Union Finance Minister Nirmala Sitharaman on Sunday presented Union Budget 2026 and said the new Income Tax Act 2025 will come into effect on April 1. "I propose to reduce TCS rate on the sale of overseas tour program package from the current 5% and 20% to 2% without any stipulation of amount," she said.FM Sitharaman said, "I propose that any interest awarded by the motor accident claims tribunal to a natural person will be exempt from income tax and any TDS on this account will be done away with." “We propose a rule-based automated process for small taxpayers in FY27 Budget. "People filing ITR-1 and ITR-2 can continue to file till July 31. Non-audit business cases and trusts will be allowed to file returns till August 31,” she said.
She said "now as a person you can file revised ITR by March 31 with a nominal fee. "She stated that minor offences to attract fine only and there will be no penalty on non-disclosure of non-immovable foreign assets with aggregate value less than Rs 20 lakh. “I propose to provide them immunity from prosecution,” she said. The Income tax system has undergone significant change over the years. In the post-Independence era, income tax had 11 tax slabs, and currently, there are just seven tax slabs under the New Tax Regime, introduced in the Union Budget 2025. Finance minister Nirmala Sitharaman is presenting the Union Budget 2026-27 in the Lok Sabha, marking her ninth consecutive budget presentation. As every year, announcements on income tax rates and slabs are the most-awaited ones.