The Union Budget 2026-27 introduces several direct tax reforms to make life easier for taxpayers. These changes reduce tax deductions, simplify return filing, help small taxpayers, and remove confusion in rules, aiming to create a stress-free and transparent tax system.
Focus on ‘Ease of Living’ for Common People
New Delhi: The Union Budget 2026-27 focuses on reducing the tax burden and paperwork for ordinary taxpayers. The government aims to make tax rules simpler, fairer, and less stressful for individuals.
Any interest awarded by the Motor Accident Claims Tribunal to an individual will now be fully exempt from income tax. Also, no tax will be deducted at source (TDS) on such interest, bringing relief to accident victims and their families.
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The Budget reduces the Tax Collected at Source (TCS) on overseas tour packages from earlier rates of 5% or 20% to just 2%.
Similarly, money sent abroad for education or medical treatment under the Liberalised Remittance Scheme (LRS) will now attract only 2% TCS, making these expenses lighter on the pocket.
To avoid confusion, the government has clearly included manpower supply services under contractor payments. This means TDS on these services will be just 1% or 2%, simplifying compliance for businesses and service providers.
Big Tax Breaks for Cloud Companies
Small taxpayers will now get lower or zero TDS certificates automatically, without visiting tax officers.
Also, investors holding shares in multiple companies can submit Form 15G or 15H just once to depositories, instead of submitting it to each company separately.
The time limit to revise income tax returns has been extended from 31 December to 31 March, with only a small fee. This gives taxpayers more time to correct mistakes without worry.
The government has introduced staggered deadlines:
Individuals filing ITR-1 and ITR-2: till 31 July
Non-audit business cases and trusts: till 31 August
This helps reduce last-minute rush and errors.
When a resident buys property from a non-resident, TDS can now be paid using the buyer’s PAN-based challan, removing the need to obtain a TAN. This simplifies property transactions.
A one-time 6-month disclosure scheme is proposed for small taxpayers like students, young professionals, tech employees, and NRIs who missed declaring foreign income or assets.
Category A:
Undisclosed income or assets up to ₹1 crore
Pay 30% tax + 30% additional tax, and get protection from prosecution.
Category B:
Assets up to ₹5 crore (income already taxed but asset not declared)
Pay a ₹1 lakh fee and get full immunity from penalty and prosecution.
These reforms aim to reduce fear, confusion, and compliance burden for taxpayers. By simplifying rules and offering relief to small and honest taxpayers, the Budget moves towards a more taxpayer-friendly system.
