New Delhi, February 1 (). Finance Minister Nirmala Sitharaman has announced major income tax reforms in the Budget 2026 presented on Sunday. The government said that now the taxpayer will not be seen as a criminal. Through this, the government is trying to develop a trust-based tax structure in the country.
The Finance Minister said in his budget speech that under the new Income Tax Act to be implemented from April 1, if any discrepancy is found in someone’s income or tax is hidden unknowingly, then instead of punishment, only fine will have to be paid.
Apart from this, the government will give a special time of 6 months to those who have undeclared assets abroad to rectify their mistake. They can avoid legal complications by declaring their assets under a special disclosure scheme.
The Finance Minister in his Budget 2026-27 speech said, “Small offenses will attract only fines. The remaining convictions will be classified according to the seriousness of the offence. These will carry only simple imprisonment, the maximum imprisonment has been reduced to two years, and the courts will have the power to convert these also into fines.”
The Finance Minister said, no interest will be charged on the penalty amount on the taxpayer for the period of appeal before the first appellate authority, irrespective of the outcome of the appeal process. Additionally, the amount of advance payment is being reduced from 20 percent to 10 percent and will be calculated only on the basic tax demand.
Apart from this, the Finance Minister has given big relief in Income Tax Return (ITR). Now if there is a mistake in ITR, it should be easy to correct it and for this the government has announced to give additional time. Now taxpayers will be able to update late returns with nominal fees.
The government has also made it easier to buy property. If you buy a house or land from an NRI, you will not have to go through the difficult process of getting a TAN like before and TDS can be deducted even without TAN.
At the same time, now small taxpayers will not have to make rounds of officials for Nil TDS and the entire process will now become automatic and digital.
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