UNION BUDGET  2026  AND INCOME TAX

Union Budget 2026 Income Tax reforms focus on simplification, unchanged slabs, and a flat 2% TCS on overseas tour packages with no threshold.

Now TCS to be paid  at 2 % on all overseas tour packages  without any threshold

Dated  02.02.2026 :  In her Union Budget speech delivered yesterday, February 1, 2026, Finance Minister Nirmala Sitharaman left the income tax slabs and rates untouched and focused on tax simplification and relief for the middle class, primarily through the New Tax Regime and a major overhaul of the TCS (Tax Collected at Source) structure.

Here are the major proposals regarding Income Tax,   IT Returns and TCS:

Income Tax Slabs (New Tax Regime) : Remains Unchanged

The government has maintained the slab structure introduced previously, keeping the Zero-Tax threshold at ₹12 lakh (via the Section 87A rebate).

Income Tax Slabs ( Old  Tax Regime)  : 

The slabs and rates under the old tax regime are also kept unchanged.

For details, visit our webpage https://plannprogress.com/income-tax-slabs-fy-2025-26/

CHANGES PROPOSED  : 

1. The New Income Tax Act, 2025

The biggest structural change is the official rollout of the Income Tax Act, 2025, which will replace the 1961 Act starting April 1, 2026.

• Single “Tax Year”: The confusing distinction between “Assessment Year” and “Previous Year” has been removed. There will now be just one “Tax Year” (April–March).
• Simplified Sections: The law has been compressed from over 800 sections to roughly 536, aiming for simpler language and fewer legal disputes.

2. Major TCS & TDS Relief

The government has moved to reduce the “upfront cash flow” burden on taxpayers through rate rationalisation:

• Overseas Tour Packages: TCS has been slashed from 20% to a flat 2%, with no minimum threshold (the previous ₹7 lakh limit is gone). You will pay a flat 2% TCS on the entire amount, whether your package costs ₹50,000 or ₹50 lakh. There is no longer a “higher rate” for luxury travel.
• Education & Medical Remittances: For funds sent abroad under LRS for these specific purposes, TCS is reduced from 5% to 2%. The cumulative LRS (Liberalised Remittance Scheme) threshold of ₹10 lakh remains.If your foreign education is funded by a bank loan, the ultra-low rate of 0.5% (above the threshold) continues to apply.
• NRI Property Purchases: Resident buyers of property from NRIs can now deposit TDS using their PAN alone; they no longer need to apply for a TAN, simplifying one-time transactions.
• Lower TDS Certificates: A new automated, rule-based system will allow small taxpayers to get “Nil or Lower TDS” certificates without visiting a tax officer.

3. Return Filing & Compliance

• Revised Return Deadline: You now have more time to fix errors. The deadline to file a Revised Return has been extended from December 31 to March 31, subject to a nominal fee.
• Staggered Deadlines: To prevent website crashes, the FM proposed staggering ITR deadlines:
  • ITR-1 & ITR-2 (Salaried): Remains July 31.
  • Non-Audit Business/Trusts: Extended to August 31.

Late Filing Refunds: A major relief for small taxpayers—you can now claim TDS refunds even if you file your return after the due date, without facing previous penal restrictions.

4. Exemptions & Deductions

• Motor Accident Claims: Interest awarded by the Motor Accident Claims Tribunal (MACT) to individuals is now fully tax-exempt. No TDS will be deducted on this interest anymore.
• Senior Citizen Relief  under old tax regime : The deduction for interest income (Section 80TTB) has been doubled from ₹50,000 to ₹1,00,000.

Form 15G/15H Centralization: You can now submit a single Form 15G/H to a depository (like NSDL/CDSL) to cover all your shareholdings across different companies, instead of submitting it to each company individually.

5. Decriminalization

The Budget has removed “prison time” for several procedural lapses. Minor TDS defaults or the non-production of documents are being decriminalized and converted into simple monetary fees/fines.

For  the  FM’s speech and Highlights of the  budget, CLICK HERE

Union Budget 2026 – Government of India