Last Updated on February 6, 2026
Each Union Budget sets out expectations for income tax relief, particularly for salaried employees, professionals, and small business owners. Prior to the budget 2026, most taxpayers had hoped that the budget would make changes to their slabs or lower the rates to relieve them of taxes. Nevertheless, it is significant to the financial planning and compliance to know what actually changed (and what did not) in order to plan.
This blog disaggregates the announcements of the income tax slabs in Budget 2026, discusses whether the announcements have provided any relief to taxpayers, and how individuals and businesses are supposed to respond on a compliance basis.
Did Budget 2026 include any Income Tax Cuts?
The most significant lesson is simple – the Budget 2026 made no adjustments to changes in income tax slab rates. The new tax regime left the previous slab structure to be used in the assessment year 2026-27 by the government.
This is an implication that taxpayers were not given new rate cuts or even changes in the threshold, even after anticipating relief. It has also been reported that the budget did not bring any substantial slab-based tax relief to the middle-income earners.
The new tax regime that is in default remains in place unless otherwise requested by taxpayers.
New Income Tax Slabs 2026
New Tax Regime
Up to ₹4,00,000 — Nil
₹4,00,001 – ₹8,00,000 — 5%
₹8,00,001 – ₹12,00,000 — 10%
₹12,00,001 – ₹16,00,000 — 15%
₹16,00,001 – ₹20,00,000 — 20%
₹20,00,001 – ₹24,00,000 — 25%
Above ₹24,00,000 — 30%
Also, the rebate allowances imply that taxable income to a point of Rs.12 lakh is practically liable to zero taxation, with conditions and deductions as usual deductions.
Old Tax Regime (unchanged)
Up to ₹2,50,000 — Nil
₹2,50,001 – ₹5,00,000 — 5%
₹5,00,001 – ₹10,00,000 — 20%
Above ₹10,00,000 — 30%
The old regime still has a higher exemption threshold in the case of senior citizens.
The taxpayers still have a choice of regimes to adopt in a year (except where there is a limitation on business income).
Other Income Tax Compliance amendments in Budget 2026
Despite the fact that there were no changes in slabs, some updates associated with compliance were provided:
1. Deadline Extension of Revised Return
The deadline for the submission of an altered income tax return has been set to March 31, which creates more time to make corrections.
2. Introduction of the New Income Tax Act Framework
In April 2026, a new framework of the income tax legislation is to be introduced that will replace the decades-old law and will attempt to streamline the tax provisions.
3. Reduction in TCS Rates
The occurrences affecting cash flow are:
- Tour packages abroad – cut to 2 per cent.
- Education and medical remittances outside the country- cut down to 2%
These changes will help minimise the initial tax outlays on some transactions.
The Implication of This to the Taxpayers
From a practical standpoint:
- No immediate reduction in income tax liability from slab revisions.
- Still depending on deductions and plans.
- More attention should be paid to the selection of the appropriate tax regime.
- Minor compliance relief because of long filing periods.
For a person with a complex financial structure or multiple sources of income, business and professional tax planning is important to make the most of savings.
How Kanakkupillai Helps Taxpayers?
It can be difficult to cope with budget alterations and select an appropriate tax strategy. Kanakkupillai supports people, organisations, and companies by:
- Tax planning and filing of income tax.
- Comparative and optimisation of regimes.
- Compliance advisory
- Return support and documentation.
- Ongoing tax consultation
Our specialists assist taxpayers in aligning their financial decisions with regulatory changes to ensure compliance and reduce unnecessary tax dispensation.
Conclusion
Budget 2026 has not introduced any cuts to the income tax slabs; therefore, taxpayers need to work under the current rate regime. Nevertheless, the slight compliance advantages are delivered by procedural softening and TCS modifications.
Without reduction of the rates, strategic tax planning, use of deductions and proper selection of the regime are the best means of dealing with the tax liability. Expert advice can help individuals and companies to make informed decisions that are consistent with changing tax rules.
FAQs
1. Does Budget 2026 alter income tax slabs?
No, the government did not make new rate cuts to cancel the current slab structure.
2. Is defaulter still the new tax regime?
Yes, the new regime of taxes still remains as the default regime unless the taxpayers choose to be in the old regime.
3. Tax Relief: What did the taxpayers get in Budget 2026?
The procedural modifications, including extended revised return filing dates and lowering TCS rates on some transactions, were the primary relief.
4. Is it possible for taxpayers to change the regimes?
Yes, the people who have no business income are able to change regimes each year according to the suitability.
5. What can be done to minimise liability in the absence of slab changes?
It is possible to optimise tax results with the help of deductions, rebates, investment planning, and professional advisory support.
