Key Income Tax Updates from Union Budget 2026

Forms 15G and 15H Scrapped for TDS Exemption

In a major compliance relief, taxpayers will no longer be required to submit Form 15G or Form 15H to avoid Tax Deducted at Source (TDS), provided their total income is below the taxable threshold.

The income tax system will now automatically verify income details and ensure that TDS is not deducted where it is not applicable.

This move significantly reduces paperwork for individuals earning interest income from fixed deposits, savings accounts, and similar instruments, especially benefiting senior citizens and low-income earners.

No Change in Income Tax Slabs

The government has retained the existing income tax slabs under both the old and new tax regimes, providing stability and predictability.

Under the old tax regime, income up to ₹2.5 lakh continues to remain tax-free.

Under the new tax regime, income up to ₹3 lakh is tax-free, with rebates effectively making income up to ₹7 lakh tax-free for eligible taxpayers.

The absence of slab changes allows taxpayers to continue their financial and tax planning without disruption.

Extended Deadlines for Filing Income Tax Returns

To provide additional flexibility and reduce filing stress, several income tax return deadlines have been extended.

Revised income tax returns can now be filed up to March 31 of the assessment year, instead of the earlier December 31 deadline, subject to a nominal late fee.

The due date for filing ITR-1 and ITR-2 has been extended to July 31, while non-audit cases such as businesses and trusts can file returns up to August 31.

Reduction in TCS on Overseas Remittances

The Budget has announced a reduction in Tax Collected at Source (TCS) on certain overseas remittances under the Liberalised Remittance Scheme.

For education, medical treatment, and foreign tour packages, TCS has been reduced from 5% to 2%.

However, TCS on other overseas remittances continues at 20%.

This change makes overseas education and medical treatment more affordable for Indian residents.

Introduction of the Income Tax Act, 2025

One of the most significant reforms announced in Budget 2026 is the replacement of the Income Tax Act, 1961 with the new Income Tax Act, 2025.

The new law will come into effect from April 1, 2026, without changing existing tax rates or slabs.

The focus of the new legislation is on simplified language, shorter compliance procedures, faster return processing, and reduced litigation.

Overall Impact on Taxpayers

Union Budget 2026 places strong emphasis on automation, ease of compliance, and taxpayer-friendly administration.

By removing redundant forms, extending deadlines, and simplifying the legal framework, the reforms particularly benefit senior citizens, salaried individuals, and small taxpayers.

Taxpayers are advised to consult a tax professional to understand the personalized impact of these changes on their financial planning.