01/02/2026
The Union Budget 2026-27, presented on February 1, 2026, maintains the status quo for personal income tax slabs and rates while introducing significant procedural reforms and targeted reliefs. The focus is on implementing the Income Tax Act, 2025, which will replace the 1961 Act starting April 1, 2026.
Individual Income Tax Slabs (Unchanged)
There are no changes to the income tax slabs or rates for FY 2026-27 under either the New or Old Tax Regimes.
New Tax Regime (Default)
Salaried individuals earning up to ₹12.75 lakh (inclusive of the ₹75,000 standard deduction and Section 87A rebate) effectively pay zero tax.
Income Tax Slabs (FY 2026-27)
There are no changes to the income tax slabs or rates in either the New or Old Tax Regimes. The structure remains the same as the previous year:
New Tax Regime (Default):
Up to ₹4 lakh: Nil
₹4 lakh – ₹8 lakh: 5%
₹8 lakh – ₹12 lakh: 10%
₹12 lakh – ₹16 lakh: 15%
₹16 lakh – ₹20 lakh: 20%
₹20 lakh – ₹24 lakh: 25%
Above ₹24 lakh: 30%
Old Tax Regime: Slabs remain unchanged at ₹2.5 lakh, ₹5 lakh, and ₹10 lakh thresholds for individuals below 60.
Key Personal Finance Updates
Standard Deduction: Remains unchanged at ₹75,000 for the New Regime and ₹50,000 for the Old Regime.
TCS Reductions: The Tax Collected at Source (TCS) rate for overseas tour packages is cut to a flat 2% (from 5%/20%). Similarly, TCS for overseas education and medical treatment is reduced from 5% to 2%.
ITR-1 (Sahaj) & ITR-2: The deadline remains 31 July 2026. This applies to salaried individuals and those with no business income.
ITR-3: The deadline has been extended to 31 August 2026. This applies to individuals and HUFs having income from profits and gains of business or profession.
Extended ITR Deadlines: The deadline for filing revised returns is extended from December 31 to March 31, subject to a nominal fee.
Securities Transaction Tax (STT): STT on Futures is increased to 0.05% (from 0.02%), and on Options to 0.15% (from 0.1%).
Share Buybacks: These will now be treated as Capital Gains for all shareholders. Promoters will face an additional buyback tax, with effective rates of 22% for corporate and 30% for non-corporate promoters.
Relief and Compliance Measures
Centralised Submission via Depositories: Investors holding securities (shares or bonds) in multiple companies can now submit a single Form 15G or 15H to depositories like NSDL or CDSL. The depositories will automatically provide these forms to all relevant companies, eliminating the need to file separately with each entity.
Foreign Asset Disclosure: A one-time 6-month window is introduced for small taxpayers (students, NRIs, etc.) to disclose foreign assets below certain thresholds with immunity from prosecution.
Motor Accident Claims: Interest awarded by a tribunal to a natural person is now exempt from income tax, and corresponding TDS is removed.
Simplified TDS for Small Taxpayers: A rule-based automated process will now allow small taxpayers to obtain nil/lower deduction certificates without a formal application.
NRI Property Sales: Resident buyers can now deposit TDS on NRI property purchases using a PAN-based challan, removing the need for a TAN (Tax Deduction Account Number).
Reduction in Pre-deposit Rate: The mandatory pre-deposit required for filing an appeal has been slashed from the previous 20% to 10% of the core tax demand.
Calculated on Core Tax Only: This 10% requirement is calculated only on the core tax amount, rather than the entire demand including interest or penalties.
Interest Relief on Penalties: Taxpayers will no longer face any interest liability on the penalty amount during the pendency of their appeal before the first appellate authority, regardless of the final outcome.
Integrated Orders: Assessment and penalty proceedings are proposed to be integrated into a single common order, aimed at reducing procedural fatigue and parallel proceedings.
Updated Returns during Reassessment: Taxpayers are now permitted to file an updated return even after reassessment proceedings have commenced. This can be done by paying an additional tax (proposed at a 10% rate), providing a practical route to resolve matters before they reach the appeal stage.
