14 personal finance highlights impacting middle-class taxpayers in FY26-27 from Budget 2026
Here are some proposal from Budget 2026 that will impact your personal finance;New Income tax act will come into affect from April 1, 2026 according to the Budget speech the simplified income tax rules and forms will be notified shortly. The forms have been redefined such that ordinary citizens can comply without difficulty.
2. Automated process of getting NIL deduction certificate
New scheme for small tax payers has been proposed where they can obtain a lower or NIL deduction certificate automatically under the rule based process. This will remove the process of filing an application with assessing officer currently.
3. No Income Tax on motor accident claims
The FM has proposed that any interest awarded by the Motor Accident Claims Tribunal to a natural person will be exempted from Income Tax and any TDS will not be applicable.
4. Rationalisation of TCS rates
There are two major announcement in Budget 2026 speech; first is reduction of TCS in overseas package programe from current 5% and 20% to 2% without any stipulation amount. Secondly, TDS under LRS scheme for education and medical purposes has been reduced to 2% from 5% .
5. TDS on supply of manpower
TDS on supply of manpower services has been brought within the ambit of payment to contractors for the purpose of TDS to avoid ambiguity. Thus, TDS on these services will be at the rate of either 1 percent or 2 percent only.Deadline to file revised ITR has been proposed to be extended from December 31 to up to March 31 with the payment of a nominal fee.
7. Depositories to accept form 15G/form 15H
Taxpayers holding securities in multiple companies, will be able to enable depositories to accept Form 15G or
Form 15H from the investor and provide it directly to various relevant companies.
8. No change in the ITR filing deadline for individuals
FM has made no changes for filing of tax returns for individuals with ITR 1 and ITR 2 returns will continue to file till 31st July. However, non-audit business cases or trusts are proposed to be allowed time till 31st August.
9. NRIs can use PAN while selling their property in India
According to Budget 2026 proposals, TDS on the sale of immovable property by a non-resident is proposed to be deducted and deposited through resident buyer’s PAN based challan instead of requiring TAN.
10. Foreign asset disclosure scheme
One-time 6-month foreign asset disclosure scheme for small taxpayers like students, young professionals, tech employees, relocated NRIs, and such others to disclose income or assets below a certain size.
This scheme would be applicable for two categories of taxpayers namely,
(A) who did not disclose their overseas income or asset and
(B) who disclosed their overseas income and/or paid due tax, but could not declare the asset acquired.
For category (A), the limit of undisclosed income/asset is proposed to be up to 1 crore rupees. They need to pay 30 percent of Fair Market Value of asset or 30 percent of undisclosed income as tax and 30 percent as additional income tax in lieu of penalty and would thereby get immunity from prosecution.
For category (B), asset value is proposed to be up to 5 crore rupees. Here, immunity from both penalty and
prosecution will be available with the payment of fee of 1 lakh rupees.
11. Rationalizing penalty and prosecution
A lot of announcement has been made in rationalisation of penalty and prosecution; here are some of those
a. Budget 2026 proposes to integrate assessment & penalty proceedings by way of a common order for both. There will be no interest liability on the taxpayer on the penalty amount for the period of appeal before the first appellate authority irrespective of the outcome of appeal process. Further, quantum of pre-payment is
being reduced from 20 percent to 10 percent and will continue to be calculated only on core tax demand.
b. Update their returns even after reassessment proceedings have been initiated, at an additional 10 percent tax rate over and above the rate applicable for the relevant year. The assessing officer will then use only this updated return in his proceedings.
c. Penalties for certain technical defaults such as failure to get accounts audited, non-furnishing of transfer pricing audit report and default in furnishing statement for financial transactions, are proposed to be converted into fee.
d. There is already a framework for immunity from penalty and prosecution in the cases of underreporting. I propose to apply this framework of immunity to misreporting too. However, in such a case the taxpayer will need to pay 100 percent of the tax amount as an additional income tax over and above the tax and interest due.
e. Non-production of books of account and documents, and requirement of TDS payment, where payment is made in kind, are being decriminalised. Further, minor offences will attract fine only.
12. Share buyback to be treated as capital gains
Budget 2026 has proposed change in taxation of buyback for all types of shareholders as Capital Gains. However, to disincentivize misuse of tax arbitrage, promoters will pay an additional buyback tax. This will make effective tax 22 percent for corporate promoters. For non-corporate promoters the effective tax will be 30 percent.
13. Customs duty for personal good halved
Customs duty structure for goods imported for personal use, I propose to reduce the tariff rate on all dutiable
goods imported for personal use from 20 per cent to 10 per cent.
14. STT hiked on futures and options
FM Sitharaman has proposed to raise the STT on Futures to 0.05% from 0.02%, currently. STT on options premium and exercise of options are both proposed to be raised to 0.15% from the rate of 0.1% and 0.125% respectively.
