Union Budget 2026-27
Complete Tax Guide
No slab changes. Major structural reform. The Income Tax Act 2025 replaces a 64-year-old law from 1 April 2026. Revised ITR deadline extended. TCS cuts for education and travel. Here is everything that changed.
In This Guide
- Income Tax Slabs — Unchanged for FY 2026-27
- Income Tax Act 2025 — What Changes from 1 April 2026
- ITR Filing Deadlines — What Changed
- TDS & TCS Rate Changes
- NRI-Specific Changes
- Capital Gains — SGB & Buyback Changes
- STT Hike — Impact on F&O Traders
- Macro Economy — Key Budget Numbers
- Effective Dates — What Applies When
- Frequently Asked Questions
Income Tax Slabs — No Change for FY 2026-27
Budget 2026-27 did not change any slabs, rebates, standard deductions or surcharges. All parameters remain identical to FY 2025-26.
Zero tax up to ₹12.75 lakh continues for salaried employees under New Regime — ₹12L rebate (Sec 87A) + ₹75,000 standard deduction. Unchanged for FY 2026-27.
New Tax Regime — FY 2026-27 Unchanged
| Income Range | Rate |
|---|---|
| Up to ₹4,00,000 | NIL |
| ₹4L – ₹8L | 5% |
| ₹8L – ₹12L | 10% |
| ₹12L – ₹16L | 15% |
| ₹16L – ₹20L | 20% |
| ₹20L – ₹24L | 25% |
| Above ₹24L | 30% |
87A rebate: Zero tax up to ₹12L. Std deduction: ₹75,000. 4% cess on tax.
Old Tax Regime — FY 2026-27 Unchanged
| Income Range | Rate (General) |
|---|---|
| Up to ₹2,50,000 | NIL |
| ₹2.5L – ₹5L | 5% |
| ₹5L – ₹10L | 20% |
| Above ₹10L | 30% |
87A rebate: Zero tax up to ₹5L. Std deduction: ₹50,000. Senior: NIL up to ₹3L. Super senior: NIL up to ₹5L.
The New Regime remains the default from FY 2023-24. Salaried employees must actively opt for the Old Regime via their employer. Use our Income Tax Calculator to compare both regimes for your income.
Income Tax Act 2025 — Replaces 64-Year-Old Law from 1 April 2026
The Income Tax Act 1961 is replaced by the Income Tax Act 2025 — the biggest structural change to Indian tax law in six decades. Effective from 1 April 2026 for FY 2026-27 onwards.
Important: All ITR filings for FY 2025-26 (AY 2026-27) — due 31 July 2026 — are still governed by the old Income Tax Act 1961. The new Act only applies from FY 2026-27 onwards.
Simpler Language
Rewrites all provisions in plain modern English. Removes cross-references, provisos-within-provisos, and archaic phrasing. Same legal effect — far easier to understand.
Unified “Tax Year” Concept
The confusing Previous Year / Assessment Year split is replaced by a single Tax Year. Tax Year 2026-27 = income earned and assessed in the same year reference.
Section Numbers Renumbered
All sections get new numbers under the 2025 Act. For example, old Sec 80C → new Sec 123, Sec 10 → Sec 11, etc. The law itself is identical — only the numbering changes.
Redundant Provisions Removed
Defunct sections, expired exemptions, and obsolete schedules cleaned out. ICDS will also be repealed from 1 April 2027 with MCA-CBDT joint committee to integrate with Ind AS.
New ITR Forms & Rules
New Income Tax Rules 2026 and simplified ITR forms notified by CBDT from 1 April 2026. Forms are shorter, digital-first, and pre-filled with more data points.
Revenue Neutral Reform
Explicitly revenue neutral — tax rates, deductions and exemptions are identical to the 1961 Act. This is a structural simplification, not a tax hike or tax cut.
ITR Filing Deadlines — What Changed in Budget 2026
| Taxpayer Category | Form | Old Deadline | New Deadline | Status |
|---|---|---|---|---|
| Salaried / No business income | ITR-1, ITR-2 | 31 Jul 2026 | 31 Jul 2026 | No Change |
| Non-audit business / Trusts (no audit) | ITR-3, ITR-4 | 31 Jul 2026 | 31 Aug 2026 | Extended |
| Tax audit cases (Sec 44AB) | ITR-3, ITR-5, ITR-6 | 31 Oct 2026 | 31 Oct 2026 | No Change |
| Transfer pricing (Sec 92E) | Any | 30 Nov 2026 | 30 Nov 2026 | No Change |
| Belated return | Any | 31 Dec 2026 | 31 Dec 2026 | No Change |
| Revised return — free window | Any | 31 Dec 2026 | 31 Dec 2026 (free) | No Change |
| Revised return — with fee (NEW) | Any | Not available | 31 Mar 2027 (+ fee) | New |
| Updated return — ITR-U | ITR-U | 36 months | 48 months | Budget 2025 |
Revised Return Fee (New from Budget 2026)
TDS & TCS Rate Changes — Budget 2026
TCS Changes (Effective 1 Oct 2026)
| Transaction | Old | New |
|---|---|---|
| LRS — Education & Medical | 5% | 2% ↓ |
| Overseas Tour Package | 5%/20% | 2% flat ↓ |
| Tendu Leaves | 5% | Reduced ↓ |
| Alcohol / Scrap / Minerals | 1% | 2% ↑ |
Key TDS Changes (Effective 1 Apr 2026)
Manpower / Labour Supply — TDS at 2%
Supply of manpower services now subject to TDS at 2% — separate from professional/technical services TDS at 10%.
Auto Lower/Nil TDS Certificate
Small taxpayers: apply online, certificate issued electronically after ITR-based verification. No more manual applications to AO.
Depository Declaration for No-TDS
Investors file Form 15G/15H with CDSL/NSDL depository — forwarded to all companies and MFs automatically. No individual submissions to each fund house.
No TAN for NRI Property Buyers (Oct 2026)
Indians buying property from non-residents no longer need TAN. TDS deducted using buyer's PAN. Effective 1 Oct 2026.
NRI-Specific Changes — Budget 2026
5-Year Global Income Exemption for Foreign Experts
Non-resident experts working in India under notified schemes get exemption on global (non-India sourced) income for up to 5 years of stay. Aimed at attracting top international talent.
FAST-DS 2026 — Foreign Asset Disclosure for Small Taxpayers
One-time voluntary disclosure for NRIs/small taxpayers who missed disclosing foreign assets (dormant bank accounts, foreign ESOPs/RSUs). Part A covers assets below ₹1 crore with limited immunity from Black Money Act prosecution.
TCS on LRS Remittances Slashed
TCS on overseas education: 5% → 2%. Overseas tour package: confusing 5%/20% dual rate → flat 2%. Effective 1 Oct 2026. Significantly reduces upfront cash burden for students studying abroad.
Portfolio Investment Scheme — 10% Limit for PROI
Person Resident Outside India (PROI) can invest in Indian listed equities through PIS with an increased limit of 10% of paid-up capital. FEMA/DTAA norms aligned.
Black Money Act — ₹20L Small Asset Threshold
Prosecution will not apply for non-disclosure of non-immovable foreign assets if aggregate value does not exceed ₹20 lakh. Relief for small account holders with inadvertent omissions.
NRI Tax Slabs & 87A Rebate
Slabs unchanged. 87A rebate not available to NRIs — they pay tax from the first rupee under New Regime. Standard deduction of ₹75,000 is available to NRI salaried employees.
Capital Gains — SGB & Buyback Changes
Sovereign Gold Bonds (SGB)
- Capital gains exemption ONLY if subscribed at original issue AND held continuously until maturity
- Premature redemption — NO exemption (even after lock-in)
- SGBs bought in secondary market — NO exemption on any redemption
Share Buyback Taxation — Overhauled
- Buyback proceeds now treated as capital gain (not dividend income)
- Corporate bodies: taxed at 22%
- Non-corporate: taxed at 30%
STT Hike — Impact on F&O Traders
STT on Futures and Options was increased in Budget 2026 — directly increasing per-trade cost for active F&O traders. The measure aims to promote responsible trading.
| Instrument | Old STT | New STT |
|---|---|---|
| Equity Futures (Sale) | 0.0125% | Increased ↑ |
| Equity Options (Sale) | 0.0625% | Increased ↑ |
| Equity Delivery (Buy/Sell) | 0.1% | Unchanged |
What Remains Unchanged for Investors
Macro & Economy — Key Budget Numbers
Effective Dates — What Applies When
ITR Deadline Extension — Retrospective
Non-audit business and trusts: ITR deadline extended from 31 Jul to 31 Aug for AY 2026-27. Applied retrospectively from 1 March 2026.
Income Tax Act 2025 — Takes Effect
Replaces IT Act 1961 for FY 2026-27. New ITR forms and rules. TDS on manpower services begins. IGST export refund in 3 working days. 48-month ITR-U window active.
ITR Filing — Salaried & Individuals (AY 2026-27)
Deadline for ITR-1 and ITR-2. Governed by old IT Act 1961 for FY 2025-26 return.
ITR Filing — Non-Audit Business (New Extended Deadline)
Extended from 31 Jul to 31 Aug for non-audit business taxpayers and trusts not requiring audit.
TCS Cuts Take Effect
LRS education/medical: 5% → 2%. Tour packages: flat 2%. No TAN for NRI property buyers — PAN-based challan instead. Depository declaration system goes live.
Belated ITR & Free Revised Return Deadline
Last date for belated return. Revised returns can also be filed free until this date.
New Extended Revised Return Deadline (With Fee)
Revised return with fee — ₹1,000 (income ≤ ₹5L) or ₹5,000 (income > ₹5L). First ever revised return window beyond 31 December.
ICDS Repealed
Income Computation and Disclosure Standards repealed. Joint MCA-CBDT committee to integrate with Indian Accounting Standards (Ind AS).
Frequently Asked Questions
File Your ITR for FY 2025-26 with a CA
Expert CA filing from ₹499. We apply all Budget 2026 updates, compare Old vs New Regime, and file before the 31 July 2026 deadline.
indiantaxplanning.in · CA-verified · Updated March 2026
