Finance Minister Nirmala Sitharaman announced that the Income Tax Act 2025 will be enforced starting April 1, 2026. The redesigned I-T forms aim to simplify compliance for ordinary citizens, enhancing ease of living. Notable changes include exemptions on insurance interest awards, nil deduction certificates for small taxpayers, and an extended ITR filing deadline for non-audit cases until August 31. Individuals using ITR 1 and ITR 2 will continue filing I-T returns until July 31.
Sitharaman highlighted the swift review of the Income Tax Act 1961 in July 2024, leading to the upcoming implementation of the Income Tax Act 2025. The revised forms are tailored for easy citizen compliance, aligning with the theme of ease of living. The Budget for 2026-27 also introduced reduced tax collection at source for various categories, easing cash-flow pressures on individuals making overseas payments.
The Union Budget proposed a reduction in the TCS rate for the sale of overseas tour packages from 5% and 20% to a uniform 2%, without any specified amount. Additionally, the TCS rate for education and medical purposes will be lowered from 5% to 2%. Sitharaman emphasized the inclusion of manpower services within the TDS framework to ensure clarity and proposed TDS rates of either 1% or 2% for these services. She also announced a tax holiday for foreign cloud companies utilizing data centers in India until 2047.
