Finance Minister Nirmala Sitharaman on Sunday, February 1, proposed to increase the time limit for filing the revised income tax returns (ITR); however, no changes were made to income tax (IT) rates and slabs.
The government also proposed a reduction in the tax collected at source (TCS) rate for pursuing education and medical education under the liberalised remittance scheme.
IT rates, slabs
The tax rates under the new tax regime, which is the default tax regime for Individuals, Hindu undivided family (HUF), association of persons (AOP)/body of individuals (BOI), and artificial juridical persons (AJP), are as follows:
| Net Income Range | Tax Rate |
| Up to Rs. 4,00,000 | Nil |
| From Rs 4,00,001 to Rs. 8,00,000 | 5% |
| From Rs 8,00,001 to Rs. 12,00,000 | 10% |
| From Rs 12,00,001 to Rs. 16,00,000 | 15% |
| From Rs 16,00,001 to Rs. 20,00,000 | 20% |
| From Rs 20,00,001 to Rs. 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
However, for annual year (AY) 2026-27, a maximum rebate of Rs 60,000 is allowed under Section 87A, if the total income of an individual is chargeable to tax under Section 115BAC(1A) and the total income does not exceed Rs 12,00,000.
Time limit for filing revised ITR
Though the minister did not change the IT rates and slabs, the time limit for filing revised ITR has been increased from December 31 to March 31, on payment of a nominal fee.
The government also proposed a reduction in the tax collected at source (TCS) for pursuing education and medical education under the liberalised remittance scheme from 5 per cent to 2 per cent.
The TCS rate on the sale of overseas tour packages was cut to 2 per cent from 5 per cent, which was 20 per cent earlier.
In her Budget speech, Sitharaman announced a proposal to exempt awards given by the Motor Accident Claims Tribunal from income tax.
Taxes to bring in 64 paise of every rupee govt earns
For every rupee in the government’s coffers, the largest slice of 64 paise will come from direct and indirect taxes, according to the Union Budget 2026-27 documents.
Around 24 paise will come from borrowings and other liabilities, 10 paise from non-tax revenue like disinvestment, and 2 paise from non-debt capital receipts, the Budget documents showed.
Income tax will yield 21 paise, corporation tax 18 paise, and Goods and Services Tax (GST) 15 paise per rupee of revenue.
Besides, the government looks to earn 6 paise from excise duty and 4 paise from customs levy in every rupee of revenue.
The collection from “borrowings and other liabilities” will be 24 paise per rupee, as per the Union Budget 2026-27 presented in Parliament by Finance Minister Nirmala Sitharaman on Sunday, February 1.
