No Major Changes to Income Tax Slabs in Union Budget 2026: FM Nirmala Sitharaman Keeps Rates Steady for FY 2026-27
Bengaluru, February 3, 2026 — Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 in Parliament on February 1, 2026, marking her ninth consecutive budget presentation. In a widely anticipated address, Sitharaman focused on reforms, simplification, and targeted relief for taxpayers, but notably refrained from altering the existing income tax slabs or rates for the financial year 2026-27 (FY 2026-27, corresponding to Assessment Year 2027-28).
Multiple reports from reliable sources, including The Times of India, The Economic Times, Mint, and official summaries from the Press Information Bureau (PIB), confirm that no changes were announced to the income tax slabs under either the new tax regime (default since recent years) or the old tax regime This continuity follows significant revisions introduced in the previous budget (likely Budget 2025), which had overhauled the new regime to make it more attractive with higher exemption limits and lower rates in middle brackets.
The decision to maintain the status quo aligns with the government's emphasis on the upcoming implementation of the new Income Tax Act, 2025, which will take effect from April 1, 2026 (the start of FY 2026-27). Sitharaman highlighted this in her speech, stating that a comprehensive review of the Income Tax Act, 1961, has been completed, and the simplified Act, along with updated rules and redesigned forms, will be notified shortly. These changes aim to ease compliance for ordinary citizens, reducing complexity without immediate rate adjustments.
### Key Income Tax Slabs for FY 2026-27 (Unchanged from Previous Year)
Under the new tax regime (default for most individuals)
- Up to ₹4 lakh: Nil
- ₹4 lakh to ₹8 lakh: 5%
- ₹8 lakh to ₹12 lakh: 10%
- ₹12 lakh to ₹16 lakh: 15%
- ₹16 lakh to ₹20 lakh: 20%
- ₹20 lakh to ₹24 lakh: 25%
- Above ₹24 lakh: 30%
(Note: A rebate under Section 87A continues to apply, potentially making income up to certain limits effectively tax-free, along with standard deduction benefits.)
Under the old tax regime(optional, with deductions and exemptions):
- Up to ₹2.5 lakh: Nil (for individuals below 60 years; higher exemptions for seniors)
- ₹2.5 lakh to ₹5 lakh: 5%
- ₹5 lakh to ₹10 lakh: 20%
- Above ₹10 lakh: 30%
(Senior citizens and super seniors have higher basic exemptions in the old regime.)
### Other Tax-Related Announcements in Budget 2026
While personal income tax slabs remained untouched, Sitharaman introduced several taxpayer-friendly measures:
- Extension of the revised ITR filing deadline with a nominal fee.
- Rationalization of Tax Collected at Source (TCS) rates, including reductions for overseas education/medical remittances (from 5% to lower levels in some cases) and specific goods.
- A new deduction for inter-cooperative dividend income under the new regime.
- Shift in taxation of share buybacks to capital gains treatment.
- Reduction in Minimum Alternate Tax (MAT) rate from 15% to 14% for corporates.
These tweaks address compliance burdens and middle-class concerns without broad rate cuts, reflecting fiscal prudence amid global uncertainties.
Experts note that with the new Income Tax Act rolling out soon, the focus has shifted toward simplification and ease of living rather than immediate slab reductions. Taxpayers are advised to review their regime choice (new vs. old) based on deductions and prepare for the updated forms.
The Budget 2026-27 has been described as a "reforms-over-rhetoric" approach, prioritizing long-term structural changes over short-term populist measures. Full details of the new Act's provisions will become clearer once the rules and forms are notified in the coming weeks.
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