Union Budget 2026: Ease of Living Measures for Taxpayers and Businesses (FAQs)

Budget 2026- FAQs on Ease of Living Measures for Taxpayers

I. Exemption on interest income awarded under the Motor Vehicles Act, 1988 [Schedule III]

Q.1 What amendment has been proposed in the Income-tax Act, 2025 in connection with the provisions of the Motor Vehicle Act, 1988?

Ans: A new provision has been inserted to exempt any income in the nature of interest awarded under the Motor Vehicle Act, 1988 to an individual or his legal heir.

Q.2 Who would be eligible to claim such exemption?

Ans: An individual or his legal heir would be the eligible person.

Q.3 What are the applicable conditions for availing such exemption?

Ans: The only requirement under the proposed provision is that such interest income is awarded by Motor Vehicle Claims Tribunal under the Motor Vehicles Act, 1988 by an individual.

Q.4 Does the proposed amendment cover the amount of interest awarded by the Motor Vehicle Claims Tribunal?

Ans: Yes, the proposed provision covers interest awarded by the Motor Vehicle Claims Tribunal.

Q.5 Will the compensation be also exempted if it is awarded to a non-individual under the Motor Vehicle Act, 1988?

Ans: No, the proposed provision of exemption is applicable to an individual and his legal heir.

Q.6 What are the TDS provisions consequent to such changes?

Ans: The provision of TDS shall not apply on such income. The appropriate amendment in this regard has also been proposed.

II. No TDS on interest awarded by Motor Accidents Claims Tribunal to an individual as per the provision of Section 393(4) [Table: Sl. No. 7] of the Income-tax Act, 2025

Q.1 Is there any provision for deduction of tax at source in respect of interest on compensation amount awarded by Motor Accidents Claims Tribunal (MACT)?

Ans: Yes. Section 393(4) [Table: Sl. No. 7] of the Income-tax Act, 2025 provides that no tax shall be deducted at source on such interest, if the aggregate amount received during the year does not exceed Rs. 50,000.

Q.2 Whether the interest on compensation is taxable under the Income-tax Act, 2025 presently?

Ans: Yes, presently interest on compensation is taxable under section 278 of the Income-tax Act, 2025.

Q.3 What changes are proposed in this regard in the Finance Bill, 2026?

Ans: It is proposed that interest awarded by MACT will not be taxable in the hands of an individual or his legal heir.
It is also proposed that no tax shall be deducted at source on any interest amount awarded by the MACT, if such interest is credited or paid to an individual.

Q.4 Whether there is any change in respect of a person other than an individual with respect to the applicability of TDS when such interest income is received?

Ans: No. In case of a person other than an individual, the existing provisions of the Income-tax Act, 2025 will continue and any interest amount exceeding Rs. 50,000 will be liable for TDS.

Q.5 From which date will the above amendment be effective?

Ans: The amendments are proposed to be made effective from 1st April, 2026.

III. Including “supply of manpower” within the ambit of definition of “work” for the purposes of TDS as defined in section 402(27) of the Income-tax Act, 2025

Q.1 Which provisions of the Income-tax Act, 2025 deals with TDS rate on contract and fee for professional services?

Ans: Section 393(1) [Table: Sl. No. 6(i)] of the Income-tax Act, 2025 provide for rate of TDS on payment to contractors. Whereas section 393(1) [Table: Sl. No. 6(iii)] of the Income-tax Act, 2025 provide for rate of TDS on fee for professional service.

Q.2 What are the rates at which TDS shall be made under the aforesaid section?

Ans: Under section 393(1) [Table: Sl. No. 6(i)] of the Income-tax Act, 2025, TDS shall be deducted @2%, if the payee is resident individual or HUF and @1%, if payee is a person other than individual and HUF.
TDS rates under section 393(1) [Table: Sl. No. 6(iii)] of the Income-tax Act, 2025 is 2% and 10%. However, TDS shall be done @10% in respect of fee for professional services.

Q.3 What changes are proposed in the Finance Bill, 2026 with regard to rate of TDS on supply of manpower?

Ans: It is proposed that the definition of “work” may be extended to include “supply of manpower” within its ambit so as to provide clarity that rate of TDS for supply of manpower shall be governed by the provisions of section 393(1) [Table: Sl. No. 6(i) and (ii)] of the Income-tax Act, 2025.

Q.4 From which date will the above change be effective?

Ans: The amendments are proposed to be made effective from 1st April, 2026.

IV. Simplified procedure for small taxpayers to obtain certificate of lower or nil deduction of tax at source under section 395 of the Income-tax Act, 2025

Q.1 What is the present provision under the Income-tax Act, 2025 for obtaining certificate for deduction of income-tax at a lower rate or no deduction of income-tax?

Ans: As per the present provisions, the payee has to make an application before the Assessing Officer.
Subsequent to the application, if the Assessing Officer is satisfied that the total income of the recipient justifies deduction at any lower rates or no deduction, he/she issues a certificate.
However, the process for issuance of such certificates is uniform both for cases involving small amounts as well as large amounts.

Q.2 What is the change proposed vide Finance Bill, 2026?

Ans: For small taxpayers, it is proposed that the application for issuance of certificates for lower rate or nil deduction of tax may be made electronically to the prescribed income-tax authority.
The prescribed income-tax authority shall examine the application electronically and issue the certificate subject to fulfilment of conditions as may be prescribed, or reject the application if prescribed conditions are not fulfilled or the application is incomplete.

Q.3 Who can make application to the prescribed income-tax authority under the proposed changes?

Ans: The category of taxpayers and other related conditions will be prescribed by the Board by making rules in this regard.

Q.4 Who will be the prescribed income-tax authority to whom application can be made?

Ans: Such authority will be prescribed by the Board by making rules in this regard.

Q.5 Can a person file application before Assessing Officer as well as to prescribed income-tax authority?

Ans: No. The application can be filed either before the Assessing Officer or to the prescribed income-tax authority.

Q.6 From which date will the above amendment be effective?

Ans: The amendments are proposed to be made effective from 1st April, 2026.

V. Ease of compliance to the investors filing declaration for no deduction of tax under section 393(6) of the Income-tax Act, 2025

Q.1 What is the existing procedure for furnishing a declaration for no deduction of tax under section 393(6) of the Income-tax Act, 2025?

Ans: At present, the taxpayer has to furnish a declaration for no deduction of tax to the person responsible for paying (hereinafter referred as the “deductor”) any income of the nature specified in section 393(6) of the Income-tax Act, 2025.

Q.2 What changes are proposed in the Finance Bill, 2026 in this regard?

Ans: It has been proposed that the taxpayer may file the declaration u/s 393(6) of the Income-tax Act, 2025 to the depository, as defined in section (2)(e) of the Depositories Act, 1996, for following nature of income:
(i) Income from units of a mutual fund
(ii) Interest from securities
(iii) Dividends
The depository will make available the declaration filed with it to the deductor.

Q.3 Whether a person who does not hold its units and securities in the depository can make declaration to the depository?

Ans: No. A person can only make declaration to the depository, if
(i) the units and securities are held in the depositories and
(ii) such securities are listed on a recognized stock exchange.

Q.4 What will be the procedure and manner to file a declaration with the depository?

Ans: The procedure and manner for filing the declaration with the depository and making available such declaration to the deductor will be provided by making rules in this regard.

Q.5 Will the depository provide necessary enablement to file the declaration with it?

Ans: Yes, the depositories will make necessary arrangements to ensure that the declaration is filed with them.

Q.6 Will the deductor be mandated to consider the declaration made available to it by the depository?

Ans: Yes, the deductor is mandated to consider the declaration received from the depository.

Q.7 Is there any change with regard to delivering the declaration to the Department?

Ans: Yes, two changes are proposed in this regard.
(i) The deductor will furnish declaration received to the prescribed income-tax authority and not to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.

(ii) The deductor will be required to deliver the declaration received by it on quarterly basis and not on monthly basis.

Q.8 What will be the impact of the proposed changes?

Ans: The taxpayer will not have to file separate declaration with different entities and instead it can file the declaration with the depository. It will ease the compliance burden of the taxpayers.
The deductor will receive declaration from a single source i.e. depository and will have to deliver declarations received on quarterly basis. This will make compliance easier for the deductors.

Q.9 From which date will the above change be effective?

Ans: The amendments are proposed to be made effective from 1st April, 2027.

VI. Rationalisation of period of filing revised return

Q.1 What does Section 263 of the Income-tax Act, 2025 deal with?

Ans: Section 263 of the Income-tax Act, 2025 provides for the furnishing of return of income by a person whose total income exceeds the basic exemption limit or who is otherwise required to file a return under the Income-tax Act, 2025.

Q.2 Who is required to file a return under Section 263 of the Income-tax Act, 2025?

Ans: Any person (individual, company, firm, etc.) whose income exceeds the prescribed limit or who satisfies specified conditions must file a return.

Q.3 What happens if return is not filed under Section 263 of the Income-tax Act, 2025?

Ans: Failure to file the return may attract fee, interest, penalty, and prosecution, as provided under other sections of the Act.

Q.4 What is a revised return under Section 263 of the Income-tax Act, 2025?

Ans: A revised return is a return furnished to correct any omission or wrong statement in a previously filed return (original or belated) for a tax year.

Q.5 Presently, when can a revised return be filed?

Ans: It can be filed any time within nine months from the end of the relevant tax year or before the completion of the assessment, whichever is earlier.

Q.6 What are the proposed changes in revised return in Finance Bill, 2026?

Ans: As per the proposed changes the revised return can be filed any time within twelve months (instead of nine months at present) from the end of the relevant tax year or before the completion of the assessment, whichever is earlier.

Q.7 What are the proposed changes as regards to fee in respect of revised ITR?

Ans: A fee is proposed in section 234I of Income-tax Act, 1961 and corresponding fee in section 428(b) of Income-tax Act, 2025 for revised return filed beyond nine months from end of relevant tax year.

Q.8 What is the income threshold of determination of fee – is it total income or incremental income in the revised return?

Ans: Fee is imposed on the total income that has been filed during revised return. If the total income filed in the revised return exceeds 5 lakh rupees and revised return is filed after 9 month from end of tax year then fee shall be Rs. 5,000 and if the total income is less than 5 lakh rupees then fee shall be Rs. 1,000.

VII. Due Dates for filing return of Income

Q.1 What are the changes that has been carried out in due dates for filing of return of Income?

Ans: Due date for non-audit business cases and Trusts is extended under section 263(1)(c) of the Income-tax Act, 2025 from 31st July to 31st August.

Q.2 What is the rationale for making amendments in due dates under section 263(1)(c) of the Income-tax Act, 2025?

Ans: It is envisaged to provide more time for non-audit business cases and trusts to prepare their books of account and make necessary compliances and reduce grievances.

Q.3 What are the changes in due dates for salaried Individuals?

Ans: Due date for assessee filing ITR-1 & ITR-2 shall remain 31st July.

Q.4 When shall these amendments in due dates under section 263(1)(c) of the Income-tax Act, 2025 will come into force?

Ans: Amendments under section 263(1)(c) of the Income-tax Act, 2025 shall be effective from 1st April, 2026 and shall be applicable for tax year 2026-27.

Q.5 Whether similar amendments are carried out under Income-tax Act, 1961?

Ans: Yes, similar amendments under Explanation-2 to section 139(1) has been carried out in the Income-tax Act, 1961.

Q.6 Which assessment year shall be affected by the amendments made in Income-tax Act, 1961?

Ans: Amendments in section 139(1) of the Income-tax Act, 1961 shall be effective from 1st March, 2026 and shall be applicable for assessment year 2026-27 (previous year 2025-26). Accordingly, due date for non-audit business cases and Trusts for AY 2026-27 shall be 31st August 2026.

VIII. No TAN requirement for deducting TDS where seller of the immovable property is a non resident under section 397 of the Income-tax Act, 2025

Q.1 Who are required to obtain TAN under the Income-tax Act?

Ans: Section 397(1) of the Income-tax Act, 2025 provides that every person, deducting or collecting tax shall apply for the allotment of a Tax Deduction and Collection Account Number (TAN).
However, clause (c) of the said section provides for the cases where a person is not required to obtain TAN for deducting TDS.

Q.2 Whether a resident individual or Hindu undivided family (HUF) is required to obtain TAN, where he is required to deduct tax on any consideration for sale of immovable property and the seller of the property is a resident?

Ans: No. In case the seller of the immovable property is a resident, the resident individual or HUF is not required to obtain TAN for deduction of income-tax.
In such cases, the buyer deducts tax using his PAN and reports the deduction quoting the PAN of seller in the challan-cum-statement that is filed with the department.

Q.3 What is the present provision in respect of transaction on immoveable property is the buyer is a resident and the seller is a non-resident?

Ans: In case the seller of the immovable property is a non-resident, the resident individual or HUF is required to obtain TAN for deduction of income-tax.

Q.4 What is the change proposed with regard to obtaining TAN in the Finance Bill, 2026?

Ans: It is proposed that the resident individual or HUF will not be required to obtain TAN where TDS is required to be deducted by him on any consideration for the transfer of any immovable property and the seller of the property is a non-resident.
In such cases, the buyer will now deduct tax using his PAN and shall report the deduction quoting the PAN of seller in the challan-cum-statement that is filed with the department.
Therefore, the process of tax deduction and reporting shall now be similar irrespective of whether seller is a resident or a non-resident.

Q.5 How will it benefit the taxpayers?

Ans: It will reduce compliance burden on the resident individual and HUF as they will not be required to obtain TAN for such transaction and can deduct income-tax based on his PAN.

Q.6 What would be the process of tax deduction at source in the absence of TAN?

Ans: The taxpayer can deduct tax at source by furnishing PAN based challan-cum-statement as may be notified. The process of tax deduction and reporting shall now be similar irrespective of whether seller is a resident or a non-resident.

Q.7 From which date will the above amendment be effective?

Ans: The amendments are proposed to be made effective from 1st October, 2026.

IX. Due date for crediting employee contribution to the account of the employee in the provident fund, superannuation fund, etc. for the purposes of section 29(1)(e) of the Income tax Act, 2025

Q.1 What are the provisions of section 29(1)(e) of the Income-tax Act, 2025?

Ans: Section 29(1)(e) allows for deduction of any amount of contribution received by the employer (being the assessee) from the employee, if such amount is credited to the employees’ account within the due date.

Q.2 What is the “due date” as per the existing provisions of the Income-tax Act, 2025?

Ans: As per the existing provisions of the Act, the term “due date” denotes the date under the Acts and rules governing approved provident fund, superannuation fund or any fund set up under ESI Act within which amount of contribution received from employee shall be credited.

Q.3 What are the changes proposed in Finance Bill, 2026 with regard to the “due date”?

Ans: It has been proposed that any amount of contribution received from employee by the employer (being the assessee), towards any approved provident fund, superannuation fund or any fund set up under ESI Act shall be allowed as deduction if such amount is credited to the relevant fund, on or before the due date of filing of return of income under section 263(1) of the Income-tax Act, 2025 which is applicable for the employer.

Q.4 Why is an extended date being given for payment of PF/ESI contributions deducted from employees?

Ans: At present, payment of employer’s contribution to PF/ESI is allowed as deduction, if such amount is actually paid on or before the due date of filing of return of income under section 263(1) of the Income-tax Act, 2025 for the employer. Whereas payment of employee contribution is allowed as deduction, if amount is paid within the due date of relevant fund.
The relevant Acts provide same date for payment of employee as well as employer contribution i.e. 15 days from end of the calendar month in which wages are paid.
Thus, the change is proposed to align the due date for employee contribution with that of employer contribution as there is no such distinction in the relevant Acts. Further there are adequate compliance provisions embedded in the respective Acts to persuade compliance on part of the employer.

Q.5 From when will these changes be made effective?

Ans: The amendments are proposed to be made effective from 1st April, 2026.

X. Rationalizing the provision for allowability of deduction under section 35(b)(i) and (ii)
of the Income-tax Act, 2025 for insurance business other than life insurance business

Q.1 Which provisions of the Income-tax Act, 2025 provide for the computation of profits and gains of insurance business other than life insurance business?

Ans: Section 55 read with Part B of Schedule XIV of the Income-tax Act, 2025 provide for the computation of profits and gains of insurance business other than life insurance business.

Q.2 How the computation of profit and gains is done for aforesaid insurance business?

Ans: Part B of Schedule XIV of the Income-tax Act, 2025 provides the manner for computation of profit and gains of such business. It provides that any amount inadmissible under section 28 to 54 of the Income-tax Act, 2025 shall be added back to the profits and gains.
Further, sub-paragraph (2) of paragraph (4) provides that any amount which was added back under section 37 of the Income-tax Act, 2025, shall be allowed as a deduction in the tax year in which it is actually paid.

Q.3 What is the change proposed in Schedule XIV of the Income-tax Act, 2025?

Ans: It is proposed that any amount which was added back due to it being non-deductible u/s 35(b)(i) or 35(b)(ii) [amount not allowed as deduction due to non-deduction or payment of TDS on such amount as per said section] of the Income-tax Act, 2025 to non-life insurance business, shall be allowed as deduction in a tax year in accordance with the provisions of section 35(b)(i) or 35(b)(ii) of the Income-tax Act, 2025 to such business.

Q.4 What will be the impact of such change?

Ans: If any amount on which tax was not deducted and paid at source as per provisions of section 35(b)(i) or 35(b)(ii) of the Income-tax Act, 2025 and in any subsequent tax year, the said tax is deducted and paid, the said amount will be allowed as deduction in that subsequent tax year.

Q.5 Will this amendment be prospective?

Ans: Yes, the amendment will be prospective and will be applicable from 01.04.26 for tax year 2026-27 and subsequent tax years.

Q.6 From when the said amendment in Schedule XIV of the Income-tax Act, 2025 be made effective?

Ans: The said amendment shall be made effective from 1st April, 2026.

XI. Foreign Assets of Small Taxpayers – Disclosure Scheme 2026 (FAST-DS)

Q.1 What is the Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026?

Ans: The Scheme provides a one-time opportunity to eligible taxpayers to disclose specified foreign income and assets either not taxed or not reported in the return of income, on payment of tax or fee, with immunity from further tax, penalty and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Q.2 Who is eligible to make a declaration under this Scheme?

Ans: Any person who is or was a resident in India in the relevant period and who satisfies the conditions specified in the Scheme may make a declaration. This includes persons who are presently non-resident or not ordinarily resident but were resident in India when the undisclosed foreign income accrued or when the foreign asset was acquired.

Q.3 Who are the people who can take advantage of this scheme?

Ans: Many taxpayers can take advantage of this scheme, including but not limited to –
• employees of multinational technology companies receiving ESOPs or RSUs from foreign employers who have not reported such assets;
• former students retaining dormant or low-balance foreign bank accounts after completion of studies abroad;
• returning non-residents with undisclosed foreign savings or insurance policies; and
• mission employees or other personnel on deputation abroad.

Q.4 What types of income or assets can be disclosed under the Scheme?

Ans: The Scheme covers—
(a) undisclosed foreign income;
(b) undisclosed assets located outside India; and
(c) specified foreign assets acquired from foreign income when assessee was a non-resident or from income already offered to tax in India, which have not been reported in the relevant Schedule of the return of income.

Q.5 What is the “undisclosed foreign income” that can be declared under the Scheme?

Ans: It is defined as the total amount of income of an assessee from a source located outside India which should have been taxed in India but has not been offered to tax.

Q.6 What is the “undisclosed assets located outside India” that can be declared?

Ans: It is defined as an asset (including financial interest in any entity) located outside India, held by the assessee in his name or as a beneficial owner, but he has no explanation about the source of investment in such asset.

Q.7 What are the monetary limits to be eligible under the Scheme?

Ans: For “undisclosed assets located outside India” or “undisclosed foreign income”, the Scheme applies where the aggregate value does not exceed ₹ 1 Crore as on 31st March, 2026.

Q.8 What are the monetary limits under this scheme for foreign assets that were taxed but not reported?

Ans: For foreign assets acquired from disclosed income or during status as a non-resident, the value of the asset must not exceed ₹ 5 Crore as on 31st March, 2026.

Q.9 What is the amount payable where “undisclosed assets located outside India” or “undisclosed foreign income” are declared?

Ans: The declarant is required to pay tax at the rate of 30 per cent of the value of the undisclosed foreign asset as on 31st March, 2026 or of the undisclosed foreign income, as the case may be, together with an additional amount equal to 100 per cent of such tax. The total amount payable will be 60% of the value of the asset or foreign income, as the case may be.

Q.10 What is the amount payable where the foreign asset is explained but not reported?

Ans: Where the foreign asset was acquired during non-resident status or from income already offered to tax in India but was not disclosed in the relevant return schedules, a flat fee of ₹ 1 Lakh is payable, subject to the value threshold.

Q.11 If there is a non-declaration of same asset in multiple years will the fee of Rs. 1 lakh be chargeable for all the years or one year only?

Ans: If the asset is same, then only one time fee would be chargeable and would be applicable for the first year of non-disclosure. Thereafter it would be deemed that the asset remains disclosed. However, if there are assets that were acquired in multiple years, then fee would be chargeable for corresponding first years when the asset was undisclosed.

Q.12 What is the manner of making a declaration under the Scheme?

Ans: A declaration under the Scheme shall be made electronically in the prescribed form and verified in the prescribed manner, within the period notified by the Central Government.

Q.13 How is the amount payable under the Scheme determined?

Ans: After electronic verification of eligibility and the declaration, the prescribed income-tax authority shall communicate the amount payable by way of an order within one month from the end of the month in which the declaration is furnished.

Q.14 What is the time limit for payment of the amount determined?

Ans: The declarant is required to pay the amount determined within two months from the end of the month in which the order is received. A further extension of two months is permitted, and no extension beyond this period is allowed.

Q.15 Is any interest payable for delayed payment?

Ans: Yes. Where payment is made during the extended period of two months, simple interest at the rate of 1% for every month or part of a month is payable on the unpaid amount.

Q.16 What happens after payment is made?

Ans: Upon payment and intimation thereof in the prescribed form, an order certifying payment under the Scheme shall be issued electronically. Such order is conclusive as to the matters stated therein.

Q.17 Does the Scheme grant immunity from penalty and prosecution?

Ans: Yes. A declarant who makes a valid declaration and pays the prescribed amount shall be granted immunity from levy of tax, penalty and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in respect of the income or asset so declared.

Q.18 Are there any exclusions where the Scheme shall not apply?

Ans: Yes. The Scheme does not apply to income or assets representing proceeds of crime under the Prevention of Money Laundering Act, 2002, or to cases where assessment proceedings under the Black Money Act have already been completed.

Q.19 How are pending assessment proceedings affected?

Ans: Where assessment proceedings under the Income-tax Act, 2025 are pending in respect of the declared income or asset, the Assessing Officer shall take the declaration into account while finalizing such proceedings.

Q.20 Can a declaration be made for more than one foreign asset or income item?

Ans: Yes. A single declaration may include multiple items of undisclosed foreign income or foreign assets, subject to compliance with the monetary limits and other conditions specified under the Scheme.

Q.21 How is the value of an undisclosed foreign asset to be determined for the purposes of the Scheme?

Ans: The value of an undisclosed foreign asset shall be determined in accordance with the valuation rules prescribed under the Scheme, having regard to the nature of the asset and the relevant valuation date.

Q.22 How will cases of misrepresentation or suppression of facts be dealt with?

Ans: Where a declaration is found to be false or contains material misrepresentation or suppression of facts, the declaration shall be void and the provisions of the applicable law shall apply as if no declaration had been made.

Q.23 Who is the competent authority for administering the Scheme?

Ans: The Scheme shall be administered by such income-tax authorities as may be notified by the Central Government.

Q.24 What is the last date for making a declaration under the Scheme?

Ans: The last date for the Scheme shall be such date as may be notified by the Central Government in the Official Gazette. The declarations can be made only within the period so notified.

Q.25 From when will the Scheme come into force?

Ans: The Scheme shall come into force on such date as may be notified by the Central Government in the Official Gazette.