Budget 2026 for Individuals in One Page

Budget 2026 was presented on 1 February 2026, two months before the Income-tax Act, 2025 replaced the 1961 Act. Most of its direct tax changes amend the new Act and apply from Tax Year 2026-27 (April 2026 to March 2027). A few also amend the 1961 Act from 1 March 2026, which is why they already apply to the AY 2026-27 returns being filed this year.

The short version for a salaried person: tax rates did not change, the revised-return window got longer, and studying or travelling abroad became cheaper on TCS. Traders in futures and options, and shareholders in buybacks, see larger changes.

Slabs and rates: unchanged

The Finance Bill's memorandum states that no change was proposed in tax rates. For Tax Year 2026-27, the new regime under section 202 remains the default:

The old regime slabs (nil up to ₹2,50,000, then 5%, 20% and 30%, with higher nil limits for those aged 60 and 80) continue for anyone who opts out under section 202(4). Surcharge rates are also unchanged, with the new regime's surcharge capped at 25%. The ₹75,000 standard deduction and the rebate that makes income up to ₹12,00,000 tax-free under the new regime carry on; old vs new regime works through the numbers.

Filing returns: new due dates and a longer revision window

ITR-3 and ITR-4 filers get until 31 August

People with business or professional income whose accounts don't need an audit, and partners in such firms, now have until 31 August to file instead of 31 July. ITR-1 and ITR-2 filers, which covers most salaried people, keep 31 July. This change was also made to the 1961 Act from 1 March 2026, so it applied to AY 2026-27 returns this year.

Revised returns: 12 months instead of 9, with a fee after 9

You can now revise a return up to 12 months from the end of the year, instead of nine. Revising after nine months costs a fee: ₹1,000 if total income is up to ₹5,00,000, and ₹5,000 otherwise. Under the 1961 Act the fee is in new section 234-I; under the 2025 Act it is in section 428(b).

For AY 2026-27, that means a revised return is free until 31 December 2026 and possible, with the fee, until 31 March 2027 (unless the assessment is completed first). The longer window also helps anyone who files a belated return in December: earlier, the belated and revised deadlines fell on the same day, leaving no time to correct a belated return.

Updated returns: two new openings

• You can now file an updated return that reduces a loss you claimed in an on-time loss return. Before, an updated return could not be a loss return at all.
• You can file an updated return after a reassessment notice under section 280 (the old section 148), within the time the notice gives. The additional tax rises by a further 10% of tax and interest, and the income so offered does not attract penalty under section 439. The 1961 Act was amended the same way from 1 March 2026.

The usual updated-return rates of 25%, 50%, 60% and 70% for the first to fourth year remain; see the ITR-U guide.

TCS: lower on education, medical and foreign tours

From 1 April 2026, TCS under section 394(1) changed as follows.

Example. A parent sends ₹15,00,000 in a year for a child's university fees. TCS applies to the ₹5,00,000 above ₹10 lakh: ₹25,000 at 5% before, ₹10,000 at 2% now. A family buying a ₹3,00,000 overseas tour package pays ₹6,000 of TCS instead of ₹15,000. TCS is not an extra tax: it is credited to your PAN and adjusted in your return, but it ties up cash until then.

Investments and trading

• Futures and options. STT on the sale of an option rises from 0.1% to 0.15% of the premium, on options exercised from 0.125% to 0.15% of the intrinsic price, and on futures from 0.02% to 0.05% of the traded price, for trades from 1 April 2026. Selling options with a premium of ₹1,00,000 now carries ₹150 of STT instead of ₹100.
• Buybacks. Money received on a share buyback is taxed as capital gains instead of as dividend, from Tax Year 2026-27. For promoters, the effective tax on buyback gains is 30% (22% for promoter companies).
• Interest against dividends. You can no longer deduct interest paid on money borrowed to earn dividends or mutual fund income. The earlier deduction was capped at 20% of that income.
• Sovereign Gold Bonds. The capital gains exemption on redemption is available only if you subscribed at the original issue and held the bond until maturity. Bonds bought on the exchange don't qualify.

Smaller changes worth knowing

• Motor accident compensation. Interest awarded by a Motor Accidents Claims Tribunal to an individual or legal heir is exempt, and no TDS is deducted on it.
• Land acquisition awards. Compensation for compulsory acquisition under the RFCTLARR Act on or after 1 April 2026 is exempt (except awards under its section 46).
• Armed forces disability pension. Exempt, both elements, where the person was invalided out because of a service-related disability, not on superannuation. The exemption extends to paramilitary personnel.
• Lower TDS certificates. You can apply online for a lower or nil deduction certificate, which can be issued or rejected against prescribed conditions.
• No TAN for buying from an NRI. A resident individual or HUF buying property from a non-resident does not need a TAN to deduct tax, from 1 October 2026.
• Form 121 through your depository. From 1 April 2027, a no-TDS declaration for listed securities and units can be filed once with the depository instead of with each company; see Form 121.
• Foreign assets. A one-time disclosure scheme for small taxpayers with undisclosed foreign assets, such as ESOPs, RSUs or old student accounts abroad; see FAST-DS 2026.
• Penalties. From 1 April 2027, penalty for under-reporting is to be imposed in the assessment order itself, and some technical penalties become fixed fees.

Separately from the Budget, the new Income-tax Rules, 2026 changed salary limits such as HRA cities, meal vouchers and gifts; see salary rules from April 2026.

Frequently asked questions

Did Budget 2026 change income tax slabs?

No. The slabs, rebate and standard deduction stayed as they were. Tax Year 2026-27 uses the same new-regime slabs as FY 2025-26.

Can I revise my AY 2026-27 return after 31 December 2026?

Yes, until 31 March 2027, if the assessment is not completed earlier. A revision after 31 December 2026 needs a fee of ₹1,000 if your total income is up to ₹5,00,000, or ₹5,000 otherwise.

My ITR-4 was filed on 25 August 2026. Was it late?

No, if your accounts did not need an audit. The due date for non-audit business and professional returns for AY 2026-27 became 31 August 2026.

Does the 2% TCS on education apply to the first ₹10 lakh?

No. As before, TCS on LRS remittances applies only to the amount above ₹10 lakh in a year. The rate on that excess fell from 5% to 2% for education and medical treatment.

Sources

• Finance Bill, 2026, as presented on 1 February 2026
• Memorandum explaining the provisions of the Finance Bill, 2026
• Form No. 121: Frequently Asked Questions (depository filing under the Finance Act, 2026)
• Latest news on the e-filing portal