Budget 2026 Income Tax Update:

(Prem Shankar Mishra)

- No tax on motor vehicle injury compensation.

- TCS reduced on overseas tour packages.

- TCS reduced for pursuing education and medical expenses.

- Supply of manpower specifically mentioned in Section 194C.

- Form 15G/H applicable for income from shares.

- Timeline for belated returns extended.

- Timeline for business and trust ITR extended to August 31.

- Six-month foreign assets disclosure scheme with limits up to 1 crore and 5 crore.

- Rationalization of penalty and assessment.

- 10% penalty for stay of demand.

- Immunity from penalty for misreporting.

- Penalty for non-audit converted to fees.

- Retrospective immunity for non-disclosure of foreign assets up to 20 lakh.

- Tax holiday for foreign companies in cloud services.

- Exemption of MAT for NRIs declaring income under presumptive taxation.

- Buyback treated as capital gain, not as income from other sources.

- Setoff of MAT credit allowed for companies in the new regime.

- MAT is the final tax to avoid accumulation.

ITR 1 and 2 continue to be filed by 31 Jul

ITR-3, ITR-4 i e. Non-audit business cases and trusts will be allowed to file returns till 31st August.

A very welcome initiative in the Budget to streamline ITR filing deadlines.

✔️ July 31 – Salaried taxpayers and non-audit cases

✔️ August 31 – Non-audit business entities and trusts

✔️ September 30 – Audited assessees (status quo maintained)

This rationalisation brings much-needed clarity, better workload distribution, and realistic timelines for compliance—especially beneficial for small taxpayers and professionals alike.

Best regards,

Prem Shankar Mishra