On February 1, 2026, Finance Minister Nirmala Sitharaman presented her ninth consecutive Union Budget—a historic moment as the first budget presented in the newly named Kartavya Bhavan. Budget 2026-27 focuses on tax simplification, infrastructure growth, and self-reliance with a total budget size of ₹53.5 lakh crore.

This comprehensive guide breaks down what Budget 2026 means for businesses, salaried individuals, and taxpayers across India.

Budget 2026-27 at a Glance

Total Budget Size: ₹53.5 lakh crore
Capital Expenditure: ₹12.2 lakh crore (9% increase)
Fiscal Deficit Target: 4.3% of GDP
GDP Growth Projection: 6.8%-7.2%
Zero Tax Threshold: Up to ₹12.75 lakh (with standard deduction)

The Big Picture: Tax Relief Meets Infrastructure Push

Budget 2026 delivers meaningful tax relief for middle-class taxpayers while significantly boosting infrastructure investment and promoting domestic manufacturing through self-reliance initiatives.

Three Key Pillars:

1. Tax Simplification: New Income Tax Act and rationalized slabs

2. Infrastructure Growth: Record ₹12.2 lakh crore capex

3. Atmanirbhar Bharat: Semiconductor Mission 2.0, rare earth corridors, nuclear energy partnerships

Income Tax: Major Relief for Middle Class

Historic Tax Relief: Zero Tax Up to ₹12 Lakh

Biggest Announcement: No income tax for earners up to ₹12 lakh under the New Tax Regime.

With the increased standard deduction of ₹75,000 (up from ₹50,000), this effectively means zero tax up to ₹12.75 lakh.

Rationalized Tax Slabs

The new tax regime slabs have been significantly improved:

Key Benefit: The 30% tax rate now kicks in only above ₹24 lakh (previously ₹15 lakh), providing substantial relief to upper-middle-class taxpayers.

Standard Deduction Increased

Old Limit: ₹50,000
New Limit: ₹75,000

Impact: Additional ₹25,000 deduction reduces tax liability for all salaried individuals under the new regime.

Major Compliance Simplifications

While tax rates stayed flat, Budget 2026 introduced several relief measures:

1. Extended Deadline for Revised Returns

Old Rule: Revised ITR deadline was December 31
New Rule: Extended to March 31 with nominal late fees (₹1,000-₹5,000)

Impact: More time to correct genuine errors without penalties.

2. Longer Filing Window for Non-Audit Cases

Old Rule: ITR-3 and ITR-4 due by July 31
New Rule: Extended to August 31 (from AY 2026-27 onwards)

Impact: Reduces year-end compliance pressure for small businesses and professionals.

3. No Interest on Penalty During Appeals

New Provision: No interest liability on penalty amounts during the appeal period before the first appellate authority, regardless of outcome.

Impact: Significant relief for taxpayers fighting assessments.

The New Income Tax Act, 2025: What You Must Know

The most significant announcement is the implementation of the Income Tax Act, 2025, replacing the 64-year-old Income-tax Act, 1961.

Why the Change?

The 1961 Act had become unmanageable:

• Amended 65 times with over 4,000 amendments

• 819 sections across 47 chapters

• Over 512,000 words of complex legal language

What's New in the 2025 Act?

Structural Simplification:

• Sections reduced from 819 to 536 (35% reduction)

• Chapters reduced from 47 to 23

• Word count cut from 512,000 to 260,000 (50% shorter)

• 39 new tables and 40 new formulas for clarity

Key Terminology Change: The confusing "Assessment Year" and "Previous Year" concepts are replaced with a single term: "Tax Year".

Important: No tax rate changes or major policy shifts—just clearer, simpler language and structure.

Effective Date: April 1, 2026

GST and Indirect Tax Changes

TCS Rationalization for Overseas Expenses

Relief for LRS Remittances: Tax Collected at Source (TCS) on foreign remittances for education, medical treatment, and overseas tours has been reduced.

Impact: Easier cash flow for families with students abroad or medical needs.

Form 15G/15H Simplification

New Provision: Depositories can now accept Form 15G or 15H directly from investors and provide it to relevant companies.

Impact: Small investors can avoid TDS on dividend income more easily without submitting forms to multiple companies.

Higher STT on F&O Trading

Increased Rates:

• Futures: STT increased from 0.02% to 0.05%

• Options: STT also increased on derivatives

Impact: Higher transaction costs for active traders in futures and options.

Capital Gains and Investment Changes

Sovereign Gold Bonds (SGB) Tax Exemption Revised

Major Change: Tax exemption on capital gains from SGBs is now available only to original subscribers, not secondary market buyers.

Who's Affected: Investors who purchased SGBs from the secondary market will now pay capital gains tax upon redemption.

Effective: From FY 2026-27

Buyback Taxation Framework Revamped

New Rule: Sale of shares in a buyback will now be taxed under capital gains provisions.

Impact: Changes how companies structure buyback offers and how shareholders calculate tax liability.

Business and Corporate Tax Updates

Minimum Alternate Tax (MAT) Changes

For Companies in New Regime: MAT will become a final tax (14% rate) for companies opting for the new corporate tax regime from April 1, 2026.

For Non-Residents: MAT exemption for all non-residents paying tax under presumptive taxation scheme.

FDI Limit Increase for Insurance

Old Limit: 74%
New Limit: 100% for companies investing entire premium in India

Guardrails: Current FDI conditionalities will be reviewed and simplified.

Impact: More foreign investment in Indian insurance sector.

Tax Holiday for IFSC Units Extended

Old Benefit: 10 out of 15 years tax holiday
New Benefit: 20 out of 25 years tax holiday, with 15% post-holiday tax rate

Impact: India becomes more attractive as a global financial hub.

Cloud Services Tax Incentive

New Provision: Foreign companies providing cloud services using Indian data centers get tax exemption until 2047 on India-sourced income.

Impact: Boosts India's digital infrastructure and attracts tech investment.

Relief for NRIs and Global Professionals

Extended Tax Exemption for Non-Resident Experts

New Benefit: Non-resident experts working in India under notified Central Government schemes can get tax exemption on global income for 5 consecutive years.

Impact: Attracts global talent to India for longer periods.

One-Time Foreign Asset Disclosure Scheme

New Amnesty: A one-time scheme for non-compliant small taxpayers to disclose foreign assets without severe penalties.

Target: Helps inadvertent non-disclosures get regularized.

Deadline: To be notified in official gazette.

NRI Property Purchase Norms Eased

Relaxation: Simplified regulations for NRIs purchasing property in India.

Impact: Encourages NRI investment in Indian real estate.

Sector-Specific Announcements

Manufacturing Push

Budget 2026 places manufacturing as the "heartbeat of India's growth story" with:

• Support for textiles, semiconductors, rare-earth mining

• MSME ecosystem strengthening

• Reduced input costs through domestic manufacturing support

Healthcare and Ayurveda

• 3 new All India Institutes of Ayurveda to be established

• Focus on AYUSH ecosystem expansion

• Quality enhancement and global integration of traditional medicine

Motor Accident Compensation Relief

Tax Exemption: Interest received on compensation awarded by Motor Accident Claims Tribunals will be tax-free and exempt from TDS.

Impact: Relief for accident victims receiving compensation.

Fiscal Discipline Maintained

Fiscal Deficit Targets:

• FY 2025-26 (RE): 4.4% of GDP

• FY 2026-27 (BE): 4.3% of GDP

Public Capital Expenditure: Increased to ₹12.2 lakh crore for infrastructure development.

State Grants: ₹1.4 lakh crore grants to states with 41% vertical devolution.

Economic Growth Projections

FY26 Real GDP Growth: 7.4% (making India the fastest-growing major economy for the fourth consecutive year)

FY27 Projected Growth: 6.8%-7.2%

Private Consumption: Grew 7.0% in FY26, reaching 61.5% of GDP—highest since FY12

Gross Fixed Capital Formation: Grew 7.8%, maintaining 30% share of GDP

What Budget 2026 Means for Different Groups

For Salaried Employees

Limited Direct Relief: No changes to tax slabs or standard deduction.

Indirect Benefits:

• Extended revised return deadline reduces penalty stress

• Simplified compliance procedures

• No interest on penalty during appeals

For Small Businesses

Major Benefits:

• Extended ITR filing deadline (August 31 vs July 31)

• Clearer tax laws from April 2026

• Reduced compliance burden with simplified forms

• Manufacturing and MSME sector support

For Investors

Mixed Impact:

• Higher STT on F&O trading (negative for active traders)

• SGB tax exemption limited to original subscribers (negative for secondary buyers)

• Revised buyback taxation (requires strategy review)

• No changes to LTCG or other investment taxes

For Chartered Accountants and Tax Professionals

Significant Impact:

• New Income Tax Act requires learning updated provisions

• Extended deadlines reduce peak-season pressure

• Simplified compliance reduces routine work

• More time for strategic advisory services

Technology and Compliance: The hisabkitab Advantage

With Budget 2026's emphasis on simplified compliance and the transition to the New Income Tax Act, businesses need accounting software that adapts automatically.

How hisabkitab Prepares You for Budget 2026 Changes

Automatic Updates: When the New Income Tax Act takes effect April 1, 2026, hisabkitab will automatically update section references, forms, and validations—no manual template editing needed.

Extended Deadline Support: Built-in reminders for new August 31 ITR filing deadline and March 31 revised return deadline.

AI-Powered Data Entry: Upload invoices, bills, and bank statements—AI extracts all data automatically, reducing manual compliance work so you can focus on strategic planning.

GST Integration: Handles TCS changes, Form 15G/15H simplifications, and all GST compliance automatically.

Real-Time Dashboard: Track your tax position, pending filings, and compliance status in one place.

Affordable Compliance: Plans from ₹2,999/year make professional-grade tax compliance accessible to all businesses.

Action Items: What to Do Now

This Month (February 2026)

✓ Review Budget 2026 announcements with your CA or tax advisor
✓ Assess impact on your tax planning strategy
✓ Update internal financial projections if affected by STT or SGB changes
✓ Check if you qualify for any new benefits (NRI schemes, cloud services exemption, etc.)

Before March 31, 2026

✓ Utilize extended revised return deadline if you need to correct FY 2024-25 returns
✓ Complete any pending compliance before New Income Tax Act takes effect
✓ Ensure your accounting software is ready for April 2026 transition

Before April 1, 2026

✓ Familiarize yourself with New Income Tax Act terminology and structure
✓ Update all tax documentation templates with new Act references
✓ Train accounting team on new compliance procedures
✓ Verify your software vendor's readiness for the new Act

The Bottom Line

Budget 2026 signals a shift from rate cuts to compliance simplification. While salaried taxpayers didn't get the tax relief many hoped for, the extended deadlines, reduced interest burden, and clearer tax laws provide meaningful practical benefits.

For businesses, the focus on manufacturing, infrastructure, and digital economy—combined with simplified compliance—creates a favorable environment for growth.

The introduction of the New Income Tax Act, 2025 from April 1, 2026, marks a historic modernization of India's tax system. Success in this new era will depend on having the right systems and processes in place.

Stay Compliant with hisabkitab

As Budget 2026 changes take effect and the New Income Tax Act becomes law, hisabkitab ensures you stay ahead:

✓ Automatic compliance updates for all Budget 2026 changes
✓ New Act ready from April 1, 2026
✓ AI-powered automation reducing manual work
✓ Extended deadline support built into reminders
✓ Real-time tax tracking for better planning
✓ Free trial to experience the difference

Visit hisabkitab.co to start your free trial and experience tax compliance designed for India's evolving tax landscape.

Budget 2026 may not have delivered dramatic tax cuts, but its focus on simplification and the New Income Tax Act creates a foundation for easier, more transparent compliance. With the right tools and preparation, businesses and taxpayers can navigate these changes smoothly and focus on growth rather than paperwork.