New Delhi: Finance Minister Nirmala Sitharaman, presenting the Union Budget 2026–27, announced that a new income tax law will come into effect from April 1, 2026. The law is designed to simplify filings, making it easier for ordinary citizens to comply. Simplified tax return forms will soon be made available to the public, streamlining the filing process.
Sitharaman announced that the deadline for filing revised tax returns, which previously ended on December 31, has been extended to March 31. She also revealed reduced Tax Deducted at Source (TDS) rates for various expenses, including foreign travel, education, and medical expenses, bringing rates down from 5% to 2%. TDS on human resource supply agencies will also be reduced to 1–2%.
The Finance Minister further highlighted measures to ease tax burdens for individuals, including removing tax on interest received as compensation for road accidents and introducing special schemes for small taxpayers, aiming to reduce compliance costs and simplify taxation for the common citizen.
Corporate taxation was also addressed in the Budget. Sitharaman announced that corporate buybacks will now attract a 2% tax, while non-corporate buybacks will be taxed at 30%, signaling a stricter regulatory framework for dividend distribution while ensuring clarity for investors.
In a bid to ease penalties in tax disputes, the Finance Minister said that the severity of criminal action will be reduced. Jail terms for such cases will now be limited to two years, and taxpayers who pay fines will be exempted from imprisonment, reflecting the government’s efforts to create a more investor- and taxpayer-friendly environment.