Finance Minister Nirmala Sitharaman presented the Union Budget 2026 on February 1, bringing clarity to taxpayers across the country. The government has decided not to make any changes to the income tax slabs for the Financial Year 2026-27. This decision applies to both the Old and New tax regimes. While the tax rates remain the same, there are important updates regarding Tax Collected at Source (TCS) regarding foreign travel and a new simplified Income Tax Act that will start from April 1, 2026.
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Current Tax Slabs and Important Dates
Since there are no changes, the tax rates remain familiar for the common man. Under the New Tax Regime, there is no tax on income up to Rs 4 lakh. Income between Rs 4 lakh and Rs 8 lakh is taxed at 5%, and it increases gradually to 30% for income above Rs 24 lakh. In the Old Tax Regime, the basic exemption limit stays at Rs 2.5 lakh.
You must keep the filing dates in mind. The deadline to file your Income Tax Return (ITR-1 and ITR-2) is July 31, 2026. However, the government has given more time for corrections. If you need to file a revised return or a late return, you can now do so until March 31 by paying a small fee. This extension from the previous December 31 deadline provides relief to those who might make mistakes while filing.
New Rules for Hidden Income and TCS Relief
The government has introduced a new way to handle undisclosed money kept abroad. Under the ‘Foreign Asset Disclosure Scheme’, if a person has undisclosed overseas assets up to Rs 1 Crore, they can voluntarily disclose it. The rule states you will have to pay a total of 60% tax (30% tax plus 30% additional tax). If you do this voluntarily, there will be no jail time or criminal charges.
For people planning to travel or study abroad, there is good news. The Tax Collected at Source (TCS) on overseas tour packages has been reduced to 2%. Earlier, this rate was much higher. Similarly, TCS for education and medical expenses sent abroad is also set at 2%. Additionally, if you hold shares, note that share buybacks will now be treated as Capital Gains for tax purposes.
