.

Tax Collected at Source / Tax Deducted at Source Changes

• Tax Collected at Source on foreign tour package: Reduced from 5% & 20% → flat 2%, without threshold.
• Tax Collected at Source under LRS for education & medical purposes: Reduced from 5% → 2%.
• Tax Deducted at Source on manpower services: Either 1% or 2%.
• Tax Deducted at Source on sale of Immovable Property to a Non-Resident: To be deducted using the buyer's PAN, not TAN.

2. Reforms for Small Taxpayers

• Lower/nil tax-deducted-at-source certificates to be automated via rule-based processing.
• One-time 6-month amnesty window for disclosure of income below a certain threshold.
• Taxpayers are allowed to rectify past returns even where assessment proceedings were already initiated, if additional 20% tax + interest is paid.
• Non-production of books/documents & non-reporting of Tax Deducted at Source payment made non-criminal, reducing prosecution risks.

3. Incentives for Non‑Residents / NRIs

• PROIs (Persons Resident Outside India) are allowed to invest in Indian equities via the Portfolio Investment Scheme (PIS).
• Exemption from Minimum Alternate Tax (MAT) for non-residents paying tax on a presumptive basis.

4. Capital Gains & Business Income

• A new capital gains regime:
  All transfers of shares are taxed as capital gains only.
  Promoters will pay additional buyback tax.
• MAT regime revised: Certain units allowed to use existing MAT credit up to 1/4th of tax liability.

5. Corporate & Regulatory Compliance

• Depositories can accept Form 15G/15H from investors with multiple demat accounts.
• Finance Ministry + CBIC to develop Indian Accounting Standards (Ind AS) for taxation (ICDS overhaul).
• Quicker customs processes as CIS (Customs Integrated System) rolls out in 2026.

 6. Exemptions & Sector-Specific Reliefs

• Immunity from prosecution for non-disclosure of certain non-immovable foreign assets for AYs 2010–2020.
• Digital visa & customs systems to ease compliance for travelers.
• Expenditure deductions expanded for cancer patients.

7. Dispute Resolution & Amnesty

• Honest taxpayers opting to settle disputes can close cases by paying an additional month of penalty, incentivizing faster resolution.

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