The wait for the Union Budget 2026-27 ended with a clear message from Finance Minister Nirmala Sitharaman: stability and continuity. While many taxpayers hoped for a reduction in tax rates, the government chose to maintain the existing structure while introducing significant compliance reforms.

This article breaks down the income tax slabs for the upcoming financial year and explores the key changes that will impact your wallet and your filing process.

Income Tax Slabs

For the financial year 2026-27, the government has announced that there will be no changes to the income tax rates or slabs under either the old or the new tax regimes. The focus remains on encouraging taxpayers to migrate to the new regime, which offers lower rates but fewer deductions.

Current Slabs Under the New Tax Regime:

• Up to ₹4 Lakh: Exempt from tax.
• ₹4 Lakh – ₹8 Lakh: 5% tax rate.
• ₹8 Lakh – ₹12 Lakh: 10% tax rate.
• ₹12 Lakh – ₹16 Lakh: 15% tax rate.
• ₹16 Lakh – ₹20 Lakh: 20% tax rate.
• ₹20 Lakh – ₹24 Lakh: 25% tax rate.
• Above ₹24 Lakh: 30% tax rate.

The Section 87A rebate also remains unchanged. This means that resident individuals with a net taxable income of up to ₹12 lakh under the new regime can still claim a rebate of up to ₹60,000, effectively making their tax liability zero.

Income Tax Act 2025

One of the most significant announcements is the comprehensive review and replacement of the old law. The Income Tax Act 2025 is set to come into effect on April 1, 2026.

The new Act aims to:

• Simplify language: Moving away from bulky, traditional drafting to a more user-friendly style.
• Logical restructuring: Provisions have been regrouped thematically to improve readability.
• Decriminalize minor offenses: Non-production of books and certain TDS payment defaults will now be decriminalized, attracting fines rather than prosecution.

Relief in TCS & TDS Rates

To ease the financial burden on middle-class families and “global Indians,” the budget has slashed Tax Collected at Source (TCS) rates for several categories.

1. Overseas Travel: The TCS on overseas tour program packages has been reduced to 2% from the previous 5% and 20% rates, with no threshold limit.
2. Education and Health: TCS for remittances under the Liberalised Remittance Scheme (LRS) for medical treatment and education is now 2%, down from 5%.
3. Property Purchases from NRIs: Resident buyers no longer need to obtain a TAN (Tax Deduction and Collection Account Number) to deduct tax. They can now simply use their PAN to deposit TDS, mirroring the process for transactions between two residents.

New Disclosure Schemes

The government is introducing the Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS). This is a one-time, six-month window for taxpayers to regularize undisclosed foreign assets or income up to ₹1 crore by paying tax and a penalty, thereby gaining immunity from prosecution.

Furthermore, the deadline for filing revised returns has been extended from December 31 to March 31. This provides much-needed “breathing room” for taxpayers to correct errors without facing heavy penalties.

Market & Investment Impacts

The budget has taken a firm stance on short-term market speculation. The Securities Transaction Tax (STT) has been hiked by 150% on Futures and 50% on Options. This reform aims to slow down excessive trading and encourage long-term capital formation.

Additionally, the tax exemption for Sovereign Gold Bonds (SGB) has been refined. To claim the exemption upon maturity, the bonds must now be subscribed to at the time of original issue and held continuously by the individual until redemption.

The Logical Indian’s Perspective

The Union Budget 2026-27 reflects a pragmatic approach to governance, prioritizing long-term structural reforms over immediate populist relief.

While we acknowledge the middle class’s desire for lower tax slabs, the government’s focus on simplifying laws and easing compliance burdens is a step toward a more transparent and empathetic tax system.

We believe that true progress lies in creating a society where dialogue and fair policies empower every citizen to contribute to the nation’s growth with ease and dignity.