The Union Budget 2026–27, presented on 01 February 2026, introduces wide-ranging Direct Tax reforms aimed at simplifying compliance, reducing litigation, and improving ease of living for taxpayers, in line with the vision of Viksit Bharat.
Key Direct Tax Announcements in Budget 2026
New Income Tax Act
Income Tax Act, 2025 to come into effect from 1 April 2026
Simplified rules and redesigned tax forms for easier compliance
Ease of Living for Taxpayers
Interest on compensation awarded by Motor Accident Claims Tribunal (MACT) made fully tax-exempt
TCS on overseas tours, education and medical remittances reduced to 2%
Extension of time for filing revised returns till 31 March with nominal fee
Staggered ITR deadlines for individuals and non-audit cases
Litigation & Penalty Reforms
Integration of assessment and penalty proceedings into a single order
Reduced pre-deposit for appeals from 20% to 10%
Decriminalisation of minor technical offences
Penalties for certain defaults converted into fees
Foreign Assets Disclosure Relief
One-time Foreign Asset Disclosure Scheme for small taxpayers
Immunity from prosecution on payment of prescribed tax or fee
Boost for IT & Business
IT and IT-enabled services grouped under a single category
Higher safe-harbour limits and automated approvals
Fast-track Advance Pricing Agreements for IT companies
These reforms aim to create a trust-based, technology-driven tax system that reduces compliance burden while ensuring fairness and transparency.
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