Budget 2026 income tax: Top announcements made by FM Sitharaman - check list

Feb 1, 2026

Finance minister Nirmala Sitharaman on Sunday presented the Union Budget 2026 for the ninth time, unveiling major changes for taxpayers. Among the key changes are simpler rules, redesigned forms, and several tax relief measures. The move aims to make compliance easier, reduce taxes on certain transactions, and clear up confusion for individuals and service providers.

Key announcements:

• The timeline for filing revised returns has been extended from December 31 to March 31, with a nominal fee applicable.

• The due dates for filing tax returns will be changed: individuals filing ITR 1 and 2 will continue to have a deadline of 31 July, while non‑audit business cases and trusts will have a due date of 31 August.

• Non-residents supplying capital goods, equipment, or tooling to toll manufacturers in a bonded zone will be exempt from income tax for five years.

• The TCS rate on education and medical purposes under the Liberalised Remittance Scheme (LRS) has been reduced from 5% to 2%.

• The TCS rate on overseas tours and packages is proposed to drop from 5% or 20% to 2%.

• Small taxpayers will now be able to avail rule‑based lower or nil tax deduction without having to file an application for a lower withholding certificate.

• The government also proposes to exempt any interest awarded by the Motor Accident Claims Tribunal to a natural person

• The forms have also been redesigned, so that ordinary citizens can comply without difficulty.

FM Nirmala Sitharaman said that the new Income Tax Act, 2025, will come into effect from 1 April this year. The act brings simplified rules, redesigned forms, and several direct-tax relief measures, including lower TCS rates and new exemptions, she said, adding, "these changes are expected to ease compliance for ordinary taxpayers, lower tax burdens on specific transactions, and remove ambiguities affecting individuals and service providers."

[The Times of India]