The Union Budget of 2026 is less about changing slabs and more about changing how you navigate your way through the tax-filing process. Timelines are set to be longer, some withholding rates are set to go down, and a few investor favourites have been re-priced.
Provided below are the budget 2026 highlights for taxpayers in India.
1. ITR filing
The Union Budget 2026-27 confirms the implementation of the Income Tax Act, 2025, which will be in effect from April 1, 2026.
- It extends the revised-return deadline to 31 March instead of 31 December, with a nominal fee. That extra quarter helps you reconcile Form 16, bank interest, and AIS/TIS data, and then fix genuine mistakes before they turn into notices.
- Budget 2026 also talks about dates on ITR filing - most individuals to continue with 31 July, while non-audit business cases and trusts move to 31 August.
- On updated returns, Budget 2026 allows filing an updated return even after reassessment starts, by paying additional tax.
Overall, your strategies from last year and estimates from an income tax calculator that you may have based your planning on, can be taken forward without any changes.
2. TDS and TCS rationalisation
Budget 2026 reduces TCS under the Liberalised Remittance Scheme to 2% for education and medical purposes. It brings TCS on overseas tour programme packages to a flat 2% with no threshold. For you, this may be mainly a cash-flow benefit because less money gets blocked upfront.
For property purchases from non-resident sellers, resident individual and HUF buyers get relief. The requirement to obtain a TAN is relaxed, and a PAN-based challan route is proposed instead, which should reduce procedural delays.
Another update from Budget 2026 is that the interest awarded by the Motor Accidents Claims Tribunal will not be taxable in an individual’s hands. This removes the TDS compliance confusion surrounding it.
3. Securities Transaction Tax
Budget ‘26 raises STT on Futures from 0.02% to 0.05%. It also raises STT on options premium and on exercise of options to 0.15%. If you trade Futures & Options actively, this increases frictional trading cost because STT applies regardless of profit or loss.
This also matters indirectly to market-linked insurance and investment products. If your unit-linked plan or a market-linked fund strategy uses derivatives or high turnover, higher STT becomes part of the cost stack and can drag net returns over time.
4. Sovereign Gold Bonds (SGB) tax rule
Budget 2026 narrows the capital gains tax exemption on SGB redemption at maturity. From FY 2026–27 (effective 1 April 2026), SGBs bought in the secondary market will not get the maturity redemption exemption. The exemption remains for SGBs subscribed at the time of original issue through Reserve Bank of India issuance and held to maturity.
5. Foreign Asset Disclosure Scheme (FAST-DS) 2026
Budget 26 introduces a one-time, six-month foreign asset disclosure window for small taxpayers to disclose overseas income or assets (within specified limits).
This is relevant if you studied abroad, received ESOPs or RSUs via a foreign broker, or left an overseas account dormant and never reported it properly. Think of it as a clean-up window aimed at smaller, real-world non-disclosure situations.
6. Corporate and cooperative tax changes
Budget 2026 changes the Minimum Alternate Tax framework.
- The MAT rate is proposed to fall from 15% to 14%.
- For domestic companies continuing under MAT, it is proposed to be treated as a final tax with no fresh MAT credit allowed, alongside tighter rules on credit usage. The intent is simplification and nudging companies toward the concessional corporate tax regime.
- For cooperative societies, dividend income from another cooperative society is allowed as a deduction even under the new regime, preserving an important internal-tax efficiency.
Buyback taxation also changes. The proposal is to tax shareholders on net “capital gains” instead of treating buyback proceeds as dividend-like income, which can shift the effective rate for many investors and make capital loss set-off relevant in some cases.
7. Compliance relief measures
Budget ‘26 pushes more processes into automation.
- A rule-based automated mechanism is proposed for issuing lower or nil TDS certificates for small taxpayers. I should help reduce dependence on assessing officer discretion and help prevent excess TDS.
- On disputes, Budget 2026 proposes no interest on penalty levied during the first-appeal period, alongside a common order approach for assessment and penalty. This reduces “interest-on-penalty” pressure while a genuine dispute is being resolved.
- From the tax year 2027–28 onwards, ICDS (Income Computation and Disclosure Standards) requirements are proposed to be incorporated into Indian Accounting Standards (IndAS). This should help remove parallel tax accounting standards for businesses that already prepare Ind AS financials.
Moving Forward
Via reforms in direct and indirect taxation, Budget 2026 indicates the country’s approach towards a simpler, trustworthy regime that is less burdened by litigation, especially for MSMEs, exporters, the IT sector, and global investors.
Budget 2026 gives you more time to correct errors, lowers some withholding frictions, and increases transaction costs in derivatives while tightening SGB tax assumptions.
- If you take the help of an accountant for ITR filing, get in touch with them to plan reconciliation and document collection around the new dates.
- If you file taxes yourself, block time in February and March for final checks (not just July). Take advantage of an online income tax calculator to ensure maximum tax savings on your funds.
- If you trade frequently, re-check whether the post-taxation return still justifies the churn after Budget 26’s STT increase.
For FY 2026–27, you can aim to reconcile data earlier, simplify planning around foreign assets, and reassess strategies that rely on frequent market transactions. With the right strategies, adherence to procedures, and thoughtful decisions around your money, you can make the best of the changes and updates announced.
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