Key changes related to Income Tax announced in the Union Budget 2026-27 (presented on 1 Feb 2026 by Finance Minister Nirmala Sitharaman)

1. No Change in Income Tax Slabs and Rates The Government did not change income tax slab rates for FY 2026-27; the existing new tax regime slabs remain as before: Nil up to ₹4 lakh, rising progressively to 30% above ₹24 lakh.

    Under the new regime, effective tax-free income extends up to around ₹12 lakh for many taxpayers after rebate and standard deductions.

Why this matters: There’s no direct tax cut this year, but predictability continues with the status quo on slabs and rates.
📜 2. New Income Tax Act, 2025 (Effective from 1 April 2026)

    A completely redesigned Income Tax Act, 2025 will replace the 1961 law from April 1, 2026.

    It simplifies provisions, reducing the number of sections by around half and aims to cut litigation and ambiguity.

    Introduces a single “tax year” concept, replacing the old “previous year – assessment year” system.

Effect: Simplified compliance, modern structure, and clearer procedures for all taxpayers.
🧑‍💻 3. Extended ITR Revision Deadline

    Taxpayers can now revise their Income Tax Return (ITR) up to 31 March (previously 31 Dec) on payment of a nominal fee.

    This gives more time to correct returns and reduces filing pressure.

💡 4. Relief & Compliance Simplification for Small Taxpayers

    Introduction of an automated “Nil Deduction Certificate” for small taxpayers to reduce unnecessary TDS deductions.

    Goal: Fewer refunds, less queuing for low-income individuals, pensioners, and small business owners.

📉 5. Changes in TDS / TCS and Related Tax Rules

    TCS (Tax Collected at Source) rates under the Liberalised Remittance Scheme (LRS) are being lowered for overseas education and medical remittances.

    New mandatory TDS provisions on certain non-resident property sales and manpower services.

    Proposal for staggered return filing timelines to ease system load.

📊 6. Other Income Tax–Linked Measures

    Interest awarded by Motor Accident Claims Tribunals is now fully tax-exempt with no TDS.

    Provisions to tighten crypto-income reporting with penalties for non-compliance.

    Stock buyback proceeds will be taxed as capital gains under the revised framework.

    Rationalised TDS/TCS compliance to support ease of doing business.

📌 Summary — What It Means for You

✔ No tax slab/rate cuts this Budget — relief comes from process reforms, not lower rates.
✔ Major legal overhaul with the new Income Tax Act coming into force.
✔ More time & simplified compliance for individuals and small taxpayers.
✔ TDS/TCS reforms and simplified reporting to reduce friction in tax filing.