Nirmala Sitharaman presented her ninth consecutive Union Budget on 1 February 2026 — a record in itself. The focus this time: economic growth, tax compliance, infrastructure, and pushing India toward self-reliance. If you're a salaried employee, business owner, investor, or just someone trying to figure out how this affects you — here's everything broken down.
Particulars
Announcement
Infrastructure Capex
₹12.2 lakh crore
Income Tax Slabs
No change
Revised Return Deadline
Extended to 31 March
Non-Audit Business ITR Due Date
Extended to 31 August
Defence Allocation
₹7.85 lakh crore
Focus Areas
Infrastructure, MSMEs, AI, Semiconductors, Railways
New Income Tax Act
Effective from 1 April 2026
Sitharaman called this a Yuva Shakti-driven Budget, built around three core duties: accelerating economic growth, building the capacity of people, and providing resources, amenities, and opportunities to every family, community, region, and sector.
Think of it as the government's stated commitment to growth that doesn't leave people behind — Sabka Saath, Sabka Vikas.
No changes to income tax slabs or rates. If you were hoping for relief there, it hasn't come — at least not this year.
ITR Due Date Extended for Non-Audit Taxpayers
For freelancers, traders, and business owners filing ITR-3 or ITR-4, the due date has been pushed to 31 August (from the earlier 31 July). This kicks in from FY 2025-26 (AY 2026-27), meaning the first extended deadline is 31 August 2026.
ITR-1 and ITR-2 filers are not affected by this change.
Revised Return Deadline Now Extends to 31 March
Made an error in your filed return? You now have until 31 March to file a revised return — up from 31 December earlier. But file after 31 December and late fees apply:
Income Level
Late Fee
Up to ₹5 lakh
₹1,000
Above ₹5 lakh
₹5,000
Both changes are effective from 1 April 2026.
STT Hike — Not What Traders Were Hoping For
Securities Transaction Tax has gone up on select instruments:
Instrument
Present Rate
Proposed Rate
Futures
0.02%
0.05%
Options Premium
0.10%
0.15%
Options Exercise
0.13%
This is a meaningful cost increase for active F&O traders, especially those running high-volume strategies.
Sovereign Gold Bonds: The New Tax Condition
SGBs are still tax-free on redemption — but only if you were the original subscriber. If you bought SGBs from the secondary market, the tax-free benefit no longer applies from the upcoming tax year. Interest on SGBs remains fully taxable regardless.
Dividend Income: The Deduction Is Gone
The 20% deduction previously available against dividend income and mutual fund unit income has been removed. Both are now fully taxable under "Income from Other Sources." Mutual fund investors with large dividend payouts will feel this directly.
TCS Rate Changes
Category
Old Rate
New Rate
Alcoholic liquor, scrap, tendu leaves
1%
2%
Education/medical remittances above ₹10L (LRS)
5%
Overseas tour package
5% (up to ₹10L), 20% (above)
2% flat
The reduction in TCS on overseas remittances for education and travel is a genuine relief for families sending money abroad.
Form 15G / 15H: Digital Filing Now Allowed
Lower TDS certificates under section 395 of the new Income Tax Act can now be applied for electronically. More usefully, investors can submit their declarations directly to depositories (CDSL, NSDL), which will then forward them to all paying entities. No more submitting separately to every fund house.
Buyback Taxation: Now Under Capital Gains
Share buyback proceeds are no longer taxed as dividend income. They'll be taxed as capital gains going forward. However, corporate promoters face an additional buyback tax, bringing effective tax on buyback transactions to 22% for corporate promoters and 30% for non-corporate promoters.
NRI Property Sales: No TAN Needed for Buyers
When an NRI sells immovable property, buyers previously had to apply for a TAN to deduct TDS. Under Budget 2026, buyers can use a PAN-based challan instead. A small but practical simplification.
Foreign Asset Disclosure Scheme
A new scheme under Finance Bill 2026 nudges small taxpayers — former students with dormant foreign accounts, ESOP holders of foreign companies — to disclose foreign assets without fear of heavy penalties. It runs in two parts:
Foreign companies providing cloud services through India-based data centres are tax-exempt on Indian income until 2047. Non-resident experts on Central Government-notified projects staying in India beyond five consecutive years may also qualify for exemption. MAT is exempt for non-residents taxed under the presumptive scheme.
IFSC Exemptions Extended
For Overseas Banking Units in SEZs, the tax holiday stretches to 20 years (from 10). IFSC units get a 20-year holiday out of 25 consecutive years (previously 10 out of 15). A meaningful signal to financial institutions looking at GIFT City.
A ₹10,000 crore SME Growth Fund is proposed to back high-potential MSMEs and build "Champion SMEs." The Self-Reliant India Fund gets a ₹2,000 crore top-up to keep supporting micro enterprises with risk capital.
TReDS — the platform for invoice discounting — gets reforms too, including mandatory usage by CPSEs and credit guarantee support. For small businesses that have struggled with delayed payments, this could make a real difference.
A High-Level Committee on Banking for Viksit Bharat is proposed to align sector reforms with India's next growth phase. PFC and REC are up for restructuring. Measures to deepen corporate and municipal bond markets are also on the table for long-term financing.
Bharat-VISTAAR — an AI-enabled agricultural advisory platform — is proposed to support farm decision-making. High-value crops like coconut, cocoa, cashew, sandalwood, and nuts get focused attention to improve farmer incomes.
Public capital expenditure is proposed at ₹12.2 lakh crore for FY 2026-27. Freight corridors and national waterways get expansion to cut logistics costs. Seven high-speed rail corridors are proposed, connecting Hyderabad, Bengaluru, Chennai, Delhi, and other major cities. City Economic Regions are a new framework to drive city-led growth.
The Railways Ministry received an allocation of ₹2,77,830 crore for capital expenditure — 10.25% higher than the previous year and the highest ever.
Tourism, Culture & Sports: Infrastructure strengthening, archaeological site development, and a long-term sports mission.
Skills & Employment: A High-Powered 'Education to Employment and Enterprise' Standing Committee is proposed. Skilling initiatives target healthcare, tourism, AVGC, and design.
Semiconductor Mission 2.0 was announced, and dedicated Rare Earth Corridors are to be set up for mining, processing, research, and manufacturing. India is also proposed to be developed as a global biopharma manufacturing hub.
GST: Tightening the System
No headline rate changes. The focus is on compliance and structural accuracy:
All changes effective from 1 April 2026, subject to CBIC notification.
The core direction here is simple: make it easier to produce in India, harder to import what India can make. Key changes:
Budget Impact
Key Reason
Salaried Employees
Neutral
No slab changes; compliance simplification only
MSMEs
Positive
SME Growth Fund, TReDS reforms, credit access
Startups
AI, deep-tech, innovation support continues
Manufacturing
Customs incentives, domestic production push
Infrastructure Companies
Highly Positive
₹12.2 lakh crore capex allocation
Railways
Highest-ever allocation, high-speed corridors
Semiconductor Industry
Mission 2.0, policy support
AI & Tech Sector
Digital infra focus, data centre tax holiday
Exporters
Logistics improvements, duty restructuring
Agriculture
AI advisory, high-value crop programmes
F&O Traders
Negative
STT hike across futures and options
Dividend/MF Investors
20% deduction removed
FAQs
A: No, Budget 2026 does not change income tax slabs or rates. Salaried individuals and other taxpayers will continue to pay tax at the same rates as before. The key changes are in compliance timelines, TCS rates, and procedural simplifications.
A: For non-audit taxpayers filing ITR-3 or ITR-4 — typically freelancers, traders, and business owners — the due date is extended to 31 August, starting from AY 2026-27. This change does not apply to ITR-1 and ITR-2 filers.
A: Under Budget 2026 changes, you can now file a revised return until 31 March. However, filing after 31 December attracts a late fee — ₹1,000 if income is up to ₹5 lakh, and ₹5,000 if income exceeds ₹5 lakh.
A: SGBs remain tax-free on redemption, but only for original subscribers who hold until redemption. If you purchased SGBs from the secondary market, the tax exemption no longer applies. Interest on SGBs continues to be taxable for everyone.
A: The government has proposed ₹12.2 lakh crore in public capital expenditure for FY 2026-27, up from the previous year. This covers spending on infrastructure, railways, roads, defence, and other public assets. It is the largest capital outlay in India's budget history and is aimed at accelerating economic growth and job creation.
A: Securities Transaction Tax on futures has been hiked from 0.02% to 0.05%, on options premium from 0.10% to 0.15%, and on options exercise from 0.13% to 0.15%. For high-frequency traders, this increases the cost of every transaction and will likely compress margins.
A: A ₹10,000 crore SME Growth Fund is proposed to identify and support high-potential MSMEs, effectively creating "Champion SMEs" with improved access to capital, credit, and growth resources. The existing Self-Reliant India Fund also gets a ₹2,000 crore top-up.
A: Budget 2026 does not change GST rates. Instead, it strengthens compliance: stricter linking of credit notes to invoices, provisional refunds for inverted duty structure claims, removal of the minimum refund threshold for exporters, and a stronger appellate mechanism through NAAAR for conflicting advance rulings.
A: A new scheme targets small taxpayers — such as former students with dormant foreign bank accounts and ESOP holders — who missed foreign asset disclosures inadvertently. Part A covers cases with undisclosed assets up to ₹1 crore; Part B covers cases where income was declared but the linked assets were not.
A: Infrastructure companies, railways, semiconductor manufacturers, MSME businesses, and the AI/technology sector see the clearest gains. F&O traders and mutual fund investors receiving dividends face higher tax burdens. Salaried employees see no direct change in tax outgo but benefit from simplified compliance processes.
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