Budget 2026: Income Tax Updates
India's Budget 2026 included several changes impacting taxpayers, including no revisions to income tax slabs under the New Tax Regime and alterations to the Securities Transaction Tax (STT). The budget aims to boost infrastructure growth and job creation through increased capital expenditure.
Income Tax Slabs
The income tax slabs under the New Tax Regime remain unchanged from the 2025 revision. Individuals with a taxable income of up to ₹12 lakh effectively pay zero tax, considering standard deductions and rebates.
Income Tax Slab Rates for FY 2025-26 (AY 2026-27)
- From 0 to ₹4,00,000: 0%
- From ₹4,00,001 to ₹8,00,000: 5%
- From ₹8,00,001 to ₹12,00,000: 10%
- From ₹12,00,001 to ₹16,00,000: 15%
- From ₹16,00,001 to ₹20,00,000: 20%
- From ₹20,00,001 to ₹24,00,000: 25%
- From ₹24,00,001 and above: 30%
Securities Transaction Tax (STT)
Budget 2026 increased the Securities Transaction Tax (STT) on futures and options trading to discourage retail speculation. Effective April 1, 2026, the STT on options will increase by up to 50%, and on futures, a hike of up to 150% will be applied. The rate of Securities Transaction Tax on the sale of a future in securities has increased from 0.02% to 0.05%, and the tax will be computed on the traded price of the future.
Other Key Updates
- Customs Duty: The budget has simplified the customs regime by rationalizing exemptions and reducing duty to 10% on goods imported for personal use.
- Foreign Assets Disclosure: A one-time six-month foreign asset disclosure scheme has been proposed for small taxpayers who may have unintentionally failed to report overseas income or assets. A tax rate of 30% is applicable on the value of the undisclosed foreign asset as of March 31, 2026, along with an additional amount equal to 100% of such tax.
- Minimum Alternate Tax (MAT): There will be no further credit accumulation from April 1, 2026. The rate of final tax is reduced to 14% from the current MAT rate of 15%.
- Simplified Income Tax Filing: Simpler ITR forms and an extended deadline for filing revised returns until March 31 have been announced.
Conclusion
Budget 2026 focused on maintaining stable income tax slabs while introducing measures to streamline customs, address foreign asset disclosures, and adjust taxes on securities transactions. The New Income Tax Act, 2025 will come into effect from April 2026.
