One of the most tangible benefits is for families funding education or medical treatment overseas. Until now, such remittances attracted tax collected at source (TCS) at 5% of the total amount. The Budget has lowered this rate to 2%. While TCS is adjustable against the final tax liability and does not alter the tax ultimately payable, the reduction means significantly less money is locked up with the tax authorities until returns are filed and refunds processed.
A similar reprieve has been extended to outbound leisure travellers. TCS on foreign package tours has been reduced to 2% from the earlier rates of 5% or 20%, depending on the size of the spend. For frequent international travellers, this cut translates into lower upfront costs at the time of booking and improved liquidity during the year.
There is also modest relief for individuals importing dutiable goods for personal use. Customs duty on items such as mobile phones and tablets has been halved to 10%, offering some savings to consumers who bring back high-value electronics from overseas.
On the investment front, the Budget has changed the tax treatment of income arising from share buybacks. Such income will now be classified as capital gains and taxed at 12.5%, rather than being added to the taxpayer’s total income and taxed at the applicable marginal rate. For investors in higher tax brackets, this could mean a lower effective tax outgo on buyback-related gains.
However, not all changes are in your favour. The capital gains exemption on sovereign gold bonds (SGBs) has been narrowed. Going forward, the exemption will apply only to investors who subscribed to the bonds at the time of original issue and held them until maturity. Those who acquired SGBs later or exit earlier will not enjoy the same tax benefit, reducing the flexibility that had made these instruments attractive to some investors.Another group facing a withdrawal of benefits is armed forces personnel who receive disability pensions but retired in the normal course of service. Until now, such pensions were exempt from tax. Under the new provisions, the exemption will be limited to those who were forced to leave service due to the disability. At the same time, the Budget extends this exemption to personnel from the paramilitary forces, partially broadening the scope even as it tightens eligibility.
Beyond direct tax and duty changes, the Budget has sought to ease procedural burdens for taxpayers. Individuals will get additional time to revise income tax returns, a move aimed at reducing errors and subsequent disputes. Property transactions involving non-resident sellers are also expected to become smoother, with fewer compliance hurdles for buyers.
Penalties under tax laws have been rationalised by introducing a uniform limitation period of six months from the end of the quarter in which an order is passed or received. In a further signal of a more facilitative approach, minor tax defaults have been decriminalised, reducing the risk of prosecution for procedural lapses.
Based on ToI report