Fine Print Analysis: Finance Bill, 2026
Key Direct Tax Proposals from Finance Minister’s 9th Budget Speech
1. The New Income Tax Act, 2025 will come into effect from April 1, 2026.
2. News Rules / forms will be informed shortly.
3. Reduces TCS rate overseas tour package to 2 % without any cap.
4. Interest awarded by Motor Accident Tribunal to be exempted.
5. TCS on pursuing education & medical purposes to be reduced to 2%.
6. TCS on overseas tours reduced to 2%.
7. Scheme for small taxpayers - obtain NIL deduction certificate.
8. Supply of manpower to be brought under ambit of payment to contractor for purpose of TDS.
9. New rule for small taxpayers for availing NIL TDS certificate instead of applying to AO.
10. Time available for revising income tax returns to be increased from Dec. 31 to March 31 with nominal fee.
11. TDS on sale of immovable property by NRs to be deposited by Resident buyers.
12. One-time 6-month Foreign Asset Disclosure scheme for disclosure of assets, for a certain category of taxpayers.
13. Proposes to integrate assessment & Penalty proceedings via a common order for both.
14. Quantum of pre-payment to be reduced from 20% to 10%.
15. Allows taxpayers to update the ROI after reassessment initiated.
16. Proposes measures to reduce litigation.
17. Penalty for certain technical defaults proposed to be converted to fee.
18. Propose to rationalise prosecution provisions.
19. Minor offences to attract a fine only.
20. De-criminalizes certain offences.
21. Power to Courts to convert even simple imprisonment to fines.
22. No penalty presently for non-disclosure of FA below Rs. 20 lakhs - provide immunity from 1.10.2024.
23. Allows exemption for 3 years for cooperatives on dividend income.
24. Enhances the threshold for safe harbor.
25. Common safe harbour margin of 15.5% for IT/ITeS services, to be approved by automated process, not tax officer; Can be continued for 5 years at a stretch.
26. Unilateral APAs for IT Cos to be fast tracked.
27. ‘Tax Holiday’ till 2047 for foreign companies providing cloud services.
28. Safe Harbour margin of 15% on costs for Data centre cos. proposed.
29. Provides exemption for Non-resident experts.
30. Proposes to integrate ICDS into IND-AS itself, separate ICDS to be done away with; Set-up MCA & CBDT joint committee for this.
31. Proposes to rationalise the definition of 'accountants'.
32. Proposes to Tax all buy-back of shares as capital gains.
33. Promoters will pay additional tax on buy-back.
34. Proposal to raise STT on futures and options; STT on futures increased to 0.05%.
35. No MAT credit accumulation from April 1, 2026; Final MAT rate to be reduced to 14% (from 15%).
