Union Budget 2026: Income Tax filing to become easier; New IT Act to come into effect from 1 April

Finance Minister Nirmala Sitharaman, in Union Budget 2026-27, announced a new IT Act effective from April 1, 2026, aimed at simplifying tax compliance. Key reforms include minor tax offenses payable via penalties, foreign assets under ₹20 lakh not required to be disclosed, revised returns filing by July 31, and reduced litigation.

Post Published By: Sona Saini

Updated : 1 February 2026, 12:16 PM IST

FM Nirmala Sitharaman Announces Simplified Tax Rules and Revised IT Act

New Delhi: Union Finance Minister Nirmala Sitharaman made a major announcement regarding income tax while presenting the budget for the financial year 2026-27 in Parliament on Sunday. She announced that the new Income Tax Act will come into effect in the country from April 1. The Finance Minister also stated that filing income tax will become easier than ever after the implementation of this new law.

New IT Act and Simplified Tax Process

In her budget speech, Nirmala Sitharaman stated that the new IT Act will bring a simple and transparent process for taxpayers. Its aim is to make the tax system digital, seamless, and quick. She stated that the government is continuously making improvements to promote a taxpayer-friendly system, and the new Act is a major step in this direction.

Key Announcements by the Finance Minister

• Minor tax offenses will now require only payment of a penalty.
• Courts can convert punishments into fines.
• Foreign assets worth less than ₹20 lakh will no longer need to be disclosed.
• Revised tax returns can be filed by 31st July instead of 31st December.
• New rules will be introduced to reduce litigation.
• Revised returns can be filed by paying a nominal fee.
• Declaration of foreign assets will be mandatory within six months.
• Procedures for small taxpayers will be simplified.
• TDS on sale of NRI-owned property will be reduced.
• Tax benefits for setting up data centers in India.
• Cloud service companies to get tax benefits until 2047.
• TDS on sale of property/land will be reduced.
• TCS on health and education reduced from 5% to 2%.
• Studying abroad will become more affordable than before.