Budget 2026: Direct Tax Proposals Explained

New Income Tax Framework

The New Income Tax Act, 2025 is set to apply from 1 April 2026 with redesigned forms intended to simplify compliance.

Ease of Living and TDS/TCS Relief

• MACT interest exempt from TDS
• Reduced TCS rates on select remittances and goods
• Clear TDS rules for manpower supply
• NRI property TDS deposit simplified
• Centralised Form 15G/15H submission
• Automated lower deduction certificates

Return Filing Improvements

• Extended revised return deadline
• Staggered filing schedules
• Return updates allowed during reassessment

Penalty and Amnesty Measures

• Foreign asset disclosure scheme
• Integrated assessment and penalty framework
• Reduced appeal pre-payment
• Decriminalisation of technical defaults

Corporate Tax Updates

• Buyback taxation changes
• Revised MAT structure
• Updated securities transaction tax rates

IT and Global Investment Incentives

• Safe harbour margins standardised
• Foreign cloud service tax holiday
• Toll manufacturing exemptions
• Non-resident expert relief

Cooperative Sector Relief

Expanded deductions and dividend relief strengthen cooperative sector taxation.

These reforms aim to simplify compliance and support economic growth. Taxpayers should evaluate how the new framework affects planning and reporting.