Finance Minister Nirmala Sitharaman on Sunday (February 1) used her Union Budget speech to make the announcement regarding the new plans that will make it easier
for ordinary Indians to file, disclose, and pay taxes, implementing the integration of assessment and penalty proceedings into a common order before the new Income Tax Act comes into effect on April 1, 2026. These new plans include changes in filing deadlines, overseas remittances, compensation taxes, and foreign assets, all aimed at giving taxpayers more flexibility as the tax system readies itself for the new structure.
New filing timelines and lower overseas tax burden
At the heart of the announcements is the staggered filing calendar. Individuals filing ITR-1 and ITR-2 will continue to file by July 31, while non-audit business cases and trusts will now have time until August 31. The deadline for revising returns will be extended to March 31 each year with a small fee, allowing taxpayers more time to correct errors.
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One of the biggest consumer-facing changes is the sharp cut in Tax Collected at Source on overseas tour packages. The TCS rate has been reduced to a flat 2 percent with no threshold, replacing the earlier 5 percent and 20 percent slabs. Remittances for education and medical purposes under the Liberalised Remittance Scheme will also attract a lower 2 percent TCS, down from 5 percent.
Tax relief, disclosures and faster dispute resolution
In a significant relief move, interest awarded by the Motor Accident Claims Tribunal to natural persons will now be fully tax exempt, with no TDS, ending long-standing ambiguity. Small investors will benefit from CDSL and NSDL accepting Form 15G and 15H directly and sharing them with companies to prevent unnecessary tax deductions.
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What will change for students and NRIs
The Budget also unveiled a one-time, six-month foreign asset disclosure scheme for students, NRIs and small taxpayers. Undisclosed assets up to Rs 1 crore can be regularised under Category A with a 60 percent tax and penalty, while Category B allows disclosure of previously unreported assets up to Rs 5 crore for a Rs 1 lakh fee, with immunity from prosecution.
To ease litigation stress, assessment and penalty proceedings will be integrated, the pre-deposit for stay of demand cut to 10 percent, and select minor offences decriminalised, marking a shift towards a less punitive tax regime.
