Income Tax Changes in Budget 2026: What Salaried Taxpayers Should Know

1. No Major Changes in Income Tax Slabs
In the Union Budget 2026–27, the government has kept income tax slabs unchanged under both the old and new tax regimes. This means salaried taxpayers should not expect any fresh reduction in basic tax rates for the current financial year.
The new tax regime continues as the default option, with progressive tax rates ranging from 0% to 30%. Under this regime, salaried individuals are eligible for a standard deduction of ₹75,000, helping reduce taxable income.
What This Means for Salaried Professionals
Under the new tax regime, middle-income earners—especially those earning around ₹12 lakh per year—may end up paying little to no income tax after accounting for standard deduction and applicable rebates.
However, individuals earning ₹15 lakh, ₹25 lakh, or more will continue to pay income tax. For most salaried employees who do not claim multiple deductions, the new tax regime generally results in lower tax liability compared to the old regime.
2. Simplified Tax Compliance and New ITR Rules
Budget 2026 places strong emphasis on ease of compliance and transparency. A new Income Tax Act will come into effect from 1 April 2026, aimed at simplifying tax laws and making return filing easier for taxpayers.
Key compliance-related changes include:
Extended revised ITR deadline: Taxpayers can now revise their income tax returns up to 31 March, instead of the earlier deadline of 31 December, by paying a nominal fee.
TDS refund relief: Salaried individuals can now claim TDS refunds even if the return is filed late, resolving a long-standing issue faced by many taxpayers.
3. Reduced TCS on Overseas Remittances
For individuals sending money abroad for education, medical treatment, or travel, the government has provided relief by reducing TCS (Tax Collected at Source) to 2%, down from 5% and, in some cases, 20%.
It is important to note that TCS is not an additional income tax. It only reduces the initial cash outflow at the time of remittance and can be adjusted while filing the income tax return.
4. What Has Not Changed in Budget 2026
Despite expectations, the budget did not introduce additional tax relief for salaried taxpayers. Key aspects that remain unchanged include:
Standard deduction remains at ₹75,000
No increase in the basic exemption limit
No new tax rebates or slab-wise rate cuts
Final Takeaway for Salaried Taxpayers
If you were expecting higher take-home salary through tax cuts, Budget 2026 offers no major direct relief. Instead, the government has focused on tax stability, simplified compliance, and predictable taxation rather than introducing new exemptions or rate reductions.