Union Budget 2026-27
What Changed for Taxpayers - A Complete Guide
Key Highlights at a Glance
Slabs Unchanged
Income tax slabs remain same for both regimes
Extended Deadlines
Revised/belated return deadline extended to 31 March
TCS Reduced
Foreign remittance TCS cut to 2% for education/medical
STT Increased
Securities Transaction Tax on derivatives revised upward
MACT Exempt
Motor accident compensation interest now tax-free
New Tax Act
Income Tax Act, 2025 effective from 1 April 2026
Income Tax Slabs - No Change
Good news for taxpayers! Income tax slabs remain unchanged for FY 2026-27 under both the New and Old tax regimes.
New Tax Regime (Default)
| Income Range | Tax Rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 - Rs 8,00,000 | 5% |
| Rs 8,00,001 - Rs 12,00,000 | 10% |
| Rs 12,00,001 - Rs 16,00,000 | 15% |
| Rs 16,00,001 - Rs 20,00,000 | 20% |
| Rs 20,00,001 - Rs 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
Note: Zero tax up to Rs 12 lakh with Section 87A rebate (Rs 60,000). Standard deduction: Rs 75,000.
Old Tax Regime
| Income Range | Tax Rate |
|---|---|
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 - Rs 5,00,000 | 5% |
| Rs 5,00,001 - Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
Note: Standard deduction: Rs 50,000. Eligible for all Chapter VI-A deductions (80C, 80D, etc.).
Extended ITR Deadlines
Major relief for taxpayers! The deadline for filing revised and belated returns has been extended from 31st December to 31st March of the assessment year.
Earlier
31st December
Now (Budget 2026)
31st March
What this means: If you missed the original filing date (31st July) or need to correct your return, you now have until 31st March of the assessment year to file a revised or belated return. A nominal fee applies for belated returns.
TCS Rate Cuts on Foreign Remittances
Budget 2026 brings significant relief for those sending money abroad under the Liberalised Remittance Scheme (LRS).
| Purpose | Earlier Rate | New Rate (Budget 2026) | Threshold |
|---|---|---|---|
| Education | 5% | 2% | Above Rs 7 lakh |
| Medical Treatment | 5% | 2% | Above Rs 7 lakh |
| Overseas Tour Package | 5% | 2% | No threshold |
| Other LRS Purposes | 5% | 5% | Above Rs 7 lakh |
| Coal/Lignite Purchase | N/A | 2% (New) | Above Rs 50 lakh |
Important: TCS is not an additional tax. It's collected at source and can be claimed as credit while filing your income tax return. You'll see it in your Form 26AS.
STT on Derivatives Increased
Securities Transaction Tax (STT) on Futures & Options has been revised upward. This impacts traders in the derivatives segment.
| Transaction Type | Updated STT Rate |
|---|---|
| Futures (Sell) | 0.02% |
| Options (Sell) | 0.1% |
| Options (Exercise) | 0.125% |
MACT Interest Exemption
A welcome relief for accident victims! Interest awarded by Motor Accident Claims Tribunal (MACT) is now fully exempt from income tax for individuals.
Who benefits: Individuals (natural persons) receiving compensation from motor accident claims.
What's exempt: The interest component of MACT awards is completely tax-free.
TDS: No TDS will be deducted on this interest.
Income Tax Act, 2025
A landmark change! The new Income Tax Act, 2025 comes into effect from 1st April 2026, replacing the six-decade-old Income Tax Act, 1961.
Simplified Forms
Redesigned ITR forms with easier navigation and fewer fields.
Streamlined Compliance
Reduced procedural complexity for taxpayers.
Rationalized Penalties
Clearer penalty structure with proportionate consequences.
Faster Processing
Improved refund timelines and assessment procedures.
Updated Calculators
All our calculators have been updated with Budget 2026 rules. Choose the one you need: