New Delhi: Budget 2026 has been specially designed to benefit the common people. Finance Minister Nirmala Sitharaman announced the introduction of a new Income Tax Act effective from April 1, 2026, which will replace the existing Income Tax Act of 1961. This change aims to simplify tax compliance for salaried individuals and the general public.
The Finance Minister emphasized that the government’s tax reforms focus on making tax compliance easier for ordinary citizens.
One of the major reliefs announced in the budget is for those sending money abroad. The Tax Collection at Source (TCS) rate on foreign tour packages has been reduced from 20 percent and 5 percent to just 2 percent. Similarly, TCS on money sent for education and healthcare purposes has been lowered from 5 percent to 2 percent. Moreover, manpower-related services will now fall under Tax Deducted at Source (TDS), attracting a tax rate of one or two percent.
The budget also provides significant relief to accident victims. Interest paid on claims awarded by the Motor Accident Claims Tribunal will now be exempt from income tax, and the related TDS on such payments has been removed. This step is expected to ease the financial burden on families already coping with difficult circumstances.
To make the tax system more flexible, the government has decided to extend the deadline for filing revised Income Tax Returns (ITR). Taxpayers can now file revised ITRs by March 31 instead of December 31 by paying a nominal fee.
Additionally, no interest will be charged on penalty amounts during the appeal period before the First Appellate Authority, regardless of the appeal outcome. The advance tax payment requirement has also been reduced from 20 percent to 10 percent and will be calculated only on the original tax demand.
The government has not made any changes to the existing income tax slabs. Under the new tax regime, income up to ₹12 lakh remains tax-free.
Currently, the income tax rates are as follows: income up to ₹4 lakh is exempt from tax; ₹4-8 lakh is taxed at 5 percent; ₹8-12 lakh at 10 percent; ₹12-16 lakh at 15 percent; ₹16-20 lakh at 20 percent; ₹20-24 lakh at 25 percent; and income above ₹24 lakh at 30 percent.
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