ET Wealth Online impact on Budget 2026: Buyback tax, Black Money Act, ITR penalties, NRI property sales, how taxpayers' concerns were addressed

Economic Times Wealth Online in its pre-budget coverage took input from various experts and highlighted multiple issues which have been addressed in Budget in 2026. These issues were related with the income tax system including the black money act, the complicated rules for non-resident Indian selling property, issues related to buyback taxation, and criminal penalties for minor errors in ITR, among others.

Here’s what ET Wealth Online had highlighted that Budget 2026 has implemented:

1. NRI property tax rules can be a real headache

Past issue: The old tax regulations regarding property sale were quite complicated, which caused a lot of funds to get tied up for non-resident Indians (NRIs) trying to sell their property. A Deloitte pre-budget report indicated that between 12.5 percent and 31.2 percent of an NRI property seller’s funds can be stuck with the tax department, restricting their ability to reinvest or take advantage of the tax-saving instruments.


Also read: NRI property sellers lose lakhs to TDS delays; why Budget 2026 must step in to simplify the tax rules

Budget 2026 impact: There’s now a relaxation on the need for a resident individual or HUF to get a tax deduction and collection account number (TAN) when the seller of the immovable property is a non -resident.

2. Issues with buyback taxation

CA Naveen Wadhwa highlighted that when Infosys launched its largest-ever share buy-back last year, offering to repurchase 10 crore shares at a 19% premium, while promoters were increasing their stake, other investors faced a significant tax shift.

Also read: Infosys buyback: What investors must know about hidden cost due to taxation

From October 1, 2024, buy-back proceeds were taxed as a 'deemed dividend' at a flat 30% rate on the gross amount, with no deductions, causing the cost of shares tendered to become a capital loss and deductible against capital gains. This had contrasted with selling shares in the open market, where gains are taxed at lower capital gains rates (12.5% or 20%) with a long-term capital gains (LTCG) exemption.

Budget 2026 change: Budget 2026 aims to rationalise the taxation process on share buy-backs by stating that the money received will be taxable under the head “Capital gains” instead of being treated as dividend income. Additionally, considering the distinct position and influence of the promoters in corporate decision-making, especially in relation to buy-backs, it is proposed that promoters will face an effective tax rate of 30% on gains from buy-backs, which includes tax payable at the applicable rates together plus an additional tax. For promoter companies, the effective tax liability will be 22%.

These amendments will be effective from April 1, 2026, and shall apply in relation to the tax year 2026-27 and subsequent tax years.

3. Criminalising small mistakes

O.P. Yadav, former Former Principal Commissioner of Income Tax Department and Tax Evangelist at Prosperr.io, had written a pre-budget article where he highlighted that the Income Tax Act 2025 still criminalises small mistakes and why India needs a more trust-based approach.

A NITI Aayog paper proposes modernizing criminal tax provisions. The focus is on decriminalizing minor, procedural offenses that cause undue worry to taxpayers. These include delays in filing returns or providing documents. Comprehensive civil penalties already exist for such lapses. The reform aims to differentiate between genuine mistakes and fraudulent actions. This aligns with the government's vision of trust-based governance and ease of doing business. However, serious offenses like contravening prohibitory orders, fraudulent property transfers, and non-payment of TDS/TCS will remain criminal. The article suggests retaining TDS/TCS offenses due to their impact on revenue and deductees.

Also read: Why Income Tax Act 2025 still criminalises small mistakes and why India needs a more trust-based approach

Budget 2026 impact: It is proposed to amend Section 473 to 485 & 494 of the Act in light of continued exercise of decriminalisation and to make the punishment for the offences mentioned in these sections, proportionate to the crimes. The principles that are followed in the proposed decriminalization exercise are as follows:

• The nature of punishment is changed from rigorous imprisonment to simple imprisonment wherever prescribed in the Sections mentioned above.
• Maximum punishment is proposed to be limited to 2 years from its current 7 year and for subsequent offences, it is reduced to 3 years from its current 7 years.
• Wherever punishment of offences is prescribed based on grading of the amount of tax evaded, new grading of offences and its corresponding punishment is prescribed.
• If the amount of tax evaded does not exceed Rs 10 lakh, it should be punishable only by fine.
• Imposition of fine is introduced in lieu of or in addition to imprisonment.
• Certain offences are fully decriminalized.

4. ITR-U Issue

O.P. Yadav, former Principal Commissioner of Income Tax Department and Tax Evangelist at Prosperr.io, in a pre-budget article had highlighted that procedural exclusions prevent the use of ITR-U when assessment or revision proceedings are initiated or concluded, even if unrelated to the updated income. This restricts taxpayers from self-correction.

Also read: ITR-U cannot be filed if proceedings are initiated against a taxpayer, even when it is unrelated to the income to be disclosed in ITR-U, why Budget 2026 must fix this

Yadav had suggested amendments to the Income-tax Act, 2025, to allow Updated Returns in such cases, provided the disclosed income is not part of ongoing proceedings. This refinement is aimed at enhancing revenue collection and reducing litigation.

Budget 2026 impact: Budget 2026 proposes to amend Section 263(6) of the Act, to allow filing of updated return in cases where taxpayer has reduced the amount of loss compared to the amount of loss claimed in the ITR, within the due date specified under sub-section (1).

O.P Yadav said: “While many taxpayers expected Budget 2026 to extend select exemptions and deductions from the old tax regime into the new one—such as interest on self-occupied property under Section 24(b) and health insurance deductions, I had argued otherwise in my LinkedIn article dated 21 January 2026, titled ‘Budget 2026: Seven Income-Tax Issues That Must Be Fixed Before the New Law Takes Effect’. Drawing attention to my earlier articles in ET Wealth, I wrote that while Budget 2025 provided significant relief to individual taxpayers through higher exemptions, enhanced rebates, and lower tax rates up to Rs 24 lakh, fiscal constraints suggested that Budget 2026 may not offer further rate-based relief. I argued that the real significance of Budget 2026 lay elsewhere: in correcting anomalies arising from the drafting of the Income-tax Act, 2025, extending the scope of updated returns, reforming the Black Money Act, decriminalising minor income-tax offences, and addressing outdated, inequitable, and inefficient provisions carried forward from the Income-tax Act, 1961. That assessment was, to a large extent, ultimately reflected in Budget 2026.”