Debt-to-GDP Target
The Centre aims to gradually reduce the debt-to-GDP ratio, estimated at 55.6% in RE 25-26 and projected to decline in BE 26-27. This will free resources for priority sectors by reducing interest payments.
Fiscal Deficit under Control
Fiscal deficit has been reduced below 4.5%, meeting the commitment of 2021-22. RE 25-26 and BE 26-27 stand at 4.4% and 4.3% of GDP respectively, signaling disciplined fiscal management.
Expenditure and Receipts
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RE 25-26: Non-debt receipts ₹34 lakh crore; net tax ₹26.7 lakh crore; total expenditure ₹49.6 lakh crore; capital expenditure ₹11 lakh crore.
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BE 26-27: Non-debt receipts ₹36.5 lakh crore; net tax ₹28.7 lakh crore; total expenditure ₹53.5 lakh crore; market borrowings ₹11.7 lakh crore (net), gross ₹17.2 lakh crore.
Direct Taxes: Simpler, Easier, Fairer
New Income Tax Act
The Income Tax Act 2025 comes into effect from 1 April 2026 with simplified rules and forms, easing compliance for ordinary citizens.
Ease of Living Measures
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Interest from Motor Accident Claims exempt from tax; TDS waived.
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TCS on overseas tours cut from 5-20% to 2%; TCS on education and medical remittances under LRS reduced to 2%.
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Supply of manpower services brought under TDS at 1-2% for clarity.
Support for Small Taxpayers
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Automated lower/nil deduction certificates.
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Depositories to accept Form 15G/15H on behalf of investors.
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Extended timelines: return revision till 31 March; staggered filing deadlines for ITR-1/2 and trusts.
Non-Resident Property TDS
TDS on property sales by non-residents will now be deposited via PAN-based challan by resident buyers, eliminating the need for TAN.
Overseas Asset Disclosure Scheme
A one-time six-month window for small taxpayers to declare overseas assets:
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Category A: Undisclosed assets/income up to ₹1 crore; 30% tax + 30% additional tax; immunity from prosecution.
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Category B: Disclosed but unreported assets up to ₹5 crore; fee ₹1 lakh; immunity from penalty and prosecution.
Penalty and Litigation Rationalisation
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Assessment and penalty proceedings will be integrated.
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No penalty liability during appeal.
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Prepayment reduced from 20% to 10% of core tax demand.
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Taxpayers can update returns even after reassessment to reduce litigation.
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Immunity framework extended to misreporting with full payment of tax and interest.
