Key Changes for Individual Taxpayers in the Union Budget 2026

What is the first thing an individual taxpayer looks for in the Budget?
Tax reduction!

Don’t lecture me, just tell me one thing “will I be paying less tax next year?”
The short answer is: NO.

There is no proposal to reduce income-tax rates. The slab rates remain exactly the same.

Many readers may stop right here. The climax has already been revealed!
Still, for those who have three minutes to spare, it may be worth reading on.

The second most common question is: Has the return filing due date been extended?

For disciplined taxpayers who compute income correctly, pay taxes on time, and file returns promptly, nothing changes. The original due date to file the return continues to be 31st July.

However, for those who either make mistakes or are late in filing returns, there is some relief. The time limit to file belated or revised returns has now been extended by three additional months.

Earlier, the deadline was 31st December. Going forward, it has been pushed to 31st March.

There is also a genuinely large class of taxpayers, employees of MNCs, individuals who received RSUs or ESOPs, or those who held foreign bank accounts,  who inadvertently failed to report these in India. For such cases, the Budget introduces a one-time compliance window.

Under the FAST-DS 2026 Scheme of the Black Money Act, taxpayers can now declare such foreign assets or income, pay the applicable taxes, and obtain immunity from penalty and prosecution.

This is, without doubt, one of the most welcome and practical measures in this Budget.

Another major relief is on Tax Collected at Source (TCS).

Those travelling abroad and paying for overseas tour packages would have experienced a steep 20% TCS, significantly affecting cash flows. This has now been reduced to 2%.

Similarly, individuals remitting money abroad for education or medical purposes will now pay only 2% TCS, instead of the earlier 5%. This will meaningfully ease upfront cash outflows.

If you are buying a property from an NRI, the resident buyer was earlier required to obtain a TAN, deduct TDS, and file e-TDS returns, a fairly cumbersome process.
From 1st October 2026, the requirement to obtain a TAN will be done away with.

Some smart taxpayers were claiming interest expense against dividend income. The Government has now taken a clear view that such interest should no longer be allowed.
In simple terms: dividend income will be taxable without interest deduction.

Senior citizens and other taxpayers who submit Form 15G or Form 15H often had to visit multiple banks and institutions to submit declarations. The Budget proposes a single, unified declaration mechanism, making compliance far simpler and reducing unnecessary TDS deductions.

Income arising from compulsory acquisition of land was always intended to be tax-exempt, but there were confusion and litigation around this aspect. The Budget has now clearly codified the exemption in the Income-tax Act, putting the matter beyond doubt.

Everyone says trading in F&O is bad, much like how smoking is injurious to health. What does the Government usually do in such cases? Increase taxes.
True to that logic, the Securities Transaction Tax (STT) on derivatives has been increased, clearly signalling an intent to discourage excessive speculative trading.

Finally, taxpayers who have faced penalties for incorrect expense claims may find some comfort. The Budget has rationalised penalty provisions, replacing several harsh penalties with more proportionate and predictable fee-based mechanisms.

That’s all for now.

I will share more insights in the coming days.

CA B E Kumar Prasad
prasad@balakrishnaandco.com | 9845721255

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