The Union Budget 2026 brings measured reforms rather than dramatic tax changes. While income tax slabs remain unchanged, the government has focused on simplification, compliance ease, and relief for lower taxpayers.

Here’s a detailed breakdown of how the new provisions impact individual taxpayers.

1️. No Change in Income Tax Slabs

There is no revision in income tax slab rates for individuals under both:

• Old Tax Regime
• New Tax Regime

Additionally:

• No changes have been proposed to education cess.
• No changes in surcharge rates.

What this means:
Tax planning strategies remain the same. There is no immediate tax burden increase or relief via slab restructuring.

2️. New Income Tax Act, 2025 – Effective from April 1, 2026

A significant structural reform is the introduction of the New Income Tax Act, 2025, which will come into effect from April 1, 2026.

The government has indicated that:

• Updated ITR forms will be released.
• Simplified tax-related rules will be introduced.
• Greater clarity and ease of compliance will be ensured.

Impact:
This reform aims at modernizing tax administration and reducing ambiguity in interpretation.

3️. Staggered ITR Filing Deadlines

The government has introduced staggered return filing timelines to ease compliance pressure.

• ITR-1 and ITR-2 filers: Deadline remains July 31.
• Individuals with non-audit business income and trusts: Deadline extended to August 31.

Why this matters:
This reduces filing congestion and gives additional time to certain categories of taxpayers.

4️. Reduced TCS on Overseas Tour Packages & Education

A major relief has been provided under Tax Collected at Source (TCS):

• TCS on overseas tour packages reduced to 2%, irrespective of amount.
• Earlier rates of 5% and 20% have been replaced.
• TCS on self-financed foreign education and overseas medical treatment (above ₹10 lakh) reduced from 5% to 2%.

Impact:
This significantly reduces upfront cash outflow for families funding travel, education, or medical treatment abroad.

5️. New Foreign Asset Disclosure Scheme

A one-time, six-month Foreign Asset Disclosure Scheme has been introduced for lower taxpayers such as students, professionals, tech employees, and relocating individuals.

Category A

For individuals with undisclosed foreign income or assets up to ₹1 crore:

• Pay 30% of fair market value of assets
  OR
• Pay 30% of undisclosed income
• Plus 30% in lieu of penalty
• Immunity from prosecution granted

Category B

For those who paid taxes but failed to report related foreign assets up to ₹5 crore:

• Regularize by paying a ₹1 lakh fee
• Full immunity from penalty and prosecution

Impact:
This provides a structured compliance window without harsh prosecution consequences.

6️. PAN-Based TDS Deduction for Property Sales to Non-Residents

In cases involving sale of immovable property to non-residents:

• Resident buyers can now deduct and deposit TDS using a PAN-based challan.
• No requirement to obtain a TAN.

Impact:
This simplifies compliance and reduces procedural complexity in property transactions involving NRIs.

7️. Relief on TDS for Lower Taxpayers

The budget introduces a fully automated, rule-based approval system for nil or lower TDS certificates.

• No interaction with tax officers required.
• Faster and transparent approval process.

Impact:
Improves ease of doing compliance and reduces administrative burden.

8️. PROIs Allowed to Invest in Listed Indian Equity

Persons Resident Outside India (PROIs) can now invest in listed Indian equity under the Portfolio Investment Scheme (PIS).

Key changes:

• Individual investment limit increased from 5% to 10%.
• Overall cap raised from 10% to 24%.

Impact:
This enhances foreign participation in Indian equity markets and may improve liquidity and capital inflows.

Overall Takeaway

Union Budget 2026 does not alter tax slabs but focuses heavily on:

• Compliance simplification
• Reduced TCS burden
• Foreign asset regularization
• Streamlined TDS processes
• Increased foreign investment flexibility

For individual taxpayers, the budget brings operational ease rather than direct tax relief.

FAQs

1. Has income tax changed in Budget 2026?

No, income tax slabs remain unchanged under both old and new regimes.

2. When will the New Income Tax Act apply?

It will be effective from April 1, 2026.

3. What is the new TCS rate on overseas tour packages?

The TCS rate has been reduced to 2%.

4. Who can benefit from the Foreign Asset Disclosure Scheme?

Students, professionals, tech employees, and individuals with undisclosed foreign assets within prescribed limits.

5. Has the ITR filing deadline changed?

Yes, certain categories now have an extended deadline until August 31.