10 income-tax announcements in Budget 2026: From TCS on LRS to revised ITR filing date

The Union Budget 2026 brings a set of income-tax changes that may not overhaul the system, but they quietly reshape how taxpayers deal with compliance, cash flow, and deadlines. Instead of focusing only on tax rates, the government has turned its attention to easing practical pain points that affect salaried individuals, professionals, investors, and those sending money abroad.

From rationalising TCS provisions under the Liberalised Remittance Scheme (LRS) to offering more breathing room through a revised ITR filing timeline, here are the top 10 income-tax proposals in Budget 2026 that every taxpayer should understand.

1. STT and share buyback

Securities Transaction Tax (STT) on Futures has bee raised to 0.05% from present 0.02%. STT on options premium and exercise of options are both proposed raised to 0.15% from the present rate of 0.1% and 0.125% respectively.

Buyback proceeds will now be taxed as capital gains, benefitting minority shareholders.

2. TCS on LRS and overseas tour packages

TCS rate reduced to 2% for education and medical purposes under LRS (remittances exceeding Rs 10 lakh) from the current 5%.

TCS on overseas tour program packages reduced from 5%/20% to 2%, without any stipulation of amount.

TCS rate on other purposes under LRS continues at 20%.

3. MACT interest exemption

Any interest awarded to an individual by Motor Accident Claims Tribunal (MACT) shall be exempt.

No tax will be deducted at source, irrespective of the amount.

4. TDS on manpower supply

Supply of manpower included within “work” under section 402(47).

Tax deducted as payment to contractors under section 393(1), not under “fee for professional services.”

5. Online TDS certificate

Small taxpayers can apply online for a certificate for lower or nil TDS, which will be issued after electronic verification.

6. No-TDS declaration via depository

Taxpayers can file a declaration via a depository for:

Income from mutual funds

Interest from securities

Dividends

The depository will report these to the payer, who will furnish them to the Department quarterly.

7. Extended revised/belated return

Revised returns can now be filed upto 31st March following the tax year.

Fee of ₹1,000 or ₹5,000 applies if revision is after 31st December, depending on whether income is up to or more than ₹5 lakh.

8. Staggered ITR due dates

ITR 1 & 2: Due by 31st July

Non-audit businesses or trusts: Due by 31st August

9. TDS on property purchase

Resident individual or HUF buying property from a non-resident need not obtain TAN.

Deduction reported using PAN, as with transactions between residents.

10. Employee contribution, Non-life insurance, and FAST–DS 2026

Employee contribution: Deduction allowed if employer credits employee contributions to provident fund, superannuation fund, or ESI fund by due date of return filing under section 263(1).

Non-life insurance: Deduction allowed in tax year when tax is deducted or paid under section 35(b)(i) or (ii).

FAST–DS 2026: Time-bound scheme for declaration of foreign assets and foreign-sourced income below certain thresholds.

• Underreporting due to misreporting: 100% payment of tax gives immunity.

• Unexplained cash credits: 120% payment.

• Reduced from 60% to 30% for incomes like cash credits or unexplained investments.

• Penalty merged with the underreporting framework (200% of tax).

In her Budget, Sitharaman also announced a slew of measures to boost infrastructure in the country, including in tier-2 and tier-3 cities.

The budget came in the backdrop of global uncertainties, trade frictions and US tariffs and slowdown in exports.

This is the third budget of the BJP-led NDA government in its third term in office.