The Union Budget 2026 did not bring any big surprises. Income tax rates have stayed the same. Still, a few useful changes were announced to make tax rules simpler and easier to handle. These changes are relevant for people sending money abroad, companies, NRIs, and small taxpayers. Let us go through them in a simple manner.
What is New in Income Tax Rules?
A new law named the Income Tax Act, 2025, will come into force from 1 April 2026. This law replaces the older income tax law.
- There is no change in income tax slabs or rates. The tax structure for the financial year 2026–27 remains the same as last year.
- Foreign cloud companies dont have to pay tax until 2047 only if services to Indian customers are routed through an Indian reseller using Indian data centres and for IFSC units, they got 20 tax free years. Income of IFSC units will be taxed at 15% after this period.
- If you send Rs 10 lakh abroad for the purposes of education or medical treatment, then TCS will be reduced from 5% to 2%. Also TCS on sale of overseas tour package, including all expenses such as travel & hotel expense has also been reduced from 5% to 2%.
- Interest on dividend income or income from mutual funds are not deductible; earlier 20% deduction of gross dividend or income from mutual fund units was allowed.
- Revised returns can now be filed up to 31 March of the following financial year.
- From FY 2026–27, late filing will attract a fee. For income up to ₹5 lakh, the fee will be ₹1,000, and for income above ₹5 lakh, it will be ₹5,000.
- Business taxpayers who are not required to undergo an audit now have time until 31 August to file their returns.
What Changes Affect Companies And NRIs?
- For companies, the Minimum Alternate Tax (MAT) has been reduced from 15% to 14%.
- From FY 2026–27 onwards, no new MAT credit can be accumulated. In such cases, the MAT paid will be treated as the final tax.
- For FY 2025–26, existing MAT credit can still be carried forward and used in later years, but only up to 25% of the actual tax payable, and only if the company follows the new tax regime.
- For NRIs selling property in India, the process has become easier. The buyer no longer needs to apply for a TAN. Instead, tax can be paid using a PAN-based challan, which reduces paperwork.
- Foreigners supplying machinery to electronic companies do not have to pay tax for 5 years while foreign experts working in India also do not have to pay tax on their global income for five years.
- Regarding investments, share buybacks will now be taxed as capital gains instead of dividend income. Promoters will have to pay additional tax on such buybacks. The most common effective rate applied are 22% for corporate and 30% for non-corporate promoters.
- STT on futures and options has also been revised as part of market regulations (0.1% to 0.15% on options, from 0.125% to 0.15% on options exercised, and from 0.02% to 0.05% on futures)
What Changes Help Common And Small Taxpayers?
- The process of getting a Lower Tax Deduction Certificate has now been automated, making it quicker and less complicated.
- A Foreign Asset Disclosure Scheme has also been introduced. People holding foreign assets are required to disclose them.
- Small taxpayers who have not disclosed foreign income or assets earlier are given one opportunity to declare them, pay the required tax and penalty, and avoid serious legal action.
- Several other offences have been decriminalised, and others now carry a maximum two-year imprisonment.
Overall, the Union Budget 2026 focuses more on clarity and ease of compliance rather than large tax cuts. Income tax rates remain unchanged, but filing procedures are simpler, and timelines are clearer. Lower TCS on foreign payments, easier rules for NRIs, MAT changes, and better disclosure options make the budget balanced and practical for ordinary taxpayers. For students and professionals who want to understand such updates in depth, accounting tax courses can help build strong practical knowledge and keep them updated with real-world tax regulations.
