Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 on February 1.
While there are no changes in income tax slabs or rates, the Budget brings several important updates that taxpayers should know before planning for the new financial year starting April 1, 2026.
The biggest changes relate to ITR deadlines, TDS rules, and taxpayer convenience.
Contents
New Income Tax Deadlines and Key Changes
The Budget has extended timelines to make compliance easier for taxpayers.
Revised ITRs can now be filed till March 31, instead of the earlier December 31 deadline, by paying a small fee.
ITR filing dates are staggered:
ITR-1 and ITR-2: Deadline remains July 31
Non-audit business cases and trusts: Deadline extended to August 31
A new automated system will allow small taxpayers to get lower or zero TDS certificates without visiting tax officers.
Other important announcements include:
Interest awarded by Motor Accident Claims Tribunals is now tax-free, with no TDS.
TCS on overseas tour packages reduced to 2%.
The same 2% TCS rate applies to education and medical remittances under LRS.
For property bought from non-residents, TDS will be paid using the buyer’s PAN, removing the need for a TAN.
New Income Tax Regime: Still the Default Option
The new tax regime continues as the default for FY 2026-27.
Under this regime, individuals earning up to ₹12 lakh a year are effectively exempt from income tax on normal income.
This exemption does not apply to special incomes such as capital gains.
Salaried taxpayers can still opt for the old regime while filing returns, but belated returns can only be filed under the new regime.
New Tax Regime Slabs
₹0 to ₹4 lakh: Nil
₹4 lakh to ₹8 lakh: 5%
₹8 lakh to ₹12 lakh: 10%
₹12 lakh to ₹16 lakh: 15%
₹16 lakh to ₹20 lakh: 20%
₹20 lakh to ₹24 lakh: 25%
Above ₹24 lakh: 30%
Benefits Under the New Regime
Standard deduction of ₹75,000 for salaried employees and pensioners
Section 87A rebate for resident taxpayers with income up to ₹12 lakh
NPS deduction up to 14% of basic salary under Section 80CCD(2)
Old Tax Regime: Best for Those with Deductions
The old tax regime continues for taxpayers who claim multiple exemptions and deductions. These include:
Section 80C deductions up to ₹1.5 lakh (PPF, ELSS, LIC)
House Rent Allowance (HRA) and Leave Travel Allowance (LTA)
Home loan interest under Section 24
Health insurance premiums under Section 80D
Education loan interest under Section 80E
Standard deduction of ₹50,000 for salaried individuals
Old Regime Tax Slabs
For individuals below 60 years:
Up to ₹2.5 lakh: Nil
₹2.5 lakh to ₹5 lakh: 5%
₹5 lakh to ₹10 lakh: 20%
Above ₹10 lakh: 30%
Senior citizens (60–80 years):
Up to ₹3 lakh: Nil
Above ₹10 lakh: 30%
Super senior citizens (80+ years):
Up to ₹5 lakh: Nil
Above ₹10 lakh: 30%
Which Tax Regime Should You Choose?
Tax experts say the right choice depends on income level and deductions.
If your annual income is up to ₹12 lakh, the new tax regime is likely to be more beneficial for most people.
However, the old regime may suit you better if you claim large deductions, pay home loan interest, invest heavily in tax-saving schemes, receive HRA or LTA, or are a senior citizen with multiple exemptions.
Final Takeaway
Budget 2026-27 focuses on ease of compliance rather than changing tax rates.
With extended deadlines, lower TCS, and simpler processes, taxpayers get more flexibility.
Choosing between the old and new tax regimes now depends less on rates and more on how well you use available deductions and benefits.