Budget 2026-27 avoids headline tax cuts and instead sharpens compliance under the new Income Tax Act effective April 2026. Here’s a verified snapshot of the changes that actually affect taxpayers—and the ones that don’t.
Union Budget 2026-27: Key Tax & Compliance Updates (Verified)
Union Budget 2026-27 maintains fiscal prudence with targeted tax and procedural refinements rather than sweeping rate cuts. The measures are aligned with the new Income Tax Act (effective 1 April 2026), with a clear emphasis on compliance ease, certainty, and litigation reduction.
Fiscal Context
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Fiscal deficit target: ~4.5% of GDP for FY27
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GDP growth projection: ~7.4%
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Continued capex push, reinforcing long-term macroeconomic stability
Direct Tax Highlights
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Income tax slabs unchanged under both regimes
(30% rate continues above ₹24 lakh in the new regime). -
ITR-1 & ITR-2 filing due date extended to 31 July, easing compliance for salaried individuals and small taxpayers.
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TCS under LRS reduced to 2% (flat, no threshold) for education, medical expenses, and foreign tour packages—providing relief on overseas remittances and NRI-linked transactions.
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MACT interest fully exempt for individuals; no TDS, resolving long-standing disputes.
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Buyback taxation shifted to shareholders, taxable as capital gains (effective impact largely on promoters).
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One-time foreign asset disclosure window announced; detailed conditions and immunity provisions to be notified.
MSME & Business Compliance
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No confirmed changes to presumptive taxation limits under Sections 44AD or 44ADA.
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Budget signals future simplification for digital-first MSMEs, subject to notifications.
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Rent TDS threshold remains unchanged at ₹2.4 lakh.
Indirect Tax & Market Updates
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GST rates and structure unchanged.
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Key deductions unchanged:
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Section 80C – ₹1.5 lakh
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Section 24(b) (home loan interest) – ₹2 lakh
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STT increased to curb speculative trading:
| Instrument | Earlier | Revised |
|---|---|---|
| Futures | 0.02% | 0.05% |
| Options | 0.10% | 0.15% |
Procedural Reforms
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Finance Bill 2026 operationalises the new Income Tax Act, strengthening faceless procedures and decriminalising minor defaults.
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No notified change in pre-deposit percentage for stay of demand or updated return timelines beyond existing provisions.
Key Takeaway
Budget 2026-27 is stability-driven, not populist.
Tax rates remain steady while compliance becomes smoother and more predictable. Relief is selective, market discipline is reinforced, and the tax administration continues its shift toward trust-based enforcement.
Immediate Action Points
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Review LRS remittances and foreign asset exposure early in FY27
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Reassess derivatives trading costs post-STT hike
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Plan July 31 ITR compliance workflows
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Track notifications under the new Income Tax Act
Based on the Union Budget Speech and Finance Bill, 2026 as presented on 1 February 2026.
