Finance Minister Nirmala Sitharaman delivered her ninth Union Budget on Sunday, raising expectations among taxpayers for potential relief, including discussions around joint taxation for married couples. However, the presentation focused primarily on boosting the economy, manufacturing sector, infrastructure development, and the import-export framework, with no adjustments made to the existing income tax slabs.
Key Tax Reforms and Simplifications
One significant announcement involves the introduction of a New Income Tax Act, set to take effect from April 1, 2026. This update aims to streamline tax rules and forms, enabling citizens to meet compliance requirements more easily.
Filing deadlines for certain income tax returns have also been extended. Individuals using ITR-1 and ITR-2 forms can submit their returns until July 31, while non-audit business cases and trusts now have until August 31—an additional month compared to previous timelines.
Exemptions and Rate Reductions
Interest awarded by the Motor Accident Claims Tribunal to natural persons will now be exempt from income tax, providing relief in such cases.
The tax collected at source (TCS) rate for overseas tour program packages has been lowered to a flat 2%, eliminating the previous tiered structure of 5% and 20% regardless of the amount. Similarly, under the Liberalised Remittance Scheme (LRS), TCS rates for education and medical purposes drop from 5% to 2%.
Taxpayers will benefit from an extended window for revising returns, now available until March 31, accompanied by a nominal fee.
Prosecution Framework Adjustments
Finance Minister Sitharaman outlined plans to refine the prosecution framework under the Income Tax Act, striking a balance between deterrence for serious offenses and leniency elsewhere. “I propose to rationalise prosecution framework under the Income Tax Act while maintaining a careful balance for deterrence in some serious offences,” she stated. “There is no penalty presently for non-disclosure of nonimmovable foreign assets with aggregate value less than 20 lakh rupees. I propose to also provide them with immunity from prosecution with retrospective effect from 1.10.2024.”
Missing Expectations on Joint Taxation
Anticipation had built around the possibility of joint taxation for husbands and wives, which could raise the overall tax exemption threshold. Despite these expectations, no such provision was included in the budget.
