Budget 2026: New Income Tax Rules Effective From April 1 Announced By FM Nirmala Sitharaman

Budget 2026 Income Tax Rules: Significant changes regarding income tax regulations have been announced by Union Finance Minister Nirmala Sitharaman during her Budget speech. These new rules are set to come into effect from April 1. The announcements cover various aspects ranging from tax return filing deadlines to penalties for tax evasion, aiming to simplify the process for taxpayers.

Changes in ITR Filing Deadlines and Correction Facility

One of the major highlights of the budget is the adjustment in the timelines for filing Income Tax Returns (ITR). According to the Finance Minister’s announcement:

• Individual Taxpayers: For those filing returns using Form 1 and Form 2, the deadline under the new rules remains up to July 31.
• Businesses and Trusts: For non-audit business entities and trusts, the deadline for filing returns has been set for August 31.

Additionally, a significant relief has been introduced regarding the rectification of returns. Taxpayers will now have the opportunity to update or correct their returns by paying a nominal fee, reducing the hassle of procedural complications later.

Penalty Over Imprisonment for Minor Defaults

In a move to decriminalize minor offenses under the Income Tax Act, the Finance Minister has proposed a shift from imprisonment to monetary penalties. Under the new regulations effective from April 1, minor tax discrepancies or small evasions will no longer attract a jail term. Instead, an additional penalty of 10% has been proposed. This change is expected to reduce fear among honest taxpayers regarding inadvertent errors.

New TDS Rules for Property Purchase from NRIs

A crucial change has been introduced in the Tax Deducted at Source (TDS) mechanism concerning property transactions involving Non-Resident Indians (NRIs).

• The Change: If a resident buys immovable property from an NRI, the buyer is now mandated to pay the TDS.
• Context: Previously, this collection was primarily associated with the sellers. This shift places the compliance burden explicitly on the buyer in such transactions.

Budget Overview and Tax Holiday for Cloud Data Centers

Finance Minister Nirmala Sitharaman has approved a total budget size of ₹53.5 lakh crore, with projected tax revenue of ₹28.7 lakh crore. To boost the technology infrastructure in India, a massive incentive has been announced for foreign investments. Foreign companies establishing ‘Cloud Data Centers’ in India will enjoy a complete tax holiday until the year 2047.