In the Union Budget 2026, Finance Minister Nirmala Sitharaman announced key changes to simplify tax compliance. Non-production of books of accounts and documents, as well as TDS obligations for payments made in kind, will no longer be treated as criminal offences.
Minor tax violations will now attract fines instead of imprisonment, while serious offences will be penalised based on their severity.
The move aims to reduce litigation, make it easier for taxpayers to comply, and ensure penalties are proportionate to the offence, particularly benefiting small businesses and individual taxpayers.