Income tax changes in Budget 2026: What taxpayers need to know
Here are some of the highlights of the direct tax proposals announced by Finance Minister Nirmala Sitharaman in her Union Budget 2026-27 speech in the Lok Sabha.
Union Finance Minister Nirmala Sitharaman announced several proposals regarding direct taxes in her Union Budget 2026-27 speech on Sunday.
Here are some key points from Budget 2026 on direct taxes.
1. Sitharaman has proposed to increase the deadline to file Income Tax returns from 31 December to 31 March.
2. A New Income Tax Act will come into effect from 1 April, replacing the six-decade-old tax law.
Sitharaman said in her Budget speech, "This (direct tax code) was completed in record time, and the Income Tax Act 2025 will come into effect from 1 April 2026. The simplified income tax rules and forms will be notified shortly, giving adequate time to taxpayers to acquaint themselves with their requirements."
3. The FM proposed raising the Securities Transaction Tax (STT) on both futures and options. For futures, she proposed raising the tax rate from 0.02% to 0.05%; for options, from 0.01% to 0.15%.
4. Sitharaman proposed the reduction of Tax Collected at Source (TCS) rates on overseas tour packages from the current rates of 5% and 20% to a flat 2% with no minimum booking amount.
5. Any interest awarded by the Motor Accident Claims Tribunal to a natural person will be exempt from Income Tax, and any TDS on this account will be done away with.
6. Reduction of TCS rate for pursuing education and for medical purposes under the Liberalized Remittance Scheme (LRS) from 5% percent to 2%.
7. Proposal for a scheme for small taxpayers wherein a rule-based automated process will enable obtaining a lower or nil deduction certificate instead of filing an application with the assessing officer.
8. The FM proposed to stagger the timeline for filing of tax returns. Individuals with ITR 1 and ITR 2 returns will continue to file till 31 July, and non-audit business cases or trusts will be allowed time till 31 August.
9. TDS on the sale of immovable property by a non-resident is proposed to be deducted and deposited through the resident buyer’s PAN-based challan instead of requiring TAN.
10. For taxpayers holding securities in multiple companies, the FM has proposed to enable depositories to accept Form 15G or Form 15H from the investor and provide it directly to various relevant companies.
11. The FM has also proposed a one-time 6-month foreign asset disclosure scheme for small taxpayers like students, young professionals, tech employees, relocated NRIs, and such others to disclose income or assets below a certain size.
12. Sitharaman proposed an exemption from Minimum Alternate Tax (MAT) to all non-residents who pay tax on a presumptive basis.
About the Author
For about a decade, Livemint—News Desk has been a credible source for authentic and timely news, and well-researched analysis on national news, business, personal finance, corporates, politics and geopolitics. We bring the latest updates on all the listed companies on BSE and NSE, startups, mutual funds, Union ministries, geopolitics, and untapped human interest stories from around the world, helping our readers to stay informed on the latest developments around the globe. Our Coverage Areas 1. Companies: Comprehensive news and analysis on listed and unlisted companies, corporate announcements, corporate chatter, C-suite, business trends, hiring alerts, layoffs, work-life balance, world's top billionaires and richest and more. 2. Personal finance: Insights into mutual funds, small savings schemes like - PPF, SSY, post office savings scheme, stock to watch, personal loans, credit cards, top bank FDs, real estate, income tax and more. 3. Politics: Comprehensive coverage of general elections, state elections and bypolls, Lok Sabha, Vidhan Sabha, Parliament, PMO, PIB, finance ministry, home ministry, among other union ministries and government departments. 4. National News: From metro cities like Delhi, Mumbai, and e to untapped stories from rural India, we cover human interest, health, education, crime and courts, and law and order, among other areas of public interest. 5. Economy: In-depth analysis of India's macro and micro-economic indicators like- GDP, inflation, forex, fiscal deficit, current account deficit, interest rate cycle, economic recovery, RBI circulars, indirect taxes, GST, Insolvency and Bankruptcy imports, exports and everything that impacts Indian economy. 6. Geopolitics: Well-rounded and deeply researched coverage on US News, Oval Office European Union, Ukraine Russia War, middle-east crisis, royal families and global leaders like - Donald Trump, Vladimir Putin, Kim Jong Un, Xi Jinping and premiers of other leading economies in the world. Meet the Team 1. Gulam Jeelani, Political Affairs Editor 2. Sugam Singhal, Senior Assistant Editor 3. Chanchal, Assistant Editor 4. Sanchari Ghosh, Chief Content Producer 5. Pratik Prashant Mukane, Chief Content Producer 6. Sayantani Biswas, Chief Content Producer 7. Ravi Hari, Deputy Chief Content Producer 8. Garvit Bhirani, Deputy Chief Content Producer 9. Akriti Anand, Senior Content Producer 10. Jocelyn Felix Fernandes, Senior Content Producer 11. Swastika Das Sharma, Content Producer 12. Mausam Jha, Content Producer 13. Riya R Alex, Trainee Content Producer
Catch all the Budget News , Business News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
MoreWait for it…
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.