Tax Harbour Insight: Union Budget 2026 -What It Means for Seafarers
- Feb 3
- 10 min read
Message from Tax Harbour:-
At Tax Harbour, one question we hear from seafarers and Merchant Navy officers after every Union Budget is simple:
“Will this affect my foreign salary, residential status, or tax planning while sailing?”
The Union Budget 2026 does not introduce any major changes impacting individual taxpayers, and importantly, there are no changes to the income-tax slab rates or provisions governing taxation of foreign salary of NRIs and seafarers.
Further, the much-discussed recommendation of joint taxation for married couples, proposed by ICAI to the CBDT, has not been accepted in this Budget.
Through this update, we highlight the key Budget proposals and explain their practical relevance for seafarers, NRIs, and Merchant Navy officers.
At Tax Harbour, we remain committed to helping seafarers stay compliant.
Here’s what the Union Budget does and does NOT change for seafarers & Merchant Navy officers.
A. For F&O Traders
FAQs
Q.1 What is the current provision for Securities Transaction Tax (STT) on options in securities?
Ans: Under the existing provisions of the Income-tax Act, 2025 and the STT framework introduced by the Finance (No. 2) Act, 2004, STT is levied on transactions in specified securities carried out through recognized stock exchanges. The current rates applicable to options in securities are 0.1 per cent of the option premium on sale of an option and 0.125 per cent of the intrinsic price on sale of an option when exercised.
Q.2 What is the current provision for Securities Transaction Tax (STT) on futures in securities?
Ans: Under the existing provisions and the STT framework introduced by the Finance (No. 2) Act, 2004, the current rate applicable to futures in securities is 0.02 per cent of the traded price on sale of a future.
Q.3 What changes have been made by the Finance Act to the rates of Securities Transaction Tax on derivatives transactions?
Ans: The Finance Act provides for a revision in the rates of Securities Transaction Tax applicable to specified derivatives transactions carried out on recognized stock exchanges. The revised rates apply to the sale of options in securities, sale of options in securities where the option is exercised, and sale of futures in securities.
Q.4 What is the revised rate of Securities Transaction Tax on sale of an option in securities?
Ans: The rate of Securities Transaction Tax on the sale of an option in securities has been increased from 0.1 per cent to 0.15 per cent, and the tax shall be computed on the option premium.
Q.5 What is the revised rate of Securities Transaction Tax on sale of an option in securities where the option is exercised?
Ans: The rate of Securities Transaction Tax on the sale of an option in securities where the option is exercised has been increased from 0.125 per cent to 0.15 per cent, and the tax shall be computed on the intrinsic price of the option.
Q.6 What is the revised rate of Securities Transaction Tax on sale of a future in securities?
Ans: The rate of Securities Transaction Tax on the sale of a future in securities has been increased from 0.02 per cent to 0.05 per cent, and the tax shall be computed on the traded price of the future.
Q.7 From which date shall the revised rates of Securities Transaction Tax apply?
Ans: The revised rates shall take effect from the 1st day of April, 2026 and shall apply to derivatives transactions in securities entered into on or after that date
B. Changes in TCS rates
FAQs
Q.1 Why TCS rates are being rationalized?
Ans: The TCS rates are rationalized with a view to provide uniform rate of TCS to the extent possible.
Q.2 Elaborate the changes made in Finance Bill, 2026 with respect to rate of TCS on remittances?
Ans. At present, TCS at 5% is collected if remittance is for the purposes of education or medical treatment and TCS at the rate of 20% is collected for purposes other than education or medical treatment.
It is proposed to reduce the rate of TCS to 2% for purposes of education and medical treatment. However, there is no change in TCS rate for purposes other than education or medical treatment.
Q.3 What is purpose of reducing TCS rates for remittance for purposes of education or medical treatment
Ans. The rationalization of rates has been done to provide more liquidity to the remitter and minimize locking of funds. In such case the rate has been rationalized only keep track of the transaction
Q.4 Whether any change is proposed in the threshold limit for TCS on remittances?
Ans. No. The threshold limit for applicability of TCS on remittances under the Liberalised Remittance Scheme remains same i.e. Rs. 10 lakhs.
Q.5 Explain the changes in rate of TCS on sale of overseas tour programme packages.
Ans. There are two changes being made ie. (i) Change in rate of TCS; & (ii) removal of threshold. Accordingly –
i TCS @5% of aggregate amount up to ten lakh rupees and @20% of aggregate amount ten lakh rupees is presently applicable on sale of overseas tour program package. It is proposed to reduce the rate of TCS to 2%.
ii The threshold limit for TCS on overseas tour programme packages has been removed. TCS @2% will be collected irrespective of the amount paid for overseas tour programme package.
Q.6 From when will these changes be made effective?
Ans. These changes will be effective from 1st April, 2026.
C. Income Tax Return related
FAQs
Q.1 What is a revised return under Section 263 of the Income-tax Act, 2025?
Ans: A revised return is a return furnished to correct any omission or wrong statement in a previously filed return (original or belated) for a tax year.
Q.2 Presently, when can a revised return be filed?
Ans: It can be filed any time within nine months from the end of the relevant tax year or before the completion of the assessment, whichever is earlier.
Q.3 What are the proposed changes in revised return in Finance Bill, 2026?
Ans: As per the proposed changes the revised return can be filed any time within twelve months (instead of nine months at present) from the end of the relevant tax year or before the completion of the assessment, whichever is earlier.
Q.4 What are the proposed changes as regards to fee in respect of revised ITR?
Ans: A fee is proposed in section 234I of Income tax Act, 1961 and corresponding fee in section 428(b) of Income-tax Act, 2025 for revised return filed beyond nine months from end of relevant tax year.
Q.5 What is the income threshold of determination of fee – is it total income or incremental income in the revised return?
Ans: Fee is imposed on the total income that has been filed during revised return. If the total income filed in the revised return exceeds 5 lakh rupees and revised return is filed after 9 months from end of tax year then fee shall be Rs 5000 and if the total income is less than 5 lakh rupees then fee shall be Rs 1000.
Q.6 What are the changes that has been carried out in due dates for filing of return of Income?
Ans: Due date for non-audit business cases and Trusts is extended under 263(1)(c) of Income-tax Act, 2025 from 31st July to 31st August.
Q.7 What is the rationale for making amendments in due dates under section 263(1)(c) of the Income-tax Act, 2025?
Ans: It is envisaged to provide more time for non-audit business cases to prepare their books of account and make necessary compliances and reduce grievances.
Q.8 What are the changes in due dates for salaried Individuals?
Ans: Due date for assessee filing ITR-1 & ITR-2 shall remain 31st July.
Q.9 When shall these amendments in due dates under section 263(1)(c) of the Income-tax Act, 2025 will come into force?
Ans: Amendments under section 263(1)(c) of Income-tax Act, 2025 shall be effective from 1st April, 2026 and shall be applicable for tax year 2026-27.
Q.10 Whether similar amendments are carried out under Income-tax Act, 1961?
Ans: Yes, similar amendments under Explanation-2 to section 139(1) has been carried out in Income-tax Act, 1961.
Q.11 Which assessment year shall be affected by the amendments made in Income-tax Act, 1961?
Ans: Amendments in section 139(1) of Income-tax Act, 1961 shall be effective from 1st March, 2026 and shall be applicable for assessment year 2026-27(previous year 2025-26). Accordingly due date for non-audit business cases and Trusts for AY 2026-27 shall be 31st August 2026.
D. TDS and TAN relief
FAQs
Simplified procedure for small taxpayers to obtain certificate of lower or nil deduction of tax at source under section 395 of the Income-tax Act, 2025
Q.1 What is the present provision under the Income-tax Act, 2025 for obtaining certificate for deduction of income-tax at a lower rate or no deduction of income-tax?
Ans: As per the present provisions, the payee has to make an application before the Assessing Officer.
Subsequent to the application, if the Assessing Officer is satisfied that the total income of the recipient justifies deduction at any lower rates or no deduction, he/she issues a certificate. However, the process for issuance of such certificates is uniform both for cases involving small amounts as well as large amounts
Q.2 What is the change proposed vide Finance Bill, 2026?
Ans: For small taxpayers, it is proposed that the application for issuance of certificates for lower rate or nil deduction of tax may be made electronically to the prescribed income-tax authority.
The prescribed income-tax authority shall examine the application electronically and issue the certificate subject to fulfilment of conditions as may be prescribed, or reject the application if prescribed conditions are not fulfilled or the application is incomplete.
Q.3 Who can make application to the prescribed income-tax authority under the proposed changes?
Ans: The category of taxpayers and other related conditions will be prescribed by the Board by making rules in this regard.
Q.4 Who will be the prescribed income-tax authority to whom application can be made?
Ans: Such authority will be prescribed by the Board by making rules in this regard.
Q.5 Can a person file application before Assessing Officer as well as to prescribed income-tax authority?
Ans: No. The application can be filed either before the Assessing Officer or to the prescribed income-tax authority.
Q.6 From which date will the above amendment be effective?
Ans: The amendments are proposed to be made effective from 1st April, 2026.
For Property Purchased from NRIs
Q.7 What is the present provision in respect of transaction on immoveable property is the buyer is a resident and the seller is a non-resident?
Ans: In case the seller of the immovable property is a non-resident, the resident individual or HUF is required to obtain TAN for deduction of income-tax.
Q.8 What is the change proposed with regard to obtaining TAN in the Finance Bill, 2026?
Ans: It is proposed that the resident individual or HUF will not be required to obtain TAN where TDS is required to be deducted by him on any consideration for the transfer of any immovable property and the seller of the property is a non-resident.
In such cases, the buyer will now deduct tax using his PAN and shall report the deduction quoting the PAN of seller in the challan-cum-statement that is filed with the department. Therefore, the process of tax deduction and reporting shall now be similar irrespective of whether seller is a resident or a non-resident
Q.9 How will it benefit the taxpayers?
Ans: It will reduce compliance burden on the resident individual and HUF as they will not be required to obtain TAN for such transaction and can deduct income-tax based on his PAN.
Q.10 What would be the process of tax deduction at source in the absence of TAN?
Ans: The taxpayer can deduct tax at source by furnishing PAN based challan cum statement as may be notified. The process of tax deduction and reporting shall now be similar irrespective of whether seller is a resident or a non-resident
Q.11 From which date will the above amendment be effective?
Ans: The amendments are proposed to be made effective from 1st October, 2026.
E. Clarification regarding SGB redemption
FAQs
Q.1 What is the current provision for capital gains on Sovereign Gold Bonds?
Ans: The capital gains arising from redemption of Sovereign Gold Bonds issued by the Reserve Bank of India are exempt under the provisions of section 70(1)(x) of the Income-tax Act, 2025.
Q.2 What amendment is proposed regarding the exemption for capital gains arising from redemption of Sovereign Gold Bonds?
Ans: Section 70(1)(x) of the Income-tax Act, 2025 has been amended to clarify that the exemption from capital gains tax shall be available only where the Sovereign Gold Bond is subscribed to by an individual at the time of original issue and is held continuously until redemption on maturity.
Q.3 Does the exemption apply uniformly to all series of Sovereign Gold Bonds issued by the Reserve Bank of India?
Ans: Yes. The amended provision applies uniformly to all Sovereign Gold Bonds issued by the Reserve Bank of India from time to time, irrespective of the series in which the bonds were issued, subject to fulfilment of the specified conditions.
Q.4 Will the exemption under section 70(1)(x) of the Income-tax Act, 2025 apply to Sovereign Gold Bonds acquired through secondary market transactions?
Ans: No, the exemption shall not apply to Sovereign Gold Bonds acquired through transfer or purchase in the secondary market. The exemption is restricted to bonds subscribed to by an individual at the time of original issue. This was also clarified by the Department of Economic Affairs in its OM dated 06.12.2022.
Q.5 Will this exemption be available in cases of premature redemption of Sovereign Gold Bonds?
Ans: No, the exemption shall apply only where the Sovereign Gold Bond is held continuously until redemption on maturity. Premature redemption, even after completion of the prescribed lock-in period, shall not be eligible for exemption.
Q.6 From which date shall the amended provisions apply?
Ans: The amendment shall take effect from the 1st day of April, 2026 and shall apply in relation to the tax year 2026-27 and subsequent tax years.
Q.7 As a result of this amendment what will be the taxability in respect of redemption of Sovereign Gold Bonds?
Ans: Taxability is as under:
S. No. | Conditions | Taxability |
1 | If purchased at the time of issue and held till maturity: | Exempt |
2 | If not purchased at the time of issue and held till maturity: | Taxable |
3 | If purchased at the time of issue and but not held till maturity: | Taxable |
4 | If neither purchased at the time of issue and nor held till maturity: | Taxable |
🚢 Key Union Budget 2026 Takeaways for Seafarers
• ✅ No change in taxation of foreign salary
• ✅ No change in residential status rules
• ✅ Revised return time extended – helpful if sailing causes delay
• ⚠️ Higher STT impacts seafarers doing F&O trading
• ✅ TCS reduction helps education / medical remittances for families in India
• ✅ Simplified TDS rules for property transactions involving NRIs
Team Tax Harbour – Your Compliance Partner at Sea & Ashore
CA Jaya Mittal
9821617961
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Disclaimer: This newsletter is for informational purposes only and should not be considered as a substitute for professional advice. Tax positions may vary based on individual facts.
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