Income Tax Slabs Budget 2026: Union Finance Minister Nirmala Sitharaman presented the Union Budget 2026 on Sunday, marking her ninth consecutive Budget presentation and creating a new record in India’s parliamentary history. As expected, income tax measures remained one of the most closely watched elements of the Budget, with salaried taxpayers and the middle class hoping for meaningful relief under the new tax regime.
While the Finance Minister did not announce any immediate changes to income tax slab rates, she introduced several important reforms aimed at simplifying compliance and improving taxpayer convenience. One of the most significant proposals is the extension of the deadline for filing a revised Income Tax Return. Taxpayers will now be able to file a revised ITR until March 31 by paying a nominal fee, a move that is expected to reduce disputes, encourage voluntary compliance, and allow individuals more time to correct genuine errors in their returns.
The Finance Minister also confirmed that the Income Tax Act, 2025 will come into effect from April 1, 2026. The new law is designed to simplify the existing framework by using clearer language, reducing ambiguities, and making the overall tax system more transparent and easier to understand for common taxpayers.
Under the current structure, income tax slabs remain unchanged in both the old and new tax regimes. In the old regime, income up to ₹2.5 lakh remains exempt, while income above ₹10 lakh continues to attract a 30 per cent tax rate. The new tax regime continues to offer a nil tax rate on income up to ₹4 lakh, with gradual slab increases leading to a 30 per cent rate for income above ₹24 lakh. Experts believe the government is focusing on stability and predictability rather than frequent rate changes.
Several announcements in the Budget were aimed at Non-Resident Indians and global investors. The government proposed income tax exemptions for NRIs supplying capital goods to Indian companies for a period of five years. In addition, the overall investment limit for residents living outside India has been increased from 10 per cent to 24 per cent, making it easier for NRIs to invest in Indian markets. A tax holiday extending up to 2047 was also announced for foreign companies providing cloud services to Indian firms, reflecting India’s push towards digital expansion.
Relief was also announced for individuals sending money abroad for education and medical needs. The Finance Minister proposed a reduction in Tax Collected at Source under the Liberalised Remittance Scheme from 5 per cent to 2 per cent for education and medical purposes. This decision is expected to significantly ease the financial burden on families supporting students overseas or facing high medical expenses.
Although taxpayers were hoping for direct income tax rate cuts, the government’s approach in Budget 2026 appears focused on long-term reform, ease of compliance, and targeted relief measures. Analysts suggest that further clarity on deductions and exemptions may emerge through notifications or future policy updates.
Overall, Budget 2026 reinforces the government’s emphasis on stability, structural reform, and gradual simplification of the tax system. While immediate tax relief may be limited, the measures announced are expected to improve taxpayer experience and support sustained economic growth in the coming years.