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Background: A Historic Overhaul of India’s Direct Tax Law During the presentation of the Union Budget 2026–27 , Finance Minister Nirmala Sitharaman announced that the Income Tax Act, 2025 will come into force from 1 April 2026 , replacing the existing Income Tax Act, 1961 , which has governed India’s direct tax regime for over six decades. The stated objective of the new law is simplification without revenue loss , with a focus on removing interpretational ambiguities that have historically fuelled litigation between taxpayers and the tax administration. Notably, the reform is structural and procedural , not fiscal in nature— no changes have been made to income tax slabs or rates . Legislative Authority and Constitutional Basis Statutory Power to Enact the New Law The Income Tax Act, 2025 has been enacted under Article 246 read with Entry 82 of List I (Union List) of the Seventh Schedule to the Constitution of India, which grants Parliament exclusive power to legislate on “taxes on ...

Introduction: Budget 2026 and the Stability Signal The Union Budget 2026–27, presented by Finance Minister Nirmala Sitharaman—her ninth consecutive Budget —has sent a clear policy message: tax stability over populism . While expectations of slab rationalisation ran high, the government chose continuity, announcing no change in income tax slabs , while confirming that the New Income Tax Act, 2025 will come into force from 1 April 2026 , replacing the six-decade-old Income Tax Act, 1961. This Budget marks a significant moment in India’s fiscal evolution, prioritising simplification, procedural reform, and targeted relief , rather than rate cuts. Constitutional Framework Governing Taxation Article 265: No Tax Without Authority of Law Article 265 of the Constitution mandates that “no tax shall be levied or collected except by authority of law.” The proposed implementation of the New Income Tax Act, 2025 directly flows from this constitutional requirement, reaffirming Parliament’s exclus...

Introduction Reinvesting proceeds from the sale of a residential property into another home is a common tax-planning strategy in India. However, when such reinvestment is made in an under-construction property , delays in completion can severely jeopardise the Long-Term Capital Gains (LTCG) exemption available under the Income Tax Act, 1961. The law adopts a strict, time-bound approach, and courts have consistently emphasised compliance with statutory timelines. This article examines the statutory framework , constitutional principles , and judicial precedents governing LTCG exemptions in cases involving under-construction residential properties. Statutory Framework Governing Capital Gains Exemption Section 54 of the Income Tax Act, 1961 Section 54 provides exemption from long-term capital gains arising from the sale of a residential house property , subject to reinvestment in another residential house. Key statutory conditions: The assessee must purchase: A residential house within ...

When Non-Resident Indians (NRIs) sell property in India, they are liable to pay capital gains tax under Indian law. However, taxation doesn’t end there — the gains may also be subject to tax in their country of residence such as the United States, the United Kingdom, or Singapore . This makes it essential to understand how Indian tax law, international tax treaties (DTAAs), and constitutional safeguards work together. 1. Statutory Framework Governing Property Sale and Capital Gains a. Income Tax Act, 1961 The taxation of property sale by NRIs in India is primarily governed by the Income Tax Act, 1961 . Section 45 : Imposes tax on capital gains arising from the transfer of a capital asset. Section 48 : Provides for indexation of the cost of acquisition to adjust for inflation. Section 195 : Mandates Tax Deducted at Source (TDS) on payments made to NRIs for property transactions. Section 90 : Grants relief from double taxation through the Double Taxation Avoidance ...