Budget at a Glance: The Union Budget 2026-27 was presented by Finance Minister Nirmala Sitharaman on 1 February 2026. The Budget introduced significant tax relief for the middle class with zero tax up to ₹12 lakh under the new tax regime, revised tax slabs, increased standard deduction, and several other taxpayer-friendly measures effective from 1 April 2026.
🏛️ Income Tax Changes - Budget 2026
✅ Zero Tax Up to ₹12 Lakh
With ₹75,000 standard deduction and ₹60,000 Section 87A rebate, individuals earning up to ₹12 lakh pay zero income tax under the new regime.
📊 Revised Tax Slabs
New regime now has 7 slabs with rates from 0% to 30%, making it more attractive for middle-class taxpayers.
💼 Standard Deduction Increased
Standard deduction raised to ₹75,000 (from ₹50,000) for salaried employees under the new regime.
🎁 Higher Section 87A Rebate
Rebate limit increased to ₹12 lakh (from ₹7 lakh), benefiting millions of middle-class taxpayers.
New Tax Regime Slabs (FY 2026-27)
| Income Range | Tax Rate | Change from Budget 2025 |
|---|---|---|
| Up to ₹4,00,000 | 0% | No change |
| ₹4L - ₹8L | 5% | No change |
| ₹8L - ₹12L | 10% | No change |
| ₹12L - ₹16L | 15% | No change |
| ₹16L - ₹20L | 20% | No change |
| ₹20L - ₹24L | 25% | No change |
| Above ₹24L | 30% | No change |
Key Changes Summary
| Provision | Budget 2025 | Budget 2026 |
|---|---|---|
| Standard Deduction (New Regime) | ₹50,000 | ₹75,000 |
| Section 87A Rebate Limit | ₹7 lakh | ₹12 lakh |
| Maximum Rebate Amount | ₹25,000 | ₹60,000 |
| Zero Tax Limit (New Regime) | ₹7 lakh | ₹12 lakh |
| TDS on Rent Threshold | ₹2.4 lakh | ₹6 lakh |
💰 Other Tax Announcements
TDS Changes
- Rent (Section 194I): TDS threshold increased from ₹2.4 lakh to ₹6 lakh per year - major relief for tenants and landlords
- Salary TDS: Rates remain unchanged, calculated as per chosen tax regime
- Interest TDS (194A): Threshold remains ₹40,000 (₹50,000 for senior citizens)
- Professional Fees (194J): ₹30,000 threshold unchanged
Capital Gains Tax
| Asset Type | Short-Term (STCG) | Long-Term (LTCG) |
|---|---|---|
| Equity & Equity MF | 20% | 12.5% (above ₹1.25L exemption) |
| Debt MF & Bonds | As per slab | 12.5% |
| Property (Real Estate) | As per slab | 20% (with indexation) |
| Gold & Other Assets | As per slab | 12.5% |
Cryptocurrency/VDA Taxation
- Tax Rate: 30% flat rate (unchanged)
- TDS: 1% on sale transactions (unchanged)
- No Loss Offset: Crypto losses cannot be set off against other income
- No Deductions: No expenses or deductions allowed
🏦 Savings & Investment Schemes - Interest Rates
| Scheme | Interest Rate (FY 2026-27) | Previous Rate |
|---|---|---|
| PPF (Public Provident Fund) | 7.1% | 7.1% |
| EPF (Employees' Provident Fund) | 8.25% | 8.15% |
| NSC (National Savings Certificate) | 7.7% | 7.7% |
| KVP (Kisan Vikas Patra) | 7.5% | 7.5% |
| Sukanya Samriddhi Yojana | 8.2% | 8.2% |
| SCSS (Senior Citizen Savings) | 8.2% | 8.2% |
| Post Office Savings Account | 4.0% | 4.0% |
| 5-Year Post Office TD | 7.5% | 7.5% |
📈 Impact on Different Income Groups
Salary ₹6 Lakh - Annual Tax Saving: ₹31,200
- Budget 2025: Tax = ₹31,200 (new regime)
- Budget 2026: Tax = ₹0 (zero tax with rebate)
- Benefit: Complete tax elimination
Salary ₹8 Lakh - Annual Tax Saving: ₹46,800
- Budget 2025: Tax = ₹46,800
- Budget 2026: Tax = ₹0 (zero tax with rebate)
- Benefit: Complete tax elimination
Salary ₹10 Lakh - Annual Tax Saving: ₹62,400
- Budget 2025: Tax = ₹62,400
- Budget 2026: Tax = ₹0 (zero tax with rebate)
- Benefit: Complete tax elimination
Salary ₹12 Lakh - Annual Tax Saving: ₹62,400
- Budget 2025: Tax = ₹1,14,400
- Budget 2026: Tax = ₹52,000 (after rebate = ₹0)
- Benefit: ₹1,14,400 saved (100% tax elimination)
Salary ₹15 Lakh - Annual Tax Saving: ₹35,000+
- Budget 2025: Tax = ₹1,87,200
- Budget 2026: Tax = ₹1,51,424
- Benefit: ₹35,776 saved annually
🎯 Key Non-Tax Announcements
Education & Skills
- PM Vidyalaxmi Scheme: Collateral-free education loans up to ₹10 lakh with full interest subsidy during moratorium period
- Digital Learning: ₹5,000 crore allocation for digital infrastructure in schools
- Skill Development: 20 lakh youth to be trained in emerging technologies
Healthcare
- Healthcare budget increased to ₹89,000 crore
- Ayushman Bharat expansion to cover additional 5 crore families
- 1,000 new Jan Aushadhi Kendras for affordable medicines
Infrastructure
- Capital expenditure: ₹11.11 lakh crore (11% increase)
- PM Gati Shakti: ₹2.4 lakh crore for transportation infrastructure
- 100 new airports and heliports under UDAN scheme
Agriculture & Rural Development
- Agricultural credit target: ₹22 lakh crore
- PM Kisan beneficiaries: Annual amount unchanged at ₹6,000
- Nano-fertilizer production plants in 100 districts
Green Energy & Environment
- ₹35,000 crore for rooftop solar scheme
- National Hydrogen Mission funding doubled
- Electric vehicle subsidy extended till 2028
MSME & Startups
- MSME credit guarantee cover enhanced to ₹5 lakh crore
- Mudra loan limit increased to ₹20 lakh
- Startup tax holiday extended by 1 year
📊 Budget 2026 vs Budget 2025 - Key Differences
| Aspect | Budget 2025 | Budget 2026 |
|---|---|---|
| Fiscal Deficit (% of GDP) | 5.1% | 4.9% |
| Capital Expenditure | ₹10 lakh crore | ₹11.11 lakh crore |
| Direct Tax Revenue Target | ₹19.45 lakh crore | ₹21.99 lakh crore |
| Indirect Tax Revenue Target | ₹15.93 lakh crore | ₹17.18 lakh crore |
| Total Budget Size | ₹47.66 lakh crore | ₹50.87 lakh crore |
| Defence Allocation | ₹5.94 lakh crore | ₹6.21 lakh crore |
💡 What This Means for You
For Salaried Employees (Below ₹12L):
- ✅ Zero tax burden - complete elimination of income tax
- ✅ Higher take-home salary starting April 2026
- ✅ More disposable income for savings and investments
- ✅ No need to worry about tax planning and deductions
For Mid-Income Group (₹12L - ₹20L):
- ✅ Significant tax savings (₹30K - ₹60K annually)
- ✅ Higher standard deduction reduces taxable income
- ✅ Can still opt for old regime if claiming major deductions
For Tenants & Landlords:
- ✅ TDS on rent threshold increased to ₹6L - relief for most residential tenants
- ✅ Less compliance burden
- ✅ Beneficial for both parties
For Investors:
- 📊 LTCG on equity continues at 12.5% above ₹1.25L exemption
- 📊 Savings scheme rates remain attractive (PPF 7.1%, SCSS 8.2%)
- 📊 EPF rate increased to 8.25%
🗓️ Important Dates - Budget Implementation
| Date | Event |
|---|---|
| 1 February 2026 | Budget 2026 presented in Parliament |
| 1 April 2026 | New tax provisions come into effect (FY 2026-27 begins) |
| April 2026 | Employers adjust TDS as per new slabs |
| 31 July 2027 | ITR filing deadline for FY 2026-27 |
❓ Frequently Asked Questions - Budget 2026
1. When was Budget 2026 presented?
Union Budget 2026-27 was presented by Finance Minister Nirmala Sitharaman on 1 February 2026 in Parliament. The budget provisions are effective from 1 April 2026 (start of FY 2026-27).
2. What is the zero tax limit in Budget 2026?
Budget 2026 introduced zero tax up to ₹12 lakh under the new tax regime. This is achieved through ₹75,000 standard deduction and ₹60,000 Section 87A rebate. Previously, zero tax was available only up to ₹7 lakh.
3. Are tax slabs changed in Budget 2026?
The tax slab structure remains the same as Budget 2025 with 7 slabs in the new regime. However, the impact is significant due to increased standard deduction (₹75K) and higher Section 87A rebate limit (₹12L), effectively creating zero tax up to ₹12 lakh.
4. What about TDS on rent in Budget 2026?
TDS on rent (Section 194I) threshold has been increased from ₹2.4 lakh to ₹6 lakh per year. This means if your annual rent is below ₹6 lakh (₹50,000 per month), no TDS is required to be deducted.
5. Did LTCG rates change in Budget 2026?
No, LTCG rates remain unchanged. Long-term capital gains on equity and equity mutual funds are taxed at 12.5% above ₹1.25 lakh exemption. LTCG on property continues at 20% with indexation benefit.
6. What is the standard deduction for FY 2026-27?
Standard deduction for salaried employees is ₹75,000 under the new tax regime (increased from ₹50,000) and ₹50,000 under the old tax regime for FY 2026-27.
7. Are savings scheme interest rates changed in Budget 2026?
Most savings scheme rates remain unchanged. PPF continues at 7.1%, SCSS and Sukanya Samriddhi at 8.2%, and NSC at 7.7%. However, EPF rate increased marginally to 8.25% from 8.15%.
8. What about GST changes in Budget 2026?
No major GST rate changes were announced in Budget 2026. GST rates continue at 5%, 12%, 18%, and 28% for different goods and services as per the existing structure. Any GST changes are decided by the GST Council separately.
9. Is there any relief for senior citizens in Budget 2026?
While there's no special announcement for senior citizens in the new tax regime, they continue to get higher basic exemption of ₹3 lakh (₹5 lakh for super seniors) under the old regime. Additionally, SCSS interest rate of 8.2% remains attractive for senior citizen savings.
10. When do Budget 2026 changes take effect?
All tax changes announced in Budget 2026 take effect from 1 April 2026, which is the start of Financial Year 2026-27. Employers will adjust TDS from April 2026 salary onwards. The changes will apply when you file ITR for FY 2026-27 (by 31 July 2027).
🎯 Budget 2026 - The Bottom Line
Budget 2026-27 is a taxpayer-friendly budget with significant relief for the middle class. The zero tax benefit up to ₹12 lakh will benefit millions of salaried individuals. Combined with increased standard deduction and higher TDS thresholds, this budget puts more money in the hands of taxpayers. Use our Tax Calculator to see how much you'll save!