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The finance minister stated that the Income-tax Act, 2025 will come into effect from April 1, 2026 as per the schedule. It was further stated that simplified Income-tax Rules and redesigned forms will be notified separately, providing adequate time to taxpayers and industry to make the necessary arrangements to implement the new Act.
A significant part of the Direct Tax proposals is directed towards improving ease of compliance and reducing procedural hardship for taxpayers. The Budget proposes several measures aimed at addressing long-standing practical difficulties.
One such measure relates to employee welfare contributions, where the due date for deposit by the employer, for the purpose of claiming deduction, is aligned with the due date for filing the return of income. The Budget also proposes full exemption of interest awarded by the Motor Accident Claims Tribunal to a natural person, along with complete removal of TDS on such interest. This measure is intended to alleviate hardship faced by accident victims and their families.
The Budget emphasises the use of technology to simplify procedures. A rule based automated process is proposed for issuance of certificates for deduction of tax at lower or nil rates, replacing the existing requirement of filing applications before the Assessing Officer. This indicated a shift to greater reliance on digital first processes and aimed particularly at easing the compliance burden of small taxpayers.
Additional compliance-oriented measures include extending the timeline for filing revised income-tax returns from December 31 to March 31, subject to payment of a nominal fee. They also include introducing staggered due dates for different categories of taxpayers. Further, the Budget proposes simplifying TDS procedures in specified cases, such as the purchase of immovable property from non-residents.
Taken together, these measures reflect clear policy intent to reduce friction in tax compliance and improve taxpayer experience. For improving taxpayer certainty and reducing litigation, the Finance Bill, 2026 carries out targeted rationalisation of prosecution and procedural provisions. Several prosecution-related provisions have been recalibrated by replacing more rigorous forms of punishment with simple imprisonment, along with a reduction in prescribed imprisonment timelines in appropriate cases.
This article first appeared in the New Indian Express on 2 February 2026.
