Quick answer
The Union Budget 2026-27, presented on 1 February 2026, kept income tax slabs unchanged but extended the revised return deadline to 31 March, cut TCS on overseas tours and education remittances to 2%, made MAT a final tax at 14%, taxed buybacks as capital gains, raised STT on F&O and removed the TAN requirement for individuals buying property from NRIs.
Key takeaways
- No change in slabs: income up to ₹12 lakh stays tax-free under the new regime after rebate.
- Revised returns can now be filed up to 31 March, with a small fee after 31 December.
- TCS cut to 2% on overseas tour packages and LRS remittances for education and medical treatment.
- Non-audit business returns due 31 August instead of 31 July.
- MAT becomes a final tax at 14%.
Table of contents
Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 on 1 February 2026, the first Budget under the new Income-tax Act, 2025, which took effect on 1 April 2026. Here are the changes that matter most to our clients in Kerala.
Personal income tax
The new tax regime slabs are unchanged:
| Income | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4–8 lakh | 5% |
| ₹8–12 lakh | 10% |
| ₹12–16 lakh | 15% |
| ₹16–20 lakh | 20% |
| ₹20–24 lakh | 25% |
| Above ₹24 lakh | 30% |
The rebate (tax-free income up to ₹12 lakh) and the ₹75,000 standard deduction continue. The old regime remains available as an option.
Returns, revisions and penalties
- Revised return: time limit extended from 9 to 12 months after the year end (31 March), with a fee of ₹1,000 or ₹5,000 for revisions after 31 December.
- Due dates: non-audit business cases and trusts move to 31 August.
- Updated returns allowed even after reassessment proceedings start, with an extra 10% tax.
- Assessment and penalty to be decided in a common order; pre-deposit for appeals cut from 20% to 10%.
- Many penalties for technical defaults converted into fees.
TDS and TCS
- TCS on overseas tour packages and on LRS remittances for education and medical treatment cut to 2%.
- Manpower supply treated as “work” for TDS on contractors (1% or 2%).
- Lower or nil TDS certificates through an automated online process.
- NRI property sales: resident individual buyers no longer need a TAN (from 1 October 2026).
Business and capital markets
- MAT becomes a final tax at 14% (from 15%); no new MAT credit after 1 April 2026.
- Buyback proceeds taxed as capital gains for shareholders.
- STT on F&O increased from 1 April 2026: futures 0.05%, options 0.15%.
- Separate ICDS computation dropped from tax year 2027-28.
Foreign assets
A one-time foreign asset disclosure window lets small taxpayers regularise undisclosed foreign income or unreported foreign assets, with immunity from prosecution. Talk to us before using it.
Need help applying these changes? Contact our income tax consultants in Kochi.
Sources: Budget Speech 2026-27 and Memorandum explaining the Finance Bill 2026 (indiabudget.gov.in). Changes are as proposed in the Finance Bill.
Frequently Asked Questions
01.Did Budget 2026-27 change income tax slabs?
No. The new regime slabs stay at nil up to ₹4 lakh, then 5%, 10%, 15%, 20%, 25% and 30% above ₹24 lakh. With the rebate and the ₹75,000 standard deduction for salaried taxpayers, income up to ₹12 lakh (₹12.75 lakh for salaried) remains tax-free.
02.What is the new due date for revised returns?
Revised returns can be filed up to 12 months from the end of the tax year, that is 31 March. A fee of ₹1,000 (income up to ₹5 lakh) or ₹5,000 applies if the return is revised after 31 December.
03.What is the ITR due date for businesses without audit?
For business taxpayers not liable to audit, and for trusts, the due date moves to 31 August. ITR-1 and ITR-2 filers stay at 31 July; audit cases at 31 October and transfer pricing cases at 30 November.
04.What changed for NRIs selling property in India?
From 1 October 2026, a resident individual or HUF buying property from an NRI no longer needs a TAN to deduct and deposit TDS; it can be paid through a PAN-based challan.
