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.