During her Union Budget presentation on Sunday (February 1, 2026), Finance Minister Nirmala Sitharaman informed that the new Income Tax, 2025, would come into effect in April this year, with the forms and rules to be notified “shortly” provisioning “adequate time” for taxpayers to acquaint themselves with the requirements.
Ms. Sitharaman also told the House that the forms have been redesigned such that ordinary citizens would be able to comply without any difficulty.
The Finance Minister had proposed to overhaul the six-decade-old Income Tax Act of 1961 in her budget presentation last year. The objective was to make the direct tax law “concise, lucid, easy to read and understand”. It was referred to a thirty-one-member Select Committee of the Lok Sabha, which submitted its report in July last year. After having incorporated the recommendations, a subsequent Income Tax Bill received a final assent from the Rajya Sabha in August last year.
Direct tax experts opine, from the personal taxation front, the budget was focussed on easing compliance.
Speaking to The Hindu, an tax expert observed that the government had already introduced “substantial changes in tax rates” in the past years, thus, there was not much of an expectation on reduction. “The [anticipated] focus was more on structural changes and reforms which would ease compliance,” she observed, adding, “The focus [of the budget] has been on that in terms of removing the glitches, trying to rationalise penalties and prosecutions etc.”
She added, “One must wait and watch for reforms [rules to be notified], because they can go a long way in terms of compliance.”
Further, Another tax expert termed the budget as a “meaningful reform in tax administration. “The government [with the budget] wants to bring in stability by getting better compliances, build up confidence of domestic and global investors.”
However, he assessed, the budget could have utilised the opportunity to spur uptake of the new tax regime by increasing the standard deduction. He explained, “The people who are into business, they can get a claim for the expenditure they incur. However, that is not the same for salaried class. They would have wanted the standard deduction to increase beyond ₹75,000 [to transition from the old tax regime which allows for certain exemptions and deduction].”
Boost for overseas transactions
Other than the income tax front, Finance Minister Nirmala Sitharaman also proposed that the tax deducted at source (TDS) on the sale of immovable property by a non-resident be deducted and deposited through the resident buyer’s Permanent Account Number (PAN) based challan instead of the Tax Deduction and Collection Account Number (TAN) at present. “Earlier, the buyer [of the property] had to get a TAN and do all the compliances when dealing with NRIs, therefore, most of the time they were hesitant because getting a TAN is a cumbersome process,” he explained, terming it as a “welcome move”.
She also pointed to Finance Minister Nirmala Sitharaman extending the time for revised return filing from December 31st to March 31st. She explained the issue emanated from India’s financial calendar not being parallel to the international calendar year for financial compliance. “When they [the taxpayers] were trying to estimate foreign tax credit relief, the timelines were not matching,” she stated, “Now, it can align. They would be able to [claim] foreign tax credits through revised returns as soon as they have data of the overseas countries.”
