In her ninth consecutive Union Budget presented on February 1, 2026, Finance Minister Nirmala Sitharaman announced a major overhaul of India’s direct tax framework. The centerpiece of the announcement is the introduction of the Income Tax Act, 2025, which will officially replace the six-decade-old Income Tax Act of 1961 starting April 1, 2026.
The new Act aims to simplify language, remove redundant provisions, and make the tax system more “trust-based.”
Key Personal Tax Highlights
The FM announced significant changes to compliance timelines and specific relief for healthcare:
- Revised ITR Deadline: In a major relief for taxpayers, the deadline to file Revised Returns has been extended from December 31 to March 31 (subject to a nominal fee).
- Staggered Filing: To reduce portal congestion, filing timelines are now staggered:
- ITR-1 & ITR-2: Deadline remains July 31.
- Non-audit Businesses/Trusts: Deadline extended to August 31.
- Healthcare Relief: Customs duty has been fully exempted on 17 life-saving medicines, focusing specifically on cancer treatment and high-risk chronic diseases.
- Tax Slabs (New Regime): The slabs remain aligned with the structure introduced in 2025:
- ₹0 – ₹4 lakh: Nil
- ₹4 – ₹8 lakh: 5%
- ₹8 – ₹12 lakh: 10%
- ₹12 – ₹16 lakh: 15%
- ₹16 – ₹20 lakh: 20%
- ₹20 – ₹24 lakh: 25%
- Above ₹24 lakh: 30%
Stock Market & Capital Gains
The Budget also introduced measures to curb “hyper-activity” in the derivatives market:
- STT Hike: Securities Transaction Tax (STT) on Futures was raised to 0.05%, and on Options to 0.15%.
- Buybacks: Shares bought back by companies will now be taxed as Capital Gains in the hands of the recipient, rather than as dividends.