Budget 2026: Small taxpayers who fail to disclose foreign assets worth up to ₹20 lakh get relief — here is how

Budget 2026: Union Finance Minister Nirmala Sitharaman on Sunday announced several tax-related measures in the Union Budget 2026-27, including a specific immunity programme for minor taxpayers regarding undisclosed small foreign assets.

While presenting the Budget in Parliament, the finance minister emphasized the government's commitment to transforming the income tax framework into a simpler, more taxpayer-centric system.

Immunity from prosecution

Sitharaman unveiled a dedicated initiative for small-scale taxpayers, offering protection from prosecution for the non-disclosure of minor overseas holdings.

She clarified that individuals failing to report non-immovable foreign assets with a combined value under ₹20 lakh would receive immunity from legal proceedings. This exemption is set to apply retrospectively starting 1 October 2024, enabling holders of low-value international assets to regularize their status without risking litigation.

In the 2026 Budget, Sitharaman outlined a "framework for penalty and prosecution immunity in instances where underreporting extends to misreporting".

The failure to produce account books or documents and certain TDS (Tax Deducted at Source) payment requirements have now been "decriminalized".

Taxpayers are granted retrospective immunity from prosecution, effective 1 October 2024, for undisclosed non-immovable foreign assets totaling less than ₹20 lakh.

TDS on immovable property sales by non-residents must now be handled via the resident buyer’s PAN rather than a TAN.

Sitharaman also declared a significant cut in tax collection at source (TCS) for international expenditures.

Small taxpayers can now obtain lower or nil deduction certificates through a rule-based, automated mechanism.

The annual budget focused on enhancing quality of life, streamlining compliance, and offering relief to everyday taxpayers.

The window for revising tax returns has been lengthened from 31 December to 31 March, subject to a nominal processing fee.

Individual Persons Resident Outside India (PROIs) are now authorized to invest in the equity of listed Indian firms via the Portfolio Investment Scheme (PIS).

New Income Tax Law Implementation

Finance Minister Sitharaman announced that the Income Tax Act, 2025 will take effect on April 1, with updated rules and return forms to be released shortly. Starting April 1, the Income Tax Act, 2025 will officially replace the six-decade-old legislation, incorporating the various tax amendments introduced in the 2026-27 Budget. The forms have been completely overhauled so that typical citizens can fulfill their obligations without difficulty, she concluded.

She said: "This (direct tax code) was completed in record time and the Income Tax Act 2025 will come into effect from first April 2026. The simplified income tax rules and forms will be notified shortly, giving adequate time to taxpayers to acquaint themselves with its requirements."