Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 on Sunday, February 1. The government has taken a strict stance against tax evasion and hiding of income. In this budget, the Finance Ministry has introduced tough rules for those who provide wrong information about their earnings. Along with strict penalties, the government has also provided some relief in taxes related to foreign travel.
New Penalty Rules for Hiding Income
The most significant announcement in this budget is regarding the penalty for misreporting income. If a taxpayer hides their actual income or shows incorrect details to save tax, they will face heavy fines. The government has decided to impose a penalty of up to 100 percent of the tax amount on such mistakes. This means the penalty will be equal to the tax evaded.
Apart from income, the rules for assets have also been tightened. Earlier, non-immovable assets were not strictly under the penalty scope, but now non-disclosure of such assets will also attract punishment. The Income Tax Department is using digital data matching (AIS/TIS), making it nearly impossible to hide financial details.
Changes in TCS Rates and Deadlines
There is good news for people planning foreign trips. The Tax Collected at Source (TCS) on foreign tour packages has been reduced significantly. Earlier, this rate ranged between 5% to 20%, but now it has been fixed at a flat 2%. This will make booking international travel packages cheaper for the common man.
The government has also extended the time limit for correcting mistakes in Income Tax Returns (ITR). Taxpayers can now file a ‘Revised Return’ till March 31 by paying a nominal fee. However, the last date for filing the regular ITR-1 and ITR-2 remains July 31.
Key Updates for Investors and NRIs
The budget has introduced several other important changes for different sections of taxpayers:
- Property Sale by NRIs: If a Non-Resident Indian (NRI) sells immovable property in India, Tax Deducted at Source (TDS) will now be applicable on the transaction.
- Safe Harbour Limit: For the IT sector, the Safe Harbour margin is set at 15.5%, and the limit has been increased from ₹300 crore to ₹2,000 crore.
- Foreign Assets Disclosure: A special 6-month window has been opened for small taxpayers to disclose their foreign assets without fear of immediate harsh action.
