Union Budget 2026: No Change In Tax Rates And Slabs, Major Update On ITR Deadline Announced By FM Nirmala Sitharaman – What Salaried Class, Other Taxpayers Should Know

Finance Minister Nirmala Sitharaman on Sunday presented the Union Budget 2026–27 in the Lok Sabha, marking her ninth consecutive Budget presentation. As has become tradition, income tax proposals and compliance-related reforms emerged as the most closely watched announcements for individual taxpayers, businesses, and foreign investors. While FM Sitharaman announced new scheme for small taxpayers and several TCS, TDS changes there were no changes in tax rates, slabs for salaried, middle class taxpayers. 

The finance minister outlined a wide range of changes spanning income tax law, TDS and TCS rates, return filing timelines, foreign asset disclosures, cooperative sector relief, capital market taxation, and IT services taxation. 

Below is a comprehensive breakdown of all tax-related announcements made during the Budget speech.

New Income Tax Law to Take Effect from April 2026

FM Sitharaman announced that the New Income Tax Act, 2025 will come into force from April 1, 2026, marking a significant overhaul of the existing tax framework.

Also Read: BUDGET 2026: Misreporting Of Income To Attract A Penalty Equal To 100% Of The Tax Amount, All You Need To Know

TCS Rates Cut on Overseas Spending and Remittances

In relief for individuals spending abroad, the government reduced Tax Collected at Source (TCS) rates across key categories:

The TCS rate on overseas tour packages has been reduced from 5% to 2%

The TCS rate under the Liberalised Remittance Scheme (LRS) has also been cut from 5% to 2%

TDS Clarifications and Relief for Small Taxpayers

The finance minister clarified that TDS on manpower services will be deducted under Section 194C, at rates of 1% or 2%, as applicable.

To ease compliance for small taxpayers, Sitharaman announced a rule-based automated mechanism for issuing nil deduction certificates, eliminating the need to file a separate application.

Revised Return Filing Timeline Extended

Significant changes were announced to the revised income tax return (ITR) filing process:

The time limit for filing a revised return has been extended up to December 31, with a penalty

Additionally, taxpayers will now be allowed to file a revised ITR by March 31 by paying a nominal fee

FM Sitharaman reiterated during her speech that taxpayers can now revise their returns until March 31 upon payment of a small charge.

Updated ITR Due Dates Announced

The finance minister also confirmed the revised due dates for filing income tax returns:

ITR-1 and ITR-2 (individuals): July 31

ITR-3 and ITR-4: August 31

Audit cases: August 31

One-Time Foreign Asset Disclosure Scheme for Small Taxpayers

A one-time six-month disclosure window has been proposed for small taxpayers to declare overseas assets and income below a specified threshold.

Who Can Avail the Scheme?

The scheme will apply to two categories of taxpayers:

Taxpayers who failed to disclose overseas income or assets

Taxpayers who disclosed overseas income and paid due tax but did not declare the acquired asset

Tax and Penalty Structure

For Category A taxpayers, the limit for undisclosed income or assets will be up to ₹1 crore

Tax will be levied at 30% of the fair market value of the undisclosed asset or income

An additional 30% will be payable as income tax in lieu of penalty

Taxpayers opting for the scheme will receive immunity from prosecution

IT Services Taxation Overhaul and Higher Thresholds

The finance minister announced sweeping changes for the IT sector:

All services will be clubbed under a single category of IT services

The turnover threshold for IT services has been increased from ₹300 crore to ₹2,000 crore

A safe harbour margin of 15.5% has been prescribed for IT services

Faster Advance Pricing Agreements, Cloud Sector Tax Holiday

To improve ease of doing business:

The fast-track timeline for Advance Pricing Agreements (APAs) has been set at two years, with an extension of up to six months

A tax holiday has been announced for foreign companies providing cloud services, extending up to 2047

Relief for NRIs Under Presumptive Taxation

Non-resident Indians opting for the presumptive taxation scheme have been exempted from Minimum Alternate Tax (MAT).

Capital Markets and Buyback Tax Changes

The Budget introduced major changes to capital market taxation:

Buyback of shares will now be taxed as capital gains for all categories of shareholders

Promoters will face an additional buyback tax:

22% for corporate promoters

30% for non-corporate promoters

Also Read: Union Budget 2026: New Dedicated Freight Links, 20 National Waterways, Big Infra Push Announcements Guided by “Yuvashakti”, Built on “Three Kartvayas”