Finance minister Nirmala Sitharaman on Sunday presented her ninth consecutive budget on Sunday, unveiling a series of reforms and easing of tax rules for the common taxpayers.
Sitharaman said the Income Tax Act 2025 will be implemented from April 1, adding that the rules and tax returns forms will be notified shortly. The finance minister also announced several reforms to the Income Tax rules and increase the time limit for filing revised tax returns.
The government has also raised the penalty for misreporting income, and made provision to tax capit
Meanwhile, buybacks are set to be taxed as capital gains for all shareholders.
Here are some of the changes and reforms announced in the tax system in Union Budget 2026-2027:
- In her budget speech, Nirmala Sitharaman proposed to increase time limit for filing revised Income Tax return from December 31 to March 31, on payment of nominal fee.
- The finance minister proposed rule-based automated process for small taxpayers in the Union Budget 2026-27.
- While speaking on the new Income tax act, the Finance Minister said that the revised tax regime will come into effect from April 1, 2026.In the Union Budget 2025-2026, the government had overhauled the personal income tax regime, exempting those with an income of up to ₹12 lakh. This limit was ₹12.75 lakh for salaried tax payers, due to standard deduction of ₹75,000.
- The government has also raised the penalty for misreporting income to 100% of tax amount.
- Meanwhile, buybacks are set to be taxed as capital gains for all shareholders.