NEW DELHI: Unveiling taxpayer-friendly measures, Finance Minister Nirmala Sitharaman on Sunday reduced TCS rates on overseas medical and education expenses, and tour packages, besides allowing an extra 3 months time to file revised Income Tax returns.
Although no change in income tax rates and slabs was announced in the 2026-27 Budget, Sitharaman proposed an amnesty scheme under which small taxpayers, like students and tech professionals, can declare undisclosed foreign income and assets by paying additional tax and fees, to skip prosecution.
Besides, the Budget proposes immunity from prosecution for non-disclosure of movable foreign assets with an aggregate value less than Rs 20 lakh with retrospective effect from October 1, 2024.
Sitharaman also said the rules and forms for the new Income Tax Act, 2025, will be issued shortly. The new Act, replacing the 1961 legislation, will come into effect from April 1.
The Budget extended the time limit for filing returns by businesses or trusts that do not need to get their accounts audited by one month till August 31. However, individuals will continue to file ITR by July 31.
The Budget also proposed to rationalise the prosecution framework under the Income Tax Act while maintaining a careful balance for deterrence in some serious offences.
It also decriminalised offences relating to non-production of books of account and documents, and the requirement of TDS payment, where payment is made in kind. Minor offences will attract a fine only.
The Budget also proposed to extend the existing framework for immunity from penalty and prosecution in cases of underreporting to misreporting.
However, in such a case, the taxpayer will need to pay 100 per cent of the tax amount as an additional income tax over and above the tax and interest due.
The Budget has reduced the Tax Collected at Source (TCS) rate on the sale of overseas tour programme packages from the current 5 per cent and 20 per cent to 2 per cent without any stipulation of amount.
It also reduced the TCS rate for pursuing education and for medical purposes under the Liberalised Remittance Scheme (LRS) from 5 per cent to 2 per cent.
It has also extended the time available for revising returns from December 31 to up to March 31, with the payment of a nominal fee.