Highlights of the Union Budget 2026

New Income Tax Act & Framework

A completely new Income Tax Act, 2025 will replace the existing Income Tax Act, 1961, effective 1 April 2026. The objective is to simplify direct tax laws, reduce the number of sections, and minimize litigation and ambiguity.

Income Tax Slabs & Rates

There are no changes to income tax rates or slabs under either the old or new tax regimes.

New Tax Regime (unchanged):

₹0 – ₹4 lakh: Nil
₹4 – ₹8 lakh: 5%
₹8 – ₹12 lakh: 10%
₹12 – ₹16 lakh: 15%
₹16 – ₹20 lakh: 20%
₹20 – ₹24 lakh: 25%
Above ₹24 lakh: 30%

There is no change in exemption limits; slabs and rates remain as per the previous reform.

Compliance Relief & Ease of Filing

Extended revision deadline:
Taxpayers may revise their returns up to 31 March of the assessment year, subject to a nominal fee.
Nil-deduction certificates:
Small taxpayers can obtain automated certificates to avoid unnecessary TDS deductions.

TCS (Tax Collected at Source) Rationalization

TCS on foreign remittances for education and medical purposes under the Liberalized Remittance Scheme (LRS) has been reduced from 5% to 2%.
TCS on overseas tour packages has also been reduced to 2%.

Tax Exemptions & Specific Reliefs

MACT interest exemption:
Interest awarded by the Motor Accident Claims Tribunal to a natural person is now fully exempt from income tax, with no TDS applicability.

Stock & Investment Tax Changes

Share buybacks:
Buybacks will now be treated as capital gains in the hands of shareholders, with effective tax rates ranging from approximately 22% to 30%, aligning taxation with normal sale transactions.
Increased STT & TCS on trading:
Higher Securities Transaction Tax (STT) on derivatives and select TCS changes have been introduced to strengthen market compliance.

Other Direct Tax Compliance Measures

Foreign asset disclosure window:
A one-time opportunity to regularize undisclosed foreign assets with graded tax and penalty, along with immunity from prosecution.
Assessment and penalty integration:
Streamlining of assessment and penalty proceedings to expedite dispute resolution and reduce taxpayer burden.