Income Tax Slabs Budget 2026 Highlights: No changes in income tax rates, slabs for FY 2026-27; some TCS, TDS changes & new deadline for filing revised returns announced
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  • Income Tax Slabs Budget 2026 Highlights: No changes in income tax rates, slabs for FY 2026-27; some TCS, TDS changes & new deadline for filing revised returns announced
THE TIMES OF INDIA | Feb 02, 2026, 13:00:18 IST
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Income Tax Slabs Budget 2026 Highlights: No changes in income tax rates, slabs for FY 2026-27; some TCS, TDS changes & new deadline for filing revised returns announced

Income Tax Budget 2026 Highlights: Finance Minister Nirmala Sitharaman has presented the Union Budget 2026-27. No changes in the income tax slabs and income tax rates under the new or old income tax regime have been announced. Sitharaman focused on making return filing and updates simpler, while promoting voluntary compliance to reduce disputes and litigation. She said the new Income Tax Act, 2025, which will take effect from April 1, is revenue-neutral, with no changes to tax rates or slabs. However, it streamlines the law by nearly halving the number of sections and removing multiple layers of interpretational complexity.

The Finance Minister also announced that the deadline for filing a revised return will be extended from nine months to 12 months from the end of the tax year, giving taxpayers more time to correct errors without the immediate threat of penalties.

In addition, taxpayers will be allowed to file updated returns even after reassessment proceedings have begun, subject to a cost. In such cases, an additional tax of 10% will be levied over and above the applicable rate for that year, and updated returns can also be used to scale back losses claimed earlier.

A key reform is the move to a single “tax year”, doing away with the long-standing and often confusing distinction between the assessment year and the previous year. Revised income tax return forms are set to be notified soon, with the government promising clearer language and easier formats that allow most taxpayers to comply without professional help.

The new income tax regime has the benefit of lower income tax rates, more rationalised income tax slabs, higher standard deduction limit. However, it also offers negligible deductions and exemptions. In contrast the old income tax regime has higher tax rates at lower levels of income, with the 30% tax slab kicking in at Rs 10 lakh only, an income level which is tax exempt under the new tax regime. But popular deductions and exemptions such as Section 80C, Section 80D, Section 80TTA, home loan interest benefits are available under the old regime.
06:20 (IST) Feb 01
Income Tax Budget 2026 Live: Making tax e-filing easier
“India’s tax e-filing system has witnessed significant improvements over the years, backed by a robust digital infrastructure. To further simplify compliance for salaried taxpayers and move closer to a near “one-click” filing experience, targeted refinements can make a meaningful impact. For instance, full validation checks should be embedded within individual schedules at data entry stage, rather than some errors appearing only at the final verification stage. The separate e-verification process also merits simplification, as unintended delays after e-filing can result in returns being treated as invalid or belated despite timely submission. Automation in the computation of capital gains, especially for listed shares and mutual funds using pre-filled, transaction-level and period-wise data would reduce effort and errors. Additionally, employer-level validation of Form 16 may be introduced to ensure consistency between gross income reported in Part A and Part B. It would help avoid notices related to income mismatch and TDS disallowance,” says Nishant Kumar, Partner, Vialto Partners.
06:20 (IST) Feb 01
Income Tax Budget 2026 Live: Making tax e-filing easier
“India’s tax e-filing system has witnessed significant improvements over the years, backed by a robust digital infrastructure. To further simplify compliance for salaried taxpayers and move closer to a near “one-click” filing experience, targeted refinements can make a meaningful impact. For instance, full validation checks should be embedded within individual schedules at data entry stage, rather than some errors appearing only at the final verification stage. The separate e-verification process also merits simplification, as unintended delays after e-filing can result in returns being treated as invalid or belated despite timely submission. Automation in the computation of capital gains, especially for listed shares and mutual funds using pre-filled, transaction-level and period-wise data would reduce effort and errors. Additionally, employer-level validation of Form 16 may be introduced to ensure consistency between gross income reported in Part A and Part B. It would help avoid notices related to income mismatch and TDS disallowance,” says Nishant Kumar, Partner, Vialto Partners.
06:15 (IST) Feb 01
Income Tax Slabs Live: Tweaks needed in new regime
“A healthy household savings rate is vital for a developing economy like India. The objective of introducing new tax regime was simplicity via lower tax rates and fewer deductions to avoid administrative efforts of verifying the claims.

Simplicity of allowing deductions can be achieved for example US and UK rely on a limited set of tax-favored instruments, with compliance driven by institution-level reporting rather than taxpayer claims. India too can explore this model by retaining a focused savings incentive within the new regime. It could be a streamlined version of Section 80C deduction permitted under the new regime with a higher limit say of INR 300,000 based on investments automatically reflected in the Annual Information Statement.

Tax incentive linked investment leads to limiting investment opportunities rather than allowing market forces to take over. This delinking and simplifying claims verification based on institutional reporting could meet both the purposes of simplifying tax administration and promoting savings,” Ravi Jain, Partner, Vialto Partners tells TOI.
06:15 (IST) Feb 01
Income Tax Slabs Live: Tweaks needed in new regime
“A healthy household savings rate is vital for a developing economy like India. The objective of introducing new tax regime was simplicity via lower tax rates and fewer deductions to avoid administrative efforts of verifying the claims.

Simplicity of allowing deductions can be achieved for example US and UK rely on a limited set of tax-favored instruments, with compliance driven by institution-level reporting rather than taxpayer claims. India too can explore this model by retaining a focused savings incentive within the new regime. It could be a streamlined version of Section 80C deduction permitted under the new regime with a higher limit say of INR 300,000 based on investments automatically reflected in the Annual Information Statement.

Tax incentive linked investment leads to limiting investment opportunities rather than allowing market forces to take over. This delinking and simplifying claims verification based on institutional reporting could meet both the purposes of simplifying tax administration and promoting savings,” Ravi Jain, Partner, Vialto Partners tells TOI.
06:10 (IST) Feb 01
Income Tax Slabs Budget 2026: Making tax filing easier
“The next phase of improvement in the e-filing experience will likely come from strengthening the digital infrastructure (such as the website, servers, and support tools) taxpayers use. Better integration of data from banks, employers and other stakeholders can minimise mismatches and reduce manual intervention. In addition, real-time tracking and quick digital clarifications, so taxpayers can respond instantly to portal queries, would streamline compliance and ease anxiety during peak filing periods. Overall, the focus should be on predictability, transparency and convenience, making the system easier to navigate for both salaried individuals and the wider taxpayer base,” says Surabhi Marwah, Tax Partner, EY India.
06:10 (IST) Feb 01
Income Tax Slabs Budget 2026: Making tax filing easier
“The next phase of improvement in the e-filing experience will likely come from strengthening the digital infrastructure (such as the website, servers, and support tools) taxpayers use. Better integration of data from banks, employers and other stakeholders can minimise mismatches and reduce manual intervention. In addition, real-time tracking and quick digital clarifications, so taxpayers can respond instantly to portal queries, would streamline compliance and ease anxiety during peak filing periods. Overall, the focus should be on predictability, transparency and convenience, making the system easier to navigate for both salaried individuals and the wider taxpayer base,” says Surabhi Marwah, Tax Partner, EY India.
06:05 (IST) Feb 01
Income Tax Budget 2026 Live: Tax compliance & scrutiny
“Over the last couple of years, the Indian tax administration is increasingly using AI enabled tools for cross verifying income declarations and deduction claims made by taxpayers in the tax return vis-à-vis details reported by the employer, financial institutions and any other third party. This is leading to automated alerts sent to taxpayers for reconfirmation of income reporting and deduction. Consequently, it has understandably created an apprehension around opting for the old tax regime. The new regime offers simplicity whereas the old regime remains relevant for taxpayers who incur significant expenses such as house rent, interest on housing or education loans etc. Where the old regime is beneficial, salaried taxpayers should declare it to their employer and submit the required proofs. This helps align the taxable income reported by the employer with the income declared in the return, thereby reducing the risk of mismatches and follow-up queries,” Nishant Kumar, Partner, Vialto Partners tells TOI.
06:05 (IST) Feb 01
Income Tax Budget 2026 Live: Tax compliance & scrutiny
“Over the last couple of years, the Indian tax administration is increasingly using AI enabled tools for cross verifying income declarations and deduction claims made by taxpayers in the tax return vis-à-vis details reported by the employer, financial institutions and any other third party. This is leading to automated alerts sent to taxpayers for reconfirmation of income reporting and deduction. Consequently, it has understandably created an apprehension around opting for the old tax regime. The new regime offers simplicity whereas the old regime remains relevant for taxpayers who incur significant expenses such as house rent, interest on housing or education loans etc. Where the old regime is beneficial, salaried taxpayers should declare it to their employer and submit the required proofs. This helps align the taxable income reported by the employer with the income declared in the return, thereby reducing the risk of mismatches and follow-up queries,” Nishant Kumar, Partner, Vialto Partners tells TOI.
05:56 (IST) Feb 01
Income Tax Budget 2026 Live: Should Section 80C limit be hiked?
Section 80C as an exemption is available only under the old income tax regime. The limit for it is Rs 1.5 lakh, and it includes investment options like provident fund, public provident fund (PPF), mutual fund investment schemes etc.
05:56 (IST) Feb 01
Income Tax Budget 2026 Live: Should Section 80C limit be hiked?
Section 80C as an exemption is available only under the old income tax regime. The limit for it is Rs 1.5 lakh, and it includes investment options like provident fund, public provident fund (PPF), mutual fund investment schemes etc.
05:56 (IST) Feb 01
Income Tax Budget 2026 Live: What are income tax slabs under old tax regime?
Under the old income tax regime for FY 2025–26, resident individuals up to 60 years of age do not pay any tax on income up to Rs 2.5 lakh, while income between Rs 2.5 lakh and Rs 5 lakh is taxed at 5%. Earnings in the Rs 5 lakh to Rs 10 lakh range attract a tax rate of 20%, and any income above Rs 10 lakh is taxed at the highest slab rate of 30%.
05:56 (IST) Feb 01
Income Tax Budget 2026 Live: What are income tax slabs under old tax regime?
Under the old income tax regime for FY 2025–26, resident individuals up to 60 years of age do not pay any tax on income up to Rs 2.5 lakh, while income between Rs 2.5 lakh and Rs 5 lakh is taxed at 5%. Earnings in the Rs 5 lakh to Rs 10 lakh range attract a tax rate of 20%, and any income above Rs 10 lakh is taxed at the highest slab rate of 30%.
05:56 (IST) Feb 01
Income Tax Budget 2026 Live: What is the standard deduction?
Standard deduction is an important deduction that is available for salaried taxpayers. It’s also important to understand the income level up to which you have to pay ZERO taxes. For example, under the new tax regime, with a Rs 75,000 standard deduction, salaried taxpayers have to pay NIL tax till Rs 12.75 lakh.
05:56 (IST) Feb 01
Income Tax Budget 2026 Live: What is the standard deduction?
Standard deduction is an important deduction that is available for salaried taxpayers. It’s also important to understand the income level up to which you have to pay ZERO taxes. For example, under the new tax regime, with a Rs 75,000 standard deduction, salaried taxpayers have to pay NIL tax till Rs 12.75 lakh.
05:56 (IST) Feb 01
Income Tax Budget 2026 Live: Income Tax Slabs Under New regime
Under the new income tax regime for FY 2025–26, income up to Rs 4 lakh is fully exempt from tax, while earnings between Rs 4 lakh and Rs 8 lakh are taxed at 5%. Income in the Rs 8 lakh to Rs 12 lakh bracket attracts a 10% tax rate, which rises to 15% for income between Rs 12 lakh and Rs 16 lakh and further to 20% for earnings from Rs 16 lakh to Rs 20 lakh. Those with income between Rs 20 lakh and Rs 24 lakh are taxed at 25%, and any income above Rs 24 lakh is taxed at the highest rate of 30%.
05:56 (IST) Feb 01
Income Tax Budget 2026 Live: Income Tax Slabs Under New regime
Under the new income tax regime for FY 2025–26, income up to Rs 4 lakh is fully exempt from tax, while earnings between Rs 4 lakh and Rs 8 lakh are taxed at 5%. Income in the Rs 8 lakh to Rs 12 lakh bracket attracts a 10% tax rate, which rises to 15% for income between Rs 12 lakh and Rs 16 lakh and further to 20% for earnings from Rs 16 lakh to Rs 20 lakh. Those with income between Rs 20 lakh and Rs 24 lakh are taxed at 25%, and any income above Rs 24 lakh is taxed at the highest rate of 30%.
05:56 (IST) Feb 01
Income Tax Budget 2026 Live: How does the New Income Tax benefit?
“The Government has stated at multiple forums that the New Income Tax Act, 2025 does not intend to have any major policy changes. In fact the intent was simplification of language and thereby consequently reducing the interpretation difficulties and challenges which may have resulted in protected litigation.

For effective implementation, all relevant e-Forms, rules, and updated section references should ideally be ready much in advance to March 2026. This will pave the road for ease of compliance and minimize transition challenges,” says Parizad Sirwalla, Partner and Head, Global Mobility Services, Tax, KPMG in India.
05:56 (IST) Feb 01
Income Tax Budget 2026 Live: How does the New Income Tax benefit?
“The Government has stated at multiple forums that the New Income Tax Act, 2025 does not intend to have any major policy changes. In fact the intent was simplification of language and thereby consequently reducing the interpretation difficulties and challenges which may have resulted in protected litigation.

For effective implementation, all relevant e-Forms, rules, and updated section references should ideally be ready much in advance to March 2026. This will pave the road for ease of compliance and minimize transition challenges,” says Parizad Sirwalla, Partner and Head, Global Mobility Services, Tax, KPMG in India.
Income Tax Budget 2026 Highlights: Middle class and salaried taxpayers always follow Finance Minister Nirmala Sitharaman’s Union Budget speech, hoping for additional tax relief. In the previous Budget, the FM completely revamped the new income tax regime. Experts always believed that Budget 2026 offered limited fiscal headroom for sweeping tax changes.

Latest Income tax slabs FY 2026-2027 under new tax regime

What will be the income tax slabs for FY 2026-2027 after the Budget? There are no changes in the old or the new tax regime. Under the current new tax regime, income up to Rs 4 lakh is exempt, setting the basic exemption limit at Rs 4 lakh.

Income between Rs 4 lakh and Rs 8 lakh is taxed at 5%, while earnings in the Rs 8 lakh to Rs 12 lakh range attract a 10% rate.

Income from Rs 12 lakh to Rs 16 lakh is taxed at 15%, which rises to 20% for income between Rs 16 lakh and Rs 20 lakh, and further to 25% for income in the Rs 20 lakh to Rs 24 lakh bracket.

Any income exceeding Rs 24 lakh is taxed at 30%, the highest slab rate under the new income tax regime.

Section 87A rebate

Currently, income up to Rs 12 lakh - Rs 12.75 lakh in the case of salaried individuals - is effectively tax-free after accounting for the Section 87A rebate. A big number of taxpayers continue to opt for the old tax regime and were seeking lower tax rates and a higher basic exemption limit under that system as well.

Standard deduction

Standard deduction allows for a simple deduction with no need for paperwork or furnishing proofs. It is a deduction available for salaried taxpayers. However, the limit for standard deduction varies between the old and the new income tax regime.

Those under the old income tax regime can avail Rs 50,000 standard deduction, while those under the new income tax regime have the advantage of Rs 75,000 standard deduction.

Home loan interest

Under the old tax regime, individuals can claim a deduction on interest paid on a home loan. For a self-occupied residential property, interest payments of up to Rs 2 lakh per year, or the actual interest paid if lower, can be deducted from taxable income. Tax experts had suggested that extending this benefit to the new tax regime could provide a meaningful boost to the housing sector, but no such relief was announced.

Section 80C

Section 80C remains one of the most widely used deductions under the old tax regime, but its Rs 1.5 lakh limit has not been revised for several years. This deduction covers investments in instruments such as provident fund, public provident fund (PPF), mutual funds and other common savings avenues.