Union Budget 2026 is now announced. Hey there, if you’re like most people in India, taxes can feel like a big puzzle. Every year, the Union Budget comes along and shakes things up a bit, or sometimes a lot. This time, on February 1, 2026, Finance Minister Nirmala Sitharaman stood up in the Lok Sabha and laid out the plans for the 2026-27 financial year. The big theme? “Yuvashakti,” which basically means empowering the youth. It’s all about building the nation, growing the economy, and making sure social justice is front and center. But let’s get real – what most folks want to know is how this affects their wallet, especially when it comes to income tax.

You might have heard the buzz: no huge overhauls in tax rates this year, but plenty of tweaks to make life easier. Think simpler rules, fewer headaches with paperwork, and some nice breaks for everyday people. The star of the show is the brand-new Income Tax Act that’s set to kick in soon. It’s replacing the old 1961 law that’s been around forever. The goal? Cut down on confusion, reduce court battles over taxes, and help everyone file without pulling their hair out. In this article, we’ll break it all down step by step. We’ll look at what exactly changed, who stands to gain the most, and how you can make the most of it. We’ll even throw in some real-life examples to make it clearer. Stick around – by the end, you’ll feel like a tax pro.

Understanding the New Income Tax Act

Okay, let’s start with the basics. The government has been talking about updating the income tax laws for a while now. The current one, the Income Tax Act of 1961, is over 60 years old. Imagine using a phone from the 1960s today – it works, but it’s clunky and outdated. That’s kind of how the old act feels to many taxpayers. It has tons of sections, exemptions, and rules that lead to mix-ups and lawsuits. So, enter the New Income Tax Act, 2025. This fresh version is designed to be straightforward. Fewer clauses mean less room for arguments, and that should cut down on the number of cases clogging up the courts.

When does this all happen? Mark your calendar for April 1, 2026. That’s the start of the new financial year, and from then on, the new act takes over. But don’t worry if you have old tax issues – the government says those won’t be touched. They’re keeping the focus on the future, encouraging more people to switch to the newer, simpler tax system. One big plus? Redesigned Income Tax Return (ITR) forms. Forms like ITR-1 and ITR-2, which are for regular folks with salary or pension income, are getting a makeover. They’ll be easier to fill out, with clearer instructions and maybe even some auto-fill options based on your data.

Speaking of filing, the deadline for your regular ITR stays the same: July 31. But here’s a handy change – if you mess up or forget something, you can file a revised return all the way up to March 31. That’s three extra months compared to the old December 31 cutoff. Why does this matter? Life happens. Maybe you find an old investment slip or realize you claimed the wrong deduction. This extension gives you breathing room without penalties piling up right away.

On the legal side, appeals are getting streamlined. If you’re disputing a tax notice, the process should be faster and less bureaucratic. Small taxpayers – think freelancers or shop owners with modest incomes – will have an easier time getting “nil TDS” certificates. TDS stands for Tax Deducted at Source, which is when tax is cut from your payments before you get them. A nil certificate means no deduction if your income is low enough. Companies can now handle Forms 15G and 15H (self-declarations to avoid TDS) directly through depositories, cutting out middlemen.

All this is part of a bigger push to make taxes less scary. The government wants to promote the new tax regime, which has lower rates but fewer deductions. By cleaning up the system, they’re hoping more people opt in. Think about it: fewer lawsuits mean less money spent on lawyers, and easier compliance means you spend less time on paperwork. For the average person, this could save hours every tax season.

Income Tax Slabs in Budget 2026: Comparing New and Old Regimes

Now, the part everyone flips to first: the tax slabs. If you were hoping for a big slash in rates, well, no luck this year. The slabs are staying put, just like they were set in last year’s Budget 2025. The idea is to keep things stable while making the new regime more appealing. Stability is good, right? It means you can plan your finances without surprises.

Let’s look at the new tax regime first. This is the one the government is pushing hard. It’s simpler – no hunting for deductions on everything from insurance to home loans. Instead, you get flat rates and a couple of built-in breaks. Salaried folks get a standard deduction of ₹75,000 right off the bat. That’s money subtracted from your income before tax is calculated. Plus, there’s a rebate under Section 87A of up to ₹60,000. Combine that, and income up to ₹12.75 lakh is basically tax-free. That’s a sweet deal for young professionals just starting out.

New Tax Regime Slabs

• 0 to ₹4 lakh: No tax at all. Perfect for low earners or part-timers.
• ₹4 lakh to ₹8 lakh: 5% tax. So, on ₹5 lakh, you’d pay 5% on the ₹1 lakh over ₹4 lakh – that’s just ₹5,000.
• ₹8 lakh to ₹12 lakh: 10%. Building up gradually.
• ₹12 lakh to ₹16 lakh: 15%. This hits the middle class.
• ₹16 lakh to ₹20 lakh: 20%. For higher salaries.
• ₹20 lakh to ₹24 lakh: 25%. Getting steeper.
• Above ₹24 lakh: 30%. The top rate for big earners.

Why choose this? It’s hassle-free. No receipts to save, no complex calculations. But if you have a lot of investments or a home loan, you might save more in the old regime.

The old regime? It’s the classic one with all the deductions. Standard deduction is ₹50,000, and the rebate is ₹12,500, making up to ₹5 lakh tax-free. You can claim under Section 80C for things like provident fund or life insurance (up to ₹1.5 lakh), HRA if you rent, and interest on home loans. Slabs here are:

Old Tax Regime Slabs

• 0 to ₹2.5 lakh: Nil.
• ₹2.5 lakh to ₹5 lakh: 5%.
• ₹5 lakh to ₹10 lakh: 20%.
• Above ₹10 lakh: 30%.

For seniors (60-80 years), the new regime starts exemption at ₹4 lakh, old at ₹3 lakh. Super seniors over 80 get ₹5 lakh in the old one. There was talk about pushing the 30% slab to ₹35 lakh or even ₹40 lakh, but that didn’t happen. Maybe next year? For now, if you’re in the ₹15-20 lakh bracket, compare both regimes. Use online calculators – plug in your numbers and see which saves you more.

Take an example: Suppose you’re a 30-year-old software engineer earning ₹10 lakh a year. In the new regime, after ₹75,000 deduction, taxable is ₹9.25 lakh. Tax: Nil up to ₹4 lakh, 5% on next ₹4 lakh (₹20,000), 10% on next ₹1.25 lakh (₹12,500). Total ₹32,500, but rebate might wipe some out. In old, with deductions like ₹1.5 lakh 80C and ₹2 lakh home loan interest, you could drop taxable to ₹4.5 lakh and pay almost nothing. It depends on your situation.

Big Relief Measures That Go Beyond Just the Slabs

Tax Collected at Source

Slabs are important, but Budget 2026 packs in relief elsewhere. These are the nuts-and-bolts changes that could put real money back in your pocket. First up: Tax Collected at Source (TCS). This is like tax paid upfront on certain spends, which you can claim back later. For foreign education, medical treatment abroad, and overseas tour packages, TCS drops from 5% to 2%, with no minimum threshold. Same for the Liberalised Remittance Scheme (LRS), which lets you send money abroad for things like investments.

Why the cut? To make global opportunities more affordable, especially for youth. Education abroad is pricey enough without extra tax hits. Similarly, if you’re sending a family member for treatment, every rupee counts.

Motor Accident Claims

Another win: Money from Motor Accident Claims Tribunals is now fully tax-free, including any interest earned. No TDS on these payments either. If you’ve been in an accident, this means your compensation isn’t nibbled away by taxes. It’s a compassionate move – accidents are traumatic, and this eases the financial pain.

NRI and TDS

For Non-Resident Indians (NRIs) selling property in India, TDS is now based on your PAN, not needing a TAN (Tax Deduction Account Number). That’s less paperwork and faster deals. Manpower supply services fall under Section 194C now, with TDS at 1-2%. But employee hiring services get 2% TDS, up from 1%. It’s a mixed bag for businesses.

Penalties

Penalties are softening too. If you hide assets worth less than ₹20 lakh, it’s just a fine – no jail time. Serious stuff could still mean up to two years behind bars. There’s immunity from penalties for misreporting income in some cases. Plus, safe harbour rules for IT services (margins where tax is presumed fair), exemptions on dividends for cooperatives under certain conditions, and a six-month window to disclose foreign assets without harsh penalties.

MAT

Don’t forget the Minimum Alternate Tax (MAT) – it’s down to 14% from 15%, treated as final tax. This helps companies. Securities Transaction Tax (STT) on futures and options is hiked: futures to 0.05% from 0.02%, options maybe higher too. It’s to curb speculative trading. Buyback of shares? Taxation shifts to make it fairer, treating it like dividends.

Who Benefits the Most and How Much Can They Save?

This budget isn’t about flashy cuts for the rich; it’s targeted relief for everyday folks, especially the young and middle class. Salaried employees? You’re in luck with higher standard deductions and easier forms. Take that ₹10 lakh earner – savings of ₹5,000-10,000 a year compared to old rules. For ₹15 lakh, tax under new regime is zero after rebates? Wait, close – liability might be low.

Youth and students: TCS cut on education remittances. Sending ₹20 lakh abroad? TCS now ₹40,000 vs. old ₹1 lakh – save ₹60,000. That’s tuition for an extra semester! Overseas tours: A family vacation costing ₹10 lakh saves ₹30,000 in TCS.

NRIs: Selling a ₹50 lakh flat? Skip TAN hassle, save ₹5,000-10,000 in fees and time.

Small taxpayers and seniors: Easier TDS waivers. A freelancer on ₹4 lakh avoids ₹20,000 deduction upfront.

Accident victims: Huge. A ₹5.5 lakh claim? Old tax ₹1.65 lakh; now zero. Peace of mind priceless.

Businesses: Less litigation saves ₹50,000+ in legal fees. IT sector benefits from safe harbours.

Overall, 70% of new regime users could save 10-20%. Middle class gets the bulk – think families planning kids’ education or overseas jobs.

But high earners with F&O trading? Higher STT might sting, adding costs to trades.

Looking Ahead 

Budget 2026 keeps rates steady but delivers smart relief. TCS/TDS cuts help the middle class chase global dreams. The new act promises simpler taxes, less stress.

If you earn under ₹12 lakh, new regime might be best. Higher? Crunch numbers on old vs. new. Use the tax department’s online calculator – it’s free and easy. Chat with a CA if needed.

These kick in for FY 2026-27 (Assessment Year 2027-28). Start planning: Update your investments, check foreign spends.

Taxes aren’t fun, but these changes make them fairer. Who knows, next budget might bring more surprises. For now, breathe easier – your tax bill just got a little friendlier.

It’s January 31, 2026, and the Union Budget for this year is just a day away, set to be presented on February 1. Everyone from business owners to everyday folks is buzzing about what Finance Minister Nirmala Sitharaman might announce. This budget comes at a time when the economy is dealing with things like a weakening rupee, global trade tensions, and the push for more homegrown manufacturing. People are hoping for changes that make life easier, boost jobs, and help India grow faster. Let’s break down some of the main expectations, based on what experts, industry groups, and reports are saying. I’ll add in some extra background to give a fuller picture.

Union Budget 2026 Key Expectations

The government has been focusing on big goals like making India a manufacturing hub and cutting down on imports. The Economic Survey, which came out today on January 31, gives a sneak peek into the economy’s health and where the government might spend more. For instance, it might highlight how inflation has hit the middle class hard, with rising costs for food and fuel. Experts think the budget could aim to keep the fiscal deficit – that’s basically how much the government borrows – at around 4.3% of GDP for the next financial year, down from 4.4% this year. That’s the lowest since before the pandemic, showing a push for careful spending.

Industry groups like FICCI and CII are calling for simpler rules to do business. They want the Goods and Services Tax (GST) system tweaked to cut down on paperwork and make rates more logical. For example, some items have “inverted duty structures,” where raw materials are taxed more than finished products, which hurts small businesses. Fixing that could save companies money and create more jobs.

On taxes, don’t expect huge changes to income tax slabs right away, especially since the new tax regime kicks in fully from April 1, 2026. But there’s talk of making it easier for people to switch over by cleaning up old rules. Last year’s budget made income up to ₹12 lakh basically tax-free under the new system, which was a big relief during high inflation. Now, some analysts suggest bumping up the standard deduction from ₹50,000 to ₹1,00,000 to help salaried folks cope with rising living costs. They also want the 30% tax rate to start at a higher income level, say ₹20 lakh instead of ₹15 lakh, to give the middle class more breathing room.

With the rupee dropping to new lows against the dollar – it hit around 84 rupees per dollar recently – and potential 50% tariffs from the US under the new administration, exports need a boost. The government might announce steps to encourage making things in India that we usually import, like electronics parts. Foreign investors are watching for cuts in transaction taxes or long-term capital gains taxes to pour more money into Indian stocks and bonds. Simplifying capital gains rules is another big ask: right now, different assets have different holding periods and rates, which confuses investors. Harmonizing them could make investing simpler and attract more funds.

There’s also a push for a one-time scheme to settle old tax disputes, like the successful Vivad se Vishwas program from 2020. Over 38,000 cases are stuck in courts, tying up ₹1.5 lakh crore. Letting businesses pay just the principal amount, without penalties or interest, could free up cash for growth. In the old tax regime, the Section 80C limit for deductions on investments like PPF or insurance hasn’t changed from ₹1.5 lakh since 2014. Raising it to ₹2 lakh would encourage more savings. For health insurance under Section 80D, especially for seniors, higher limits are needed because medical costs have skyrocketed – think about how hospital bills can wipe out savings in one go.

Customs duties might get adjusted too. Lower taxes on raw materials for small businesses, manufacturing, electronics, and green energy could help. But higher duties on finished imports would protect local makers, aligning with Make in India and the China+1 strategy, where companies shift production from China to places like India. Sectors like electric vehicles (EVs), solar panels, defense, and semiconductors could get special incentives, like subsidies or tax breaks, to build factories here.

Corporate taxes are likely to stay steady, but startups, green projects, and digital infrastructure might get extra perks. This could include faster approvals for loans or grants for tech upgrades.

Budget 2026 – Expectations from Different Sectors

Every industry has its wishlist. Here’s a closer look at what they’re hoping for, with some real-world context on why these matter.

Electronics and Gadgets

The electronics world is growing fast in India, thanks to schemes like Production Linked Incentive (PLI). But challenges like scarce semiconductor supplies, jumping memory prices, and the weak rupee are hurting. Industry folks want GST glitches fixed – for example, some components face higher taxes than expected. They also seek short-term duty cuts on key parts to keep costs down and compete globally. Building a full ecosystem, from chips to screens, could create millions of jobs. For exports, better logistics help, like faster customs clearance, and refunds on duties paid would make Indian TVs and phones more attractive abroad.

Renewable Energy and Going Green

India aims to hit 500 GW of renewable energy by 2030, but we need more push. The sector wants clear policies for advanced tech like robots in solar farms or efficient wind turbines. Bigger budget allocations for local manufacturing of solar panels and batteries could reduce imports from China. This ties into global climate goals – remember the COP conferences? Support for green bonds or funds would attract eco-friendly investors.

Non-Banking Finance Companies (NBFCs)

These lenders fuel small businesses and infrastructure. They’re not expecting flashy announcements but want smoother operations, like easier access to refinancing from banks. Making rules fair under laws like SARFAESI (for recovering bad loans) would help. With big projects like highways and airports lined up, timely approvals and less red tape could speed things up. MSMEs, which employ over 100 million people, would benefit from targeted credit schemes, especially in villages where NBFCs are key players.

Taxes on Stock Trading (STT)

Securities Transaction Tax adds to trading costs, even after long-term capital gains tax came back in 2018. Traders want it scrapped or lowered for long-term buys, or at least deductible as an expense. Reducing equity gains tax to 10-15% could encourage small investors, who make up a big chunk of the market now with apps like Groww or Zerodha.

Boosting Exports

Exports hit $778 billion last year, but we need more. The government might expand the Export Promotion Mission with ₹25,000 crore more. Ideas include guarantees for small exporters’ loans (up to 85% coverage), cheaper credit, and a platform like BharatTradeNet to cut logistics costs. Labor-heavy sectors like toys, leather, and textiles – which employ lakhs of workers – could get special help, especially with US tariffs looming.

Gold Investments

Gold prices are sky-high due to wars and uncertainty, making it a safe bet. But tax rules are uneven: Gold ETFs become long-term after one year, but physical gold or funds take two. Investors want this fixed to one year for all, helping SIP folks. Reviving Sovereign Gold Bonds (SGBs), which offer interest plus tax perks, would be great since no new ones have come out lately.

Tech and Small Businesses (MSMEs)

MSMEs drive 30% of GDP but struggle with tech. Budget could offer tax breaks for AI, cloud computing, or cybersecurity tools. Easier loans and simpler GST would help them go digital, creating jobs in software and e-commerce.

Electric Vehicles (EVs)

EV sales are booming, but subsidies end soon. Industry wants them extended, especially for bikes, and GST on all parts at 5%. Focusing on the whole chain – from batteries to charging stations – could make EVs cheaper than petrol cars, cutting pollution in cities like Delhi.

Solar Power

Extend PLI to more solar gear and grid tools. Improve schemes like PM Surya Ghar (free solar rooftops) and PM-KUSUM (solar for farmers). New green finance options, like climate funds, could draw billions in investment.

Startups and Innovation

Startups created 1.2 million jobs last year. They want faster funding, fair taxes on ESOPs (employee stock options), and less compliance hassle. This could keep unicorns like Byju’s or Flipkart growing in India.

Defense Sector

With ₹6.8 lakh crore allocated last year, focus now on turning plans into action. Faster orders for local weapons, better repair facilities, and testing labs would strengthen borders and create tech jobs.

Logistics and Transport

Build more ports, rail corridors, and parks under Gati Shakti. Lower GST on warehousing and digital tools would cut costs, making goods move faster across India.

Healthcare

Spend more on kids, moms, and vaccines. Tackle big killers like diabetes and cancer with better hospitals and early checks. Tech like apps for health tracking could save lives, especially in rural areas where doctors are scarce.

Steel Industry

Protect against cheap imports with duties, but lower taxes on inputs. Help with loans for green steel tech to meet global standards.

Education

Upgrade schools with digital tools and train teachers. Cut GST on books and online learning to 0-5%. Use CSR funds for skills training, linking education to jobs in fields like IT or manufacturing.

Fast-Moving Consumer Goods (FMCG)

Extend 0% GST to packaged flour. Subsidies for food processing would help farmers and keep prices low for basics like rice and oil.

Restaurants and Food Services

Lower taxes on dining and restore input credits to offset costs. A dedicated ministry could address issues like licenses and labor laws.

Insurance

Make policies cheaper for rural and small biz folks. Better rules for claims would build trust and cover more people against risks.

Housing and Big Projects

Redefine affordable housing to include bigger cities. Incentives for green buildings could boost real estate, which employs millions.

Farming

Support farmer groups (FPOs) with cash, storage, and market info. This could double incomes, as promised, by cutting waste and getting better prices.

Green Energy Networks

Fill gaps in financing for renewables. Stable policies would attract investors for wind and hydro projects.

Smart Meters for Power

Allocate funds for installing smart meters nationwide. Recognizing them as infrastructure would unlock cheap loans and speed up rollout, reducing theft and improving billing.

All these hopes show how the budget touches every part of life. We’ll know soon if the government delivers on them when the announcement happens tomorrow. In the meantime, it’s a reminder of how policies shape our economy and daily routines