Budget 2026 Highlights: Key Takeaways, Important Points, and PDF Download.
Union Budget 2026 Highlights: Key Direct and Indirect Tax Changes
In this post, we will discuss the key highlights of the Union Budget 2026, which focuses on agriculture, MSMEs, skill development, and new-age sectors like AI and robotics. The budget was presented on 01st February 2026 by Hon’ble Finance Minister, Smt. Nirmala Sitharaman.
Some key points from the budget are:
- The due date for filing revised returns is now extended to 31st March, with late fees ranging from Rs.1000 to Rs.5000.
- There are no changes in income tax slabs or capital gains tax rates.
- Sale of shares through buyback will now be taxed under capital gains.
Direct Tax Changes
1.Extension of ITR Due Date for Non-Audit Taxpayers
For taxpayers who are not required to get their accounts audited, except ITR 1 and ITR 2 filers, the due date for filing income tax return is extended to 31st August. This means ITR-3 and ITR-4 can now be filed up to 31st August. For Assessment Year 2026-27, the due date will be 31st August 2026.
Updated ITR Filing Deadlines (FY26):
| ITR Type | Old Deadline (AY26-27) | New Deadline (AY26-27) |
| ITR 1 | 31 July 2026 | 31 July 2026 (No change) |
| ITR 2 | 31 July 2026 | 31 July 2026 (No change) |
| ITR 3 (Non Audit) | 31 July 2026 | 31 August 2026 |
| ITR 4 (Non Audit) | 31 July 2026 | 31 August 2026 |
| Audit Cases | 31 October 2026 | 31 October 2026 (No change) |
2.Revised Return Due Date Extended
The last date to file a revised return is now extended from 31st December to 31st March.
If the revised return is filed after 31st December, late fees will apply as follows:
|
Income Level |
Late Fee |
|
Up to Rs. 5 lakh |
Rs. 1000 |
|
More than Rs. 5 lakh |
Rs. 5000 |
These changes will apply from 01st April 2026.
3.TCS Rate Changes
The revised Tax Collected at Source rates are given below:
|
Specified Goods or Payments |
Present Rate |
Proposed Rate |
|
Alcoholic liquor for human consumption |
1 % |
2 % |
|
Tendu leaves |
1 % |
2 % |
|
Scrap |
1 % |
2 % |
|
Education and medical remittances above Rs 10 lakh under LRS |
5 % |
2 % |
|
Overseas tour package remittance |
5 % up to Rs 10 lakh and 20 % above Rs 10 lakh |
2 % for all amounts |
4.Form 15G and 15H Changes
Form 15G and Form 15H can now be applied for online under section 395 of the Income Tax Act 2025.
Taxpayers can also submit these declarations directly to depositories like NSDL and CDSL. These will then be shared with all companies and fund houses paying interest or dividends.
Earlier, taxpayers had to submit the forms to each payer separately. This change makes the process much easier.
Supply of manpower will now be treated as a works contract for TDS purposes, rather than as technical services.
5.Buyback Tax Changes
Earlier, the entire amount received from the share buyback was treated as dividend income.
As per Budget 2026:
- Sale of shares in a buyback will be taxed under capital gains.
- Additional buyback tax for promoters
- Effective tax rate will be:
- 22% for corporate promoters
- 30% for non-corporate promoters
6.TDS Procedure Simplified for Property Sale by NRI
When an NRI sells property, buyers were earlier required to obtain a TAN.
Now, buyers can use a PAN-based challan and comply with TDS provisions without applying for TAN.
7.Foreign Asset Disclosure Scheme for Small Taxpayers
Residents holding foreign assets, such as bank accounts, ESOPs, or RSUs, must disclose them on their returns.
A one-time disclosure scheme is proposed for small taxpayers who missed disclosure due to a lack of awareness. The last date will be notified separately.
8.Tax Benefits for Non-Residents and Foreign Companies
- Foreign companies providing cloud services through data centres in India will be exempt from tax on income earned in India until 2047.
- Certain non-resident experts staying in India for government-approved schemes may also be eligible for tax exemption.
- MAT will not apply to non-residents opting for presumptive taxation.
9.STT Changes
Securities Transaction Tax is proposed to be increased for some instruments as shown below:
|
Security Type |
Present Rate |
Proposed Rate |
|
Futures |
0.02 percent |
0.05 percent |
|
Options premium |
0.10 percent |
0.15 percent |
|
Options exercise |
0.13 percent |
0.15 percent |
10.IFSC Exemptions
All IFSC companies get a tax holiday for 20 years out of a total period of 25 years.
Important Direct Tax Changes in brief:
- Proposed to reduce TCS rates on overseas tour program package from 5% to 2%; TCS on education and medical remittance under LRS reduced to 2%
- Interest received on Motor accident claims will be exempt from tax, and the TDS requirement will be lifted.
- ITR filing due date for non-audit businesses and trusts will be 31st August instead of 31st July. The due date for Individuals without any business will remain 31st July.
- A 6-month foreign asset disclosure scheme has been introduced to enable taxpayers to disclose their foreign assets and income.
- Updated returns can be filed even after reassessment proceedings are initiated.
- MAT is to be the final tax, and no credit will be allowed. Existing brought forward credits can be utilised.
- Several offences have been decriminalised in the proposed bill.
- The bill has provided a tax holiday until 2047 for foreign companies that use data centres of an Indian reseller entity to provide cloud services to Indian customers.
- A common safe harbour margin of 15.5% will apply to all IT services, and the threshold for availing safe harbour has been raised from ₹300 crores to ₹2,000 crores.
- STT on futures has been increased to 0.05% and on options premiums to 0.15%
Download the PDF of Budget 2026
Indirect Tax Changes
GST Changes
Budget 2026 did not bring any major changes in GST rates, but it focuses on making the GST system stronger and more efficient. The Finance Bill has made some key changes in areas like valuation, input tax credit adjustments, refunds, and dispute resolution.
Post-sales Discount
Section 15 has been updated to explain how post-sale discounts should be treated while calculating GST. Now, it is not necessary to link the discount to an agreement or issue a credit note when the buyer reverses the input tax credit. Linking Credit and Debit Notes with Invoices.
Section 34 has been amended to make the rules for issuing and reporting credit and debit notes stricter. These notes must now be properly linked to the original invoices, especially if they affect tax liability or input tax credit.
Refunds
Section 54 has been changed in two important ways:
- Refunds under an inverted duty structure can now be claimed provisionally, which helps businesses with cash flow.
- Exporters can now claim refunds without any minimum amount limit, even if they have paid GST on exports.
Advance Rulings and Conflicts
Section 10A has been amended to strengthen the role of the National Appellate Authority for Advance Ruling (NAAAR). It will now handle conflicts between advance rulings issued by state authorities, especially for the same applicant or similar questions. This ensures a more uniform interpretation of GST.
IGST Act - Intermediary Services
Section 13 of the IGST Act has been updated by removing the special rule for intermediary services. Now, the place of supply will follow the general rule, which is the location of the recipient. This should reduce disputes and make exports clearer.
These changes will come into effect from 1st April 2026, once notified by the CBIC.
Customs Changes
Customs duty rules are made to promote domestic manufacturing and exports.
Some key points include:
- Simplified tariff structure
- Removal of unnecessary exemptions
- Higher duty-free limits for seafood exporters
- Duty-free treatment for fish caught by Indian vessels
- Extended export timelines for the leather and textile sectors
- Support for solar, battery storage, nuclear, defence, and aircraft manufacturing
- Validity of customs advance rulings extended to 5 years.
Sector-wise Highlights
- Banking reforms through a high-level committee
- Rs.10,000 crore SME Growth Fund
- Higher outlay for electronics manufacturing
- Increased capital expenditure to Rs.12.2 lakh crore
- New skilling and employment initiatives
- AI-based agricultural advisory platform
- Focus on tourism, culture, sports, and social infrastructure
Conclusion
Union Budget 2026 focuses on economic stability, self-reliance, domestic manufacturing, and simpler compliance. The approach is practical and long-term, with the aim of strengthening India’s overall growth and making it easier for businesses and taxpayers to remain compliant.
If you have any questions or need clarification on any Budget 2026 changes, feel free to post them in the comments below. We will be happy to help.
