The forms have been redesigned to make them simpler for citizens to understand and comply with, she said.
Representational image (IANS)
The Income Tax Act, 2025, is slated to come into effect on 1 April 2026, and the simplified Income Tax Rules and Forms will be notified in due course, giving adequate time to taxpayers to acquaint themselves with its requirements, Union Finance Minister Nirmala Sitharaman said on Sunday.
The forms have been redesigned to make them simpler for citizens to understand and comply with, she said.
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Sitharaman proposed constituting a Joint Committee of the Ministry of Corporate Affairs and the Central Board of Direct Taxes to incorporate the requirements of the Income Computation and Disclosure Standards (ICDS) in the Indian Accounting Standards (IndAS).
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The separate accounting requirement based on ICDS will be done away with from the tax year 2027-28.
“To support the Prime Minister’s vision of home-grown accounting and advisory firms to become global leaders, the Budget also proposes to rationalise the definition of accountant for the purposes of Safe Harbour Rules,” she said.
Among other key tax proposals, the budget also aims to curb the improper use of buybacks by promoters, proposing to tax buybacks for all types of shareholders as capital gains.
However, to disincentivise misuse of tax arbitrage, promoters will pay an additional buyback tax.
This will make the effective tax 22 percent for corporate promoters and 30 percent for non-corporate promoters.
The TCS rate on remittances under the Liberalised Remittance Scheme exceeding Rs 10 lakh is 2% for education or medical treatment, and 20% for purposes other than education or medical treatment.
The Securities Transaction Tax (STT) on futures is proposed to be raised to 0.05 percent from the current 0.02 percent. STT on options premiums and the exercise of options is proposed to be raised to 0.15 percent from the present rate of 0.1 percent and 0.125 percent, respectively.
In continuance to simplified regime and lower tax rate for corporates, set-off of brought forward (Minimum Alternate tax) MAT credit is proposed to be allowed to companies only in the new regime to encourage companies to shift to the new regime, Sitharaman said.
Set-off using available MAT credit is proposed to be allowed to an extent of 1/4th of the tax liability in the new regime.
Ending further accumulation from 1st April, 2026, MAT is proposed to be made the final tax. In line with this change, the rate of final tax will be reduced to 14 percent from the current MAT rate of 15 percent.
The brought-forward MAT credit of taxpayers accumulated till 31st March 2026 will continue to be available for set-off as above, the Finance Minister highlighted in her speech.
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