Budget 2026: Important income tax changes that matter to you

Budget 2026 signals a clear move towards simplifying income-tax compliance and reducing avoidable disputes between taxpayers and the tax department. Rather than focusing on major tax rate changes, the Government has addressed several long-standing practical issues faced by individuals, businesses, investors, and NRIs. These changes aim to make compliance easier, improve cash flows, and reduce procedural hurdles. Some of the most relevant changes are explained below.

1. Relief for Accident Compensation Recipients
One of the most humane changes in Budget 2026 relates to compensation received by accident victims. Interest awarded by the Motor Accident Claims Tribunal (MACT) to an individual or legal heir has now been fully exempted from income tax. In addition, no tax will be deducted at source on such interest. This brings clarity and relief to families who were earlier burdened with tax disputes on compensation received due to unfortunate accidents.

2. Simplified Process for Lower or Nil TDS Certificates
Small taxpayers often face cash-flow issues due to excess TDS deductions. Budget 2026 introduces a simplified electronic process for applying for lower or nil TDS certificates, and rules will be prescribed separately in this regard. Instead of approaching the Assessing Officer, applications will be processed by a designated income-tax authority through a digital system. This change is expected to significantly reduce delays, paperwork, and personal interaction with tax officials.

3. Centralised Submission of Form 15G and 15H
Another important reform is the centralised filing of Form 15G and Form 15H through depositories. Taxpayers earning interest or dividend income no longer need to submit these forms separately to multiple listed companies, mutual funds, and other deductors. A single submission to the depository will now be shared with all relevant entities, reducing duplication, inconsistencies, and compliance burden.

4. More Time for Revised Returns, With a Discipline Mechanism
Budget 2026 extends the time limit for filing revised income-tax returns from nine months to twelve months from the end of the tax year. In practical terms, this means taxpayers now get time from December up to the following March to correct errors or omissions. However, to discourage unnecessary delays, a late fee has been introduced for revisions filed after nine months. This approach provides flexibility while maintaining compliance discipline.

5. Extended Return Filing Due Date for Non-Audit Cases and Trusts
Recognising the practical difficulties faced by small businesses and trusts, the due date for filing returns in non-audit cases has been extended from 31 July to 31 August. This change also benefits tax professionals, as it allows them to focus on individual returns without business income up to 31 July, before moving on to business and trust returns. The extension is expected to reduce last-minute pressure and improve the quality of filings.

6. Major Relief in NRI Property Purchases
Purchasing property from a non-resident earlier required obtaining a Tax Deduction Account Number (TAN), which was often a time-consuming process leading to delays in transactions. Budget 2026 removes the requirement of TAN for resident individuals and Hindu Undivided Families purchasing property from NRIs. TDS can now be deducted and reported using a PAN-based challan-cum-statement, making such transactions faster and more practical.

7. Rationalisation of TCS Rates on Outward Remittances
The Budget has rationalised certain high Tax Collected at Source (TCS) rates by reducing multiple rates such as 5% and 20% to a uniform 2%. This reduction mainly impacts outward remittances for education, tourism, medical expenses, and similar purposes. The move eases cash-flow pressure on families and individuals making legitimate foreign payments and simplifies TCS compliance.

8. New Tax Treatment for Buy-back of Shares
A significant change has been introduced in the taxation of buy-back of shares. Amounts received by shareholders on buy-back will now be taxed under the head “Capital Gains” instead of the earlier dividend-like taxation mechanism. This aligns buy-back taxation with general investment income principles and provides greater clarity, especially for promoters and long-term investors.

Conclusion
Overall, Budget 2026 reflects a thoughtful shift towards ease of compliance rather than aggressive tax collection. By simplifying procedures, reducing procedural bottlenecks, and addressing real-life taxpayer difficulties, the Government has taken steps that benefit both taxpayers and tax professionals. While these changes may appear modest individually, together they mark meaningful progress towards a more practical and taxpayer-friendly income-tax system.
(The writer is a chartered accountant)