01/02/2026
*Budget 2026 Highlights: Nirmala Sitharaman Announces Tax Reforms*
The Finance Minister, Nirmala Sitharaman, has just announced a comprehensive review of the Income Tax Act 1961, and the new Income Tax Act 2025 is set to come into effect from April 1, 2026. Here are some key takeaways:
- *New Income Tax Act*: The new act will come into effect from April 1, 2026, with simpler income tax forms to be notified shortly.
- *TDS on Property*: TDS on property purchased from NRI can now be deducted under PAN-based instead of TAN.
- *TCS Limit*: TCS limit on tour packages reduced from 5%/20% to 2% without any limit.
- *ITR Filing*: Time limit to file ITR increased from December 31 to March 31, with staggered timelines for different types of taxpayers.
- *Exemptions*: Interest awarded by Motor Accident Claims Tribunal to natural persons will be exempt from income tax, and TDS on the same will be done away with.
- *Other Key Points*:
- Supply of Manpower Services to be brought under Section 194C of the Income Tax Act 1961.
- Immunity from Penalty now includes Misreporting of Income provisions.
- Dividend exempted to co-op sector on fulfilling specified conditions.
- Amendment in TCS Provisions: TCS on Liberalised Remittance Scheme reduced from 5% to 2%, and TCS on Overseas Travel Package reduced from 5% to 2%.
These changes are expected to bring relief to taxpayers and simplify the tax filing process. What do you think about these changes?
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