FM Nirmala Sitharaman presents her ninth consecutive Union Budget in Lok Sabha on Sunday. PIC/ PTI
With Finance Minister Nirmala Sitharaman presenting her ninth consecutive Union Budget, several changes will directly impact household expenses and consumer choices.
Overseas tour packages as TCS has been reduced from 5-20 per cent to 2 per cent
Foreign education costs with lower TDS under the Liberalised Remittance Scheme (LRS)
Alcoholic liquor scrap and select minerals following a duty cut from 5 per cent to 2 per cent
Shoe upper exports with duty-free imports permitted
Energy transition equipment with exemption from basic customs duty (BCD)
Solar glass manufacturing inputs with BCD exemption
Capital goods used for critical mineral production with BCD exemption
Components and parts for civilian aircraft manufacturing exempted from BCD
Microwave ovens with full BCD exemption
Personal-use imports as BCD is reduced from 20 per cent to 10 per cent
Drugs used for rare diseases and cancer with BCD exemption
Fish caught by Indian fishermen in Indian waters exempt from BCD
Goods imported for nuclear power projects exempt from BCD
Cancer drugs
Leather goods
Camera
TV equipment
Imports of goods for nuclear power till 2023
video games manufacturing parts
Footwear
Income tax misreporting, now attracting a penalty equal to 100 per cent of the tax amount
Non-disclosure of movable assets, which will now invite penalties
Stock options and futures trading, with Securities Transaction Tax increased from 0.02 per cent to 0.05 per cent
"Sin" goods such as cigarettes and luxury imports
Coffee and vending machines
Coal
The FM on Sunday announced that the Income Tax Act, 2025, will come into force from April 1, marking a major overhaul of India's direct tax framework. She said the accompanying rules and redesigned income tax return (ITR) forms will be notified shortly to give taxpayers adequate time to familiarise themselves with the new system.
Speaking in the Lok Sabha during her Union Budget 2026 address, Sitharaman said the new law will replace the six-decade-old Income Tax Act of 1961, with all changes announced in the current Budget being incorporated into the fresh legislation. "This direct tax code was completed in record time, and the Income Tax Act, 2025 will take effect from April 1, 2026. The simplified rules and forms will be notified soon," she said.
The Finance Minister emphasised that the revamped ITR forms have been redesigned with the ordinary taxpayer in mind, enabling easier compliance without procedural complexity. According to her, the reform is focused on clarity and simplicity rather than altering tax rates.
She clarified that the new Income Tax Act is revenue-neutral, with no change in existing tax slabs or rates. Instead, it aims to simplify the law, remove ambiguities and significantly reduce litigation by making provisions easier to understand. Notably, the legislation cuts down the overall text and number of sections by nearly 50 per cent compared to the 1961 Act.
One of the key structural changes introduced under the new law is the simplification of the tax timeline. The long-standing distinction between the "previous year" and the "assessment year" has been removed and replaced with a single "tax year" concept, making compliance more straightforward for taxpayers.
In another taxpayer-friendly move, Sitharaman said the new framework will allow individuals to claim refunds of tax deducted at source (TDS) even if income tax returns are filed after the due date, without attracting any penal charges.
The Finance Minister said these reforms are intended to make India's direct tax system more transparent, predictable and citizen-centric, while also improving ease of compliance and reducing disputes between taxpayers and the tax administration.
