Budget 2026 TDS-TCS New Rules: Who Bears More Burden, Who Gets Relief?
Complete Analysis of Tax Rate Restructuring in Central Budget 2026-27
%20photo-style%20image%20of%20a%20small%20but%20modern%20government%20service%20office%20in%20Karnataka,%20India,%20used%20as%20a%20blog%20cover%20image%20for%20an%20article%20about%20Budget%202026%20TDS%20and%20TCS%20changes.%20The%20en.jpg)
Budget 2026 New Update: Major Restructuring in TDS-TCS Rates
In the Central Budget 2026-27, the central government has restructured TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) rates in key sectors. Tax rates have been increased in some areas while relief has been announced for education-medical remittances and certain TDS provisions.
Table of Contents
- TCS Rate Changes: Which Sales Attract How Much Tax?
- Who Gets Relief in TCS Rates?
- TCS on Foreign Remittance: Special Advantage for Education-Medical
- TDS Changes: Who Gets Clear Relief?
- Penalties for Non-Compliance: Strict Rules for TDS-TCS Adherence
- Taxpayers' Key Questions - Simple Answers
- Our CSC Service Center: What Help is Available?
TCS Rate Change: How Much Tax on Which Sale?
How Much TCS on Liquor, Scrap, Minerals Now?
Rate Increases
- TCS rate on sale of liquor for human consumption increased from 1% to 2%, with no minimum limit.
- TCS rate on scrap sale increased from 1% to 2%, here too no limit.
- TCS on specific minerals including coal, lignite, iron ore will also increase from 1% to 2%.
Through these changes, the government aims for higher collection from sectors with cash-based, high-value transactions.
Who Gets Relief in TCS Rates?
Rate Reduction
TCS rate on tendu leaves sale reduced sharply from 5% to 2%, without limit.
This is expected to reduce tax burden for small traders dealing in forest produce business.
TCS on Foreign Remittance: Special Advantage for Education-Medical
What Has Changed Under LRS?
Current System
After exceeding ₹10 lakhs per year:
- 5% TCS for education/medical remittances
- 20% TCS applicable for other purposes
New Proposal
According to new proposal:
- TCS rate on money sent abroad for education loans and medical treatment to be reduced to 2%
- 20% TCS for other remittances to continue as before, ₹10 lakh limit remains status quo
This will reduce cash pressure for essential services like education-medical expenses, while higher rate continues as before for luxury/optional expenses.
TDS Changes: Who Gets Clear Relief?
1) No TDS Now on Road Accident Compensation Money
Previously, TDS deduction would occur if interest amount given by Motor Accident Claims Tribunal exceeded ₹50,000.
Now proposal has come to completely remove TDS on interest income related to accident compensation.
Through this, compensation amount reaching affected persons may reach their hands completely.
2) TDS Clarification for Manpower Supply Services
Manpower supply service has been clearly included within "work" definition.
This brings clarity that contractor payment TDS rate of 1% or 2% will apply to such service payments.
3) Property Purchase from Non-Resident Sellers: TAN Not Required
Previously, when purchasing property from NRI, obtaining TAN was required to make TDS deduction.
Under new rule, purchaser can make TDS deduction using his PAN, just referencing seller's PAN in report is sufficient.
Through this, resident-non-resident property transaction processes will simplify to be of one type.
4) Expense Deduction Improvement for Non-Life Insurance Companies
Previously, expenses that had not undergone TDS deduction/payment from earlier were permanently disallowed.
Now if deduction is made and payment done after TDS, opportunity will be available to claim that expense as deduction in next year.
Penalties for Non-Compliance: Strict Rules for TDS-TCS Adherence
Compliance Warning
Provision for jail sentence up to maximum 2 years and penalty arrangement will remain in force if TDS or TCS payment is neglected.
Even though system has been simplified, responsibility to make tax deduction-payment correctly on time remains taxpayers' main duty.
Taxpayers' Key Questions - Simple Answers
How Does This Affect Common Salary Earner/Business Person?
For families sending money for foreign education/medical, if TCS reduces to 2%, immediate cash outflow amount will decrease.
For those in liquor, scrap, mineral business, TCS rate increase may put slight additional burden on cash flow.
From Which Date Do New Rules Apply?
Budget proposal indicates that most TDS-TCS changes are likely to come into effect from April 1, 2026.
Our CSC Service Center: What Help is Available?
At our Government Service Center - Bangarpete:
- Income Tax Returns (ITR) filing
- Tax planning guidance according to new TDS-TCS rules
- Necessary document preparation for GST services, loans and other financial services
- Approximately 350+ government related online services available in one place
As government rules change, explaining how these changes affect you in simple language and providing practical planning is our main objective.
No comments:
Post a Comment