10 ways individual taxpayers will be impacted most from Budget 2026:
Tax slabs, ITR filing deadlines, Foreign Asset Disclosure Scheme and more
Feb 2, 2026
Synopsis
Budget 2026 introduces a New Income Tax Act effective April 1, 2026, with staggered ITR filing deadlines and reduced TCS on overseas tour packages. A new Foreign Asset Disclosure Scheme offers regularization options for small taxpayers, while immunity from prosecution is extended for certain foreign non-immovable asset disclosures.
Income return filing timelines for individuals have now been staggered. ITR-1 and ITR-2 filers retain the July 31 deadline. Individuals with non-audit business income and trusts can now file their ITRs till August 31.
While Finance Minister Nirmala Sitharaman made no change in income tax slabs for individual taxpayers in Budget 2026 on Sunday, there were a lot of changes like the New Income Tax Act and new Income Tax Return (ITR) filing deadlines that are likely to impact people from all walks of life. Here, we take you through the 10 things individual taxpayers should know from Budget 2026, as per a report from The Times of India newspaper.
1. No change in income tax slabs
As per the Times of India report income tax slab rates for individuals under both the old and new tax regimes remain unchanged, with no modifications being proposed to education cess and surcharge either.
2. New Income Tax Act, 2025
The Finance Minister also announced that the New Income Tax Act, 2025 will come into effect from April 1, 2026. She has announced that ITR forms and new tax-related rules will be notified soon to provide clarity and the ease of compliance, as per the TOI report.
3. Staggered ITR filing deadlines
Income return filing timelines for individuals have now been staggered. ITR-1 and ITR-2 filers retain the July 31 deadline. Individuals with non-audit business income and trusts can now file their ITRs till August 31.
4. Reduced TCS on overseas tour packages
Tax collected at source (TCS) rates on overseas tour packages will be reduced to a uniform 2% (irrespective of the amount), replacing 5% and 20% tax rates.
Further, TCS on self-financed foreign education and overseas medical treatment above Rs 10 lakh will also be reduced from 5% to 2%.
5. New Foreign Asset Disclosure Scheme
A one-time, six-month Foreign Asset Disclosure Scheme has been introduced for small taxpayers such as students, professionals, tech employees and returning or relocating individuals, as per the TOI report. The scheme has been categorised as-
Category A – Allows those with undisclosed foreign income or assets valued up to Rs 1 crore, to regularise them by paying 30% of fair-market value of assets, or 30% of undisclosed income, plus 30% in lieu of penalty, with immunity from prosecution.
Category B – Allows those who paid taxes but failed to report related foreign assets valued up to Rs 5 crore, to regularise such assets by paying a Rs 1 lakh fee, with full immunity from penalty and prosecution.
6. Immunity from prosecution for these individuals with foreign non-immovable assets
Individuals who failed to disclose foreign non-immovable assets valued below Rs 20 lakh will receive immunity from prosecution. This is applicable retrospectively from October 1, 2024.
7. Resident buyers who can deduct TDS using PAN-based challan
For the sale of immovable property involving non-residents, resident buyers can deduct and deposit tax deducted at source (TDS) using PAN-based challan, removing the need for a TAN and thus simplifying compliance.
8. Nil or lower TDS certificates for small taxpayers
The TOI report says for small taxpayers, a fully automated, rule-based approval for nil or lower TDS certificates will be introduced, eliminating the need for any interaction with tax officers and ensuring faster processing.
9. PROIs now permitted to invest in listed Indian equity through PIS
Individuals who are persons resident outside India (PROIs) are now permitted to invest in listed Indian equity through the Portfolio Investment Scheme (PIS), with the individual limit increased from 5% to 10% and the overall cap for PROIs raised from 10% to 24%.
10. Exemption on foreign-sourced income for these experts
The TOI report says in a move aimed at attracting global talent, exemption on foreign-sourced income for experts visiting India for up to five years has been granted.
To qualify for tax exemption, the individual must have been a non-resident for the previous five years, provide services under a govt-notified scheme and satisfy other conditions as may be prescribed.
[The Economic Times]
