Finance Minister Nirmala Sitharaman on Sunday presented her ninth consecutive Union Budget, creating history. In her direct tax announcements, the Finance Minister said there will be no change in income tax rates or slabs in Budget 2026, offering stability but no immediate relief to taxpayers.
However, the Budget proposed a sharp increase in taxes on derivatives trading. The securities transaction tax (STT) on futures has been proposed to be raised by over 50% to 0.05% from 0.02%, while STT on options is set to jump to 0.15% from the current 0.01%.
Key direct tax announcements in Budget 2026
The Finance Minister proposed extending the revised income tax return (ITR) filing deadline to March 31 from December 31, giving taxpayers more time to file updated returns.
Interest awarded by motor accident claims tribunals to natural persons will be fully exempt from income tax, and the provision for tax deduction at source (TDS) on such interest will be removed.
To ease overseas spending, the TCS rate on overseas tour programme packages has been proposed to be reduced to 2%, down from the existing 5% and 20%, without any threshold limit.
Similarly, the TCS rate under the Liberalised Remittance Scheme (LRS) for education and medical purposes will be reduced from 5% to 2%.
For small taxpayers, the Budget proposes a new automated, rule-based system to obtain lower or nil TDS certificates, eliminating the need to apply to the assessing officer.
In another investor-friendly move, depositories will be allowed to accept Form 15G and Form 15H from investors holding securities in multiple companies and share them directly with the relevant firms, easing compliance and reducing paperwork.
Overall, while income tax slabs remain unchanged, Budget 2026 focuses on compliance simplification, targeted tax relief, and higher levies on speculative trading.