Date presented: 1 February 2026
Presented by: Finance Minister Nirmala Sitharaman
Context: The Union Budget 2026 🇮🇳 continues India’s efforts to sustain growth amid global economic pressures, while balancing fiscal prudence and long-term tax reforms.
📊 Overview: Growth, Deficit and Fiscal Strategy
The government maintained a focus on macro-economic stability. With strong infrastructure spending and targeted incentives, the budget seeks to keep growth on a steady path while keeping the fiscal deficit trajectory under control. Capital expenditure remains a priority to fuel long-term growth and employment.
📌 Key Tax Highlights
While expectations for dramatic tax cuts were relatively muted — because major reforms were already introduced last year — Budget 2026 reinforces and extends tax measures with meaningful changes for individuals, corporates, and financial intermediation.
🧾 1. Continued Tax Relief for Individuals
The new tax regime — introduced earlier — remains attractive with the zero tax threshold unchanged for most taxpayers. Under the new regime:
- Income up to ₹4 lakh – No tax
- ₹4 lakh to ₹8 lakh – 5%
- ₹8 lakh to ₹12 lakh – 10%
- ₹12 lakh to ₹16 lakh – 15%
- ₹16 lakh to ₹20 lakh – 20%
- ₹20 lakh to ₹24 lakh – 25%
- Above ₹24 lakh – 30%
For many salaried taxpayers, after standard deduction and rebates, the effective tax burden is very low up to ₹12.75 lakh — providing relief to the middle class.
Senior citizens enjoy enhanced exemptions (higher limits up to ₹5 lakh for super seniors), which helps reduce tax burdens for retirees.
📜 2. Modernising the Tax Framework — New Income-Tax Bill
One of the most significant structural reforms announced is the introduction of the Income-Tax Bill 2025, aimed at simplifying and modernising India’s tax law. Key elements of this reform include:
- Streamlined code: Reducing the number of sections from 819 to around 536 for easier compliance.
- Introduction of a “Tax Year” concept, replacing the older terms ‘previous year’ and ‘assessment year’ for clarity.
- Removal of convoluted provisos and explanations to make the tax law easier to interpret.
- Consolidation of related provisions to reduce ambiguity and litigation risk.
👉 The new bill is expected to lay the groundwork for a more transparent and business-friendly tax regime in coming years.
⚖️ 3. Rationalisation of Withholding Taxes & Compliance Rules
Budget 2026 places emphasis on easing compliance costs, especially for businesses and investors:
- Tax deducted at source (TDS) and tax collected at source (TCS) provisions have been rationalised to reduce unnecessary burdens. Relevant thresholds for TCS have been reviewed, and some categories like tax on education remittances and loans are eased.
- Many older, complex compliance norms are being simplified to align with the new IT framework.
💼 4. Sector-Focused Tax Measures
Budget 2026 also introduced some tax-related steps targeted at strengthening key sectors:
Information Technology (IT) & Services
- The safe harbour limit for tax audits in IT services has been increased dramatically from ₹300 crore to ₹2,000 crore, reducing transfer pricing disputes and compliance risk for large service exporters.)
International Financial Services Centre (IFSC)
- Provisions around “deemed dividend” and other financial income types have been eased to attract offshore finance businesses to IFSC jurisdictions.
Non-Resident Investors
- Clarifications on taxation of non-residents buying Indian goods for export and the introduction of presumptive taxation for non-resident service providers aim to improve certainty and strengthen India’s global competitiveness.
💡 What This Means for Our Readers
For a banking audience — including retail customers, savers, and financial professionals — the Budget 2026 delivers:
✅ Continued relief for salaried taxpayers and senior citizens
✅ A clearer, more rationalised tax law on the horizon
✅ Reduced compliance burden for corporates and high-growth sectors
✅ Enhanced thresholds and incentives for financial and IT service exporters
👉 While outright rate cuts were modest, the focus clearly remains on simplification, long-term structural reform, and compliance ease — all positives for taxpayers and businesses alike.
