Budget 2026 Income Tax announcements: What do taxpayers get this year? Did FM Sitharaman slash rates?

Budget 2026 income tax announcements:

Finance Minister Nirmala Sitharaman presented the Union Budget 2026 on Sunday, 1 February. The speech, keenly awaited by taxpayers, offered no relief on the income tax front, disappointing salaried and middle-class taxpayers who had been hoping for cuts in tax rates or changes to income tax slabs.

Presenting her ninth consecutive Budget, Sitharaman focused instead on major reforms across various sectors.

On the direct taxes front, the Finance Minister said the Income Tax Act, 2025, will come into effect on 1 April. The government will notify the new rules and tax return forms shortly. Notably, there are no changes to income tax rates, the standard deduction, or tax slabs under the new regime.

“Budget 2026 continues the shift away from headline tax cuts towards improving how the income-tax system works. Personal tax slabs remain unchanged, with the new tax regime exempting income up to ₹4 lakh and applying gradual slab rates thereafter, culminating in a 30% rate beyond ₹24 lakh,” said CA Sakchi Jain in a statement to Livemint.

Revised ITR deadline extended

Budget 2026 did not forego all income tax announcements. Speaking in the Lok Sabha on Sunday, FM Nirmala Sitharaman announced that taxpayers will now be able to file income tax returns (ITRs) till 31 March of the relevant assessment year, instead of the current deadline of 31 December.

“I propose to extend the time available for revising returns from 31 December to up to 31 March with the payment of a nominal fee,” FM Sitharaman said.

She further proposed to stagger the timeline for filing of ITRs by taxpayers. “Individuals with ITR 1 and ITR 2 returns will continue to file till 31 July and non-audit business cases or trusts are proposed to be allowed time till 31 August,” the FM said.

Income Tax Act, 2025 announcements

In her Budget speech, FM Nirmala Sitharaman said that the details of the new Income Tax Act, 2025, which will come into effect on 1 April, will be notified soon.

“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,” she said.

The forms have been redesigned so that ordinary citizens can comply without difficulty, FM Sitharaman added.