A structured, plain-language overview based on official budget materials
Source base: Finance Minister’s Budget Speech, Finance Bill Memorandum/Explanatory Notes, and official PIB / Ministry press releases only.

Union Budget 2026_Summary

Key Direct Tax Updates Affecting Most Taxpayers

Introduction of the New Income-tax Act, 2025

The Government has announced the New Income-tax Act, 2025, which is proposed to come into effect from 1 April 2026.

The stated objective is simplification, with new rules and forms to be notified separately.

Return Filing: Proposed Staggered ITR Due Dates

A revised structure for return filing timelines has been proposed, with due dates staggered by taxpayer category:

• ITR-1 / ITR-2: 31 July (unchanged)
• Non-audit business / Trust: 31 August
• Audit cases / Companies: 31 October
• Certain special cases: 30 November

Extended Window for Revised and Belated Returns

The timeline for filing revised or belated returns is proposed to be extended up to 31 March, instead of the earlier 31 December deadline.

This extension is proposed along with a fee framework.

TCS Changes for Travel and Liberalised Remittance Scheme (LRS)

Proposed changes to Tax Collected at Source (TCS) include:

• Overseas tour packages: TCS proposed at 2%
• LRS for education and medical purposes: TCS proposed at 2%

MACT Interest: Exemption and Removal of TDS

Interest received by a natural person on compensation awarded by the Motor Accident Claims Tribunal (MACT) is proposed to be:

• Exempt from tax
• Not subject to TDS

Stock Market Transactions: Increase in STT for F&O

Proposed changes to Securities Transaction Tax (STT):

• Futures: Increased to 0.05% (from 0.02%)
• Options:
  • 0.15% on premium
  • 0.15% on exercise, as per the proposal summary

TDS on Manpower Supply Payments

For TDS purposes, manpower supply payments are proposed to be treated as contractor payments, providing clarity on classification.

Procedure and Litigation-Related Direct Tax Proposals

Common Order for Assessment and Penalty

A proposal has been made to combine assessment and penalty into a single common order, with the objective of reducing multiple proceedings.

Reduction in Appeal Pre-deposit Requirement

The appeal pre-deposit is proposed to be reduced:

• From 20% to 10%
• Computed only on the core tax demand

Updated Return After Reassessment Initiation

It is proposed that taxpayers may file an updated return even after reassessment proceedings have started, subject to payment of an additional 10% tax.

Selected Decriminalisation Proposals

Decriminalisation is proposed for the following situations:

• Non-production of books or documents
• Cases where TDS liability arises when payment is made in kind

Foreign Asset Disclosure: Limited Prosecution Immunity

Limited immunity from prosecution is proposed (with retrospective effect from 1 October 2024) for non-disclosure of non-immovable foreign assets, provided such assets are below a specified threshold.

Cross-border Taxation, Transfer Pricing, and IT/ITES Highlights

As summarised by official PIB releases, the following proposals have been highlighted:

• Introduction of a single IT services category
• Safe Harbour margin proposed at 15.5%
• Turnover threshold increased to ₹2,000 crore (from ₹300 crore)
• MAT exemption for non-residents paying tax on a presumptive basis
• Tax holiday for foreign cloud service providers extended up to 2047

Corporate Taxation: Buyback Taxation Proposal

Share buybacks are proposed to be taxed as capital gains, replacing the earlier dividend-based taxation mechanism.

The proposal summary also mentions rationalisation of promoter-related tax rates.

Other Selected Direct Tax Proposals

Sovereign Gold Bonds (SGB)

The capital gains exemption for Sovereign Gold Bonds is proposed to be restricted only to cases where:

• The bond is subscribed by an individual at the original issue
• Held until maturity and redemption

New Income-tax Act, 2025: Key Highlights Reiterated

• Effective date: 1 April 2026
• Simplified rules and forms to be notified
• Reduction in multiplicity of proceedings
• Rationalisation of penalty and prosecution, as per PIB summary

Closing Note

All proposals summarised above are based strictly on official budget documents and PIB releases and reflect the proposals as announced for AY 2026–27, subject to enactment and detailed notifications.