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  THE FINANCE BILL, 2026 FAQ KEY FEATURES OF BUDGET 2026 MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL,2026

  The Budget has proposed to reduce the tax collected at source (TCS) for self-funded education and medical purposes abroad under the liberalised remittance scheme from 5% to 2%. However, the TCS rate for other purposes will continue at 20%. Govt had last year exempted remittances for education from TCS where such remittance is from a loan taken from a specified financial institution. The finance minister has also proposed to reduce TCS on overseas tour packages to 2%. Currently, TCS for such expenditure is levied at a rate of 5% (for remittances up to Rs 10 lakh) and 20% (for remittances beyond Rs 10 lakh). The move will boost foreign travel. Under the liberalised remittance scheme, all resident individuals, including minors, are allowed to freely remit up to $250,000 in a financial year without seeking prior approval from RBI. This enables an individual to send money to a child studying overseas for education, make an investment or take a vacation. Govt’s decision to slash TCS on...

  Tightened tax rules for sovereign gold bonds (SGBs) will arrow the scope of who canclaim capital gains exemption. The budget decisionsignals discomfort with SGBs eing used as a tax arbitrageinstrument rather than as along-term savings product.The Finance Bill 2026, presented on February 1, proposed amending the Incometax Act to clarify that theexemption will be availableonly to investors who subscribed to SGBs at thetime oforiginal issuance and holdthem continuously untilredemption on maturity(usually eight years). Premature redemption, even afterthe completion of the prescribed lock-in period, shallnot be eligible for exemption.The change, effective April 1,applies from tax year 2026-27and removes ambiguityaround secondary markettransactions.So far, gains from SGB saleswere exempt if they were held till maturity, irrespective ofhow long the bond was held orwhether it was bought in theprimary issue or from thesecondary market. “Only theprimary investor who continues to hold until...

  The budget has proposed a major reset in the taxation of share buybacks, shifting them from being treated as ‘deemed dividends’ back to capital gains. Under the proposal, buyback proceeds for individual shareholders will be taxed at 12.5%, significantly lower than the current slab-based rate of up to 30%. Tax treatment for promoters has also been rationalised: foreign promoters will face a 30% levy, while Indian promoters will continue to be taxed at 22%. Tax experts said the change corrects a distortion in equity taxation and restores buybacks as a more efficient capital-return mechanism. “With effect from October 2024, buyback proceeds were treated as dividends, taxed at regular rates, while the cost of acquisition was recognised separately as a capital loss. Less than 18 months later, the old system has been restored, but with added complexity—distinguishing between promoters, who do not get concessional rates, and non-promoter shareholders, who benefit from the lower capital ...

  Individuals who missed reporting small funds in foreign bank accounts, and other overseas assets like stock options or an apartment in their tax returns can now breathe easy. Under a one-time, six-month mini amnesty window announced in the budget, they can get the taxman off their backs for a fee of `1 lakh for assets up to `5 crore, as long as these were acquired with disclosed earnings. And where the source of funds is not revealed, a person can come clean by forking out 60% of the value of assets up to `1 crore. Over the years, tax officials have knocked on the doors of hundreds of residentswho remitted tax-paid moneythrough banking channels underthe Reserve Bank’s liberalised remittance scheme for failing to report overseas assets. Some werepulled up for offshore securitiesand properties bought when theywere working abroad as NRIs. Besides a hefty fine of `10 lakh,the black money law allows the income tax department to initiate prosecution gainst errant NRIs. While the big fi...

  Buying property from an NRI? Worried about obtaining TAN? Not anymore.To relax the compliance burden, the Budget has proposed that resident individuals and HUFs need not have a Tax Deduction and Collection Account Number (TAN) if they are purchasing a property from a non-resident Indian (NRI). The amendment will take effect from Oct 1, 2026. Under the proposed framework, resident individuals or HUFs can report the tax deducted at source (TDS) by quoting PAN, as is done when the transactions are between two residents. Presently, if a person buys an immovable property from a resident seller, the person is not required to obtain TAN to deduct tax at source. However, where the seller of the immovable property is a non-resident, the buyer is required to obtain TAN to deduct tax at source. Ameet Patel, partner at Manohar Chowdhry & Associates, said this used to be a detailed process. “At present, if a resident were to purchase an immovable property from an NRI, there is no separate...

  FOR TAXPAYERS FOR TAXPAYERS GAINS | Time limit to revise I-T returns can be extended by3 months to March 31 with a small fee TCS on overseas package tours, foreign education and medical treatment cut to 2% 6 ‑ month window to reveal undisclosed foreign assets/income subject to limits and additional tax payment Minimum alternate tax snipped to 14% Decriminalisation, rationalisation of penalty framework under I-T Act Some small taxpayers can apply for online issuance of lower/nil taxdeduction certificate on their income PAINS | No accumulation of MAT credit from April 1. Accumulated credit to be set off only under new tax regime Tax exemption for disability pension only to those services retirees who had to prematurely quit due to the disability FOR INVESTORS GAINS | Persons resident outside India can invest in listed Indian equity through portfolio investment scheme, individual limitraised from 5% to 10%, overall cap from 10% to 24% No need to obtain TAN for TDS if buyingproperty ...