Union Budget 2026 watch Live – Highlights of direct and indirect tax proposals.
Finance Minister has presented Union Budget 2026-27 today in Parliament. No changes have been proposed in Income Tax slabs or rates for AY 2027-28.
Income Tax Proposals in Union Budget 2026-27:
(1) No changes proposed in tax slabs or rates
(2) Income Tax Act, 2025 will come into effect from 1st April, 2026. The simplified Income Tax Rules and Forms will be notified shortly
(3) Exemption on interest income under the Motor Vehicles Act, 1988. it is proposed to provide exemption to an individual or his legal heir, on any income in the nature of interest under the Motor Vehicles Act, 1988. These amendments will take effect from the 1st day of April, 2026 and shall accordingly, apply in relation to the tax year 2026-27 and subsequent tax years
(4) No tax to be deducted at source in respect of interest on compensation amount awarded by Motor Accidents Claims Tribunal to an individual. These amendments will take effect from the 1st day of April, 2026 and shall accordingly, apply in relation to the tax year 2026-27 and subsequent tax years
(5) Electronic verification and issuance of certificate for deduction of income-tax at lower rate or no deduction of income-tax – Payee shall be able to file the application for issuance of certificate for lower or nil deduction of income-tax electronically before the prescribed income-tax authority, which may issue the certificate subject to fulfilment of conditions as may be prescribed, or reject the application if prescribed conditions are not fulfilled or the application is incomplete.
(6) Relaxation from requirement to obtain tax deduction and collection account number (TAN) by a resident individual or HUF, where the seller of the immovable property is a non -resident
(7) In order to provide clarity with regard to the deduction of tax at source in case of supply of manpower, it is proposed to include it under the ambit of “work” in section 402(47).
(8) For assessees having income from profits and gains of business or profession whose accounts are not required to be audited under this Act or under any other law in force and partner of a firm whose accounts are not required to be audited under this Act or under any other law in force or the spouse of such partner their due date for filing of return is proposed to be extended from 31st July to 31st August.
(9) Time enhanced for filing Revised Return on payment of fee – it is proposed to amend section 263(5) of the Act so as to increase the prescribed time limit for filing the revised return from its existing time limit of nine months to twelve months from the end of the relevant tax year. Further, a fee is also proposed for revised returns which are filed beyond nine months from the end of relevant tax year.
(10) Updated ITRs – It is proposed to allow filing of updated return in such cases where taxpayer reduces the amount of loss in comparison to the amount of loss claimed in the return of loss furnished within the due date . Updated return may also be allowed in such cases where proceedings of reassessment have been initiated and notice of reassessment has been issued subject to additional income-tax payable.
(11) Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS 2026) to be notified
(12) Rationalization of prosecution proceedings – Section 473 to 485 & 494 proposed to be amended as under:
(a) In section 473, punishment for the offences mentioned under section 473 is proposed to be changed from its current “rigorous imprisonment for a term which may extend to two years and shall also be liable to fine” to “simple imprisonment upto two years and fine”.
(b) In section 474, punishment for the offences mentioned under section 474 is proposed to be changed from its current “rigorous imprisonment for a term which may extend to two years and shall also be liable to fine” to “simple imprisonment upto 6 months and/or fine”.
(c) In section 475, punishment for the offences mentioned under section 475 is proposed to be changed from its current “rigorous imprisonment for a term which may extend to two years and shall also be liable to fine” to “simple imprisonment upto two years and fine”
(13) Rationalisation of punishment for TDS defaults – Punishment in these cases under section 476 is proposed to be changed (a) with simple imprisonment for a term upto two years, or with fine, or with both, in a case where amount of such tax exceeds fifty lakh rupees; (b) with simple imprisonment for a term upto six months, or with fine, or with both, in a case where amount of such tax exceeds ten lakh rupees but does not exceed fifty lakh rupees; (c) with fine, in any other case.
(14) For most defaults (section 477, 478, 479, 480, 481, 482, 483, 484, 485 …) rigorous imprisonment proposed to be replaced by simple imprisonment.
(15) Rationalisation of Penalties into Fee – it is proposed to convert following penalties into fee:
(a) Penalty under section 446 for failure to get accounts audited
(b) Penalty under section 447 for failure to furnish reports
(c) Penalty under section 454(1) for failure to furnish statement of financial transaction or reportable account
(16) A common order for Assessment and Penalty for under-reporting or misreporting of income
(17) it is proposed to amend the section 440 of the Act so as to extend the scope of immunity to cases where penalty is initiated for under-reporting of income in consequence of misreporting.
Download Copy of Finance Bill 2026 Click Here >>
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- CGDA invites application for engagement of CAs as Young Professionals
- Reopening on audit objection invalid when AO had all information during assessment
