Income Tax Slab Changes Budget 2026 LIVE Updates: What’s in Budget for small taxpayers

The Budget 2026-27 has simplified customs regime by rationalising exemptions, waiving customs duty on 17 cancer drugs, while easing baggaing rules and reducing duty to 10 per cent on goods imported for personal use.

Finance Minister Nirmala Sitharaman on Sunday unveiled a "trust-based" customs regime, which will have a single window system for cargo clearances, lesser verification for regular importers with trusted longstanding supply chains, easier duty payment norms for Authorised Economic Operators (AEOs) and use of AI in scanning at ports.

Sitharaman also announced that honest taxpayers can settle customs disputes by payment of an additional amount, in lieu of penalty, and promised to roll out a Customs Integrated System (CIS) in two years for all Customs processes.

She also announced that the advance ruling will be binding on customs authorities for five years, up from three years currently. -PTI

To capitalise on the boom in data centres led by the rapid adoption of artificial intelligence (AI) technology, Union Finance Minister Nirmala Sitharaman has proposed to provide a tax break until 204 to foreign companies looking to set up such infrastructure in the country.

Tap here to read

Sitharaman proposed a scheme for small taxpayers. Here a "rule-based automated process will enable obtaining a lower or nil deduction certificate instead of filing an application with the assessing officer".

This will make the tax-filing process less cumbersome.

"Now I present my proposals on Direct Taxes." That is how FM Sitharaman began the keenly awaited second part of her Budget speech.

She began by recounting the Income Tax Act, which will come into effect on April 1, 2026, which is just than two months away.

Then she gave a few updates on the new Income Tax Act

Finance Minister Nirmala Sitharaman presented her record ninth consecutive Budget speech today.

These are the instances where tax found a mention.

1. While talking about the Revised Estimates of the non-debt receipts, which stand at ₹34 lakh crore, she mentioned that ₹26.7 lakh crore of this are the Centre’s net tax receipts.

FM Nirmala Sitharaman has kept the tax slabs unchanged. This is where they stand currently

Duty cut from 20% to 10% on imported drugs for personal use

17 drugs for patients suffering from cancer made duty-free

7 more rare-disease drugs made made duty-free

marine leather and textile products

duty free import limit raised

from 1% to 3% of imported value of previous year

timeline raised from 6 months to 1 year for synthetic footwear and leather products

Minimum corporate tax credit only under regime

one fourth of tax liability under new regime will be considered

MAT will be considered as final tax, cut to 14%

Tax buyback for all shareholder to be treated as capital gain

To disincentivise misuse, promoters will have to pay 10% higher rate

Talking about the software sector development, FM says they will get safe harbour and be clubbed under information tech services.

Safe harbour will be approved using automated rule-driven process

Taxpayers can update returns after reassessment, need to pay 10% rate over and above.

The updated return will be considered.

100% of tax amount and tax due needs to be paid.

For 1-time six-month foreign asset disclosure scheme for a special set of people including students

who didn't discl0ose overseas assets/income (limit Rs 1 crore) and those who did disclose such assets or income (asset value up to Rs 5 crore)

Scheme for small taxpayers, will give nil tax certificate

Cut to 2% without any stipulation.

According to Finance Commission recommendation, FM Sitharaman says the central government has decided to retain the vertical devolution structure, to give 41% share to states. States will get Rs 1.4 lakh crore, says FM.

Finance Minister Nirmala Sitharaman is speaking about infrastructure reforms and schemes currently. The announcement on income tax is expected in the second half of her speech.

FM Nirmala Sitharaman is speaking about the government's kartavyas (duty) and sankalp (resolution). She has also announced measures for textile sector, which is impacted by Trump tarrifs.

Tax announcements are expected in the second half of her speech. Stay tuned.

FM Sitharaman has begun the Budget speech. The new Parliament, which is substantially bigger that the previous one is packed. All eyes are on FM Sitharaman who is wearing a deep Maroon sari.

Keeping in with tradition, Finance Minister Nirmala Sitharaman has reached Rashtrapati Bhawan to meet President Droupadi Murmu ahead of the Budget speech. President Murmu offered Sitharaman dahi-shakkar (curd and sugar), considered auspicious before the start of any work.

While the old regime allows deductions like 80C and HRA, the new regime offers lower rates with fewer exemptions — and has increasingly become the government’s preferred system. More exemptions lead to more legislation over who and what is eligible and what is not. The government hasn’t ended the old regime, but made rates substantially lower in the new regime, making it a far more attractive option.

During the Finance Minister’s speech, we’ll closely track:

• Changes in exemption limits

• Slab restructuring, rebate tweaks

• Increase in standard deduction, if any

• Changes in long-term capital gains tax on equity vis-a-vis debt

Here’s a look at the current income-tax slabs under the new tax regime, which the government has been nudging taxpayers towards with multiple sweeteners now making it an overwhelming favourite.

Not everyone earning above the exemption limit ends up paying tax. Here’s how the income-tax rebate reduces liability for lower-income earners.

India’s personal income-tax base has expanded sharply in recent years, and saw 7.28 crore returns filed for FY24. The government has rationalised taxes and made the new tax regime with fewer exemptions more attractive with a slew of tweaks.

Stock markets are usually closed on holidays besides Saturday and Sunday. An exception has been made today. The stock market is walking a fine line between green and red. The stock market will be a key barometer of how market participants are assesssing the Budget speech. One key item would be any changes on LTCG, including simplifying it.

The market is trading flat, up 61 points, or 0.07 per cent up.

From foreign remittances to education loans, FM Nirmala Sitharaman eased many a burden. She even doubled the TDS threshold on interest income for senior citizens. Check the accompanying graphic for details

While it is said that the basic exemption limit is Rs 12 lakh, why does the tax rate in the charts attached with the previous cards starts from Rs 4 lakh? Also, what will you pay if you earn more than the basic exemption limit, which is rs 12 lakh so far?

Click here to read our explainer.

Union Finance Minister Nirmala Sitharaman with the Budget team during a photo op before leaving to present the Budget in New Delhi on Sunday. (Express Photo by Tashi Tobgyal)

These are the first images of Finance Minister Nirmala Sitharaman along with the Budget documents. The documents, carried inside a red bahi khata, are in digital format on a tablet. Seen with her is the Budget team, the finance ministry officials who worked along with her to bring out the Budget. She will now go to Parliament to present the Budget but first a trip to Rashtrapati Bhawan.

Keep in mind that old regime is deductions-heavy. This leads to litigation over what is eligible and what’s not while also makes tax filing cumbersome. The new regime has lower tax rates, but also fewer exemptions. But this also means that taxpayers need not manage a boatload of documents while filing their taxes.

Finance Minister Nirmala Sitharaman has reached Kartavya Bhawan, the newly constructed set of office buildings for the Indian government.

She will present her ninth consecutive Budget today, entering the history books.

The Economic Survey mentioned the key income tax benefits that the government extended to the taxpayer in the form of lower taxes under the new regime and a higher exemption limit. It also made a mention of the GST rationalisation that simplified the tax structure and brought in lower rates. Even when talking about how consumption demand is now broad-based, it made a note of how this was “aided by the rationalisation of direct and indirect taxes”.

Income tax directly affects the people. The government is walking the tightrope of maintaining fiscal discipline while trying to boost consumption by putting more in people’s hands. Fiscal discipline refers to the government’s attempt to lower the fiscal deficit or the amount spent more than what it earned. This, in effect, means the money that the government will need to borrow.