Union Budget 2026: Major income tax changes announced — Who gains, who loses
&imwidth=600&imheight=450&format=webp&quality=medium "Union Budget 2026: Major income tax changes announced — Who gains, who loses")
Union Finance Minister Nirmala Sitharaman. Photograph: (ANI)
The new law aims to replace the decades-old Income Tax Act, 1961, with clearer provisions, streamlined rules and easier filing processes. While several measures offer relief to taxpayers, others increase costs for specific segments.
Union Finance Minister Nirmala Sitharaman announced several major direct tax reforms in the Union Budget 2026–27, which was announced on Sunday (February 1, 2026). The budget also included the rollout of the new Income Tax Act, 2025, from April 1, 2026.
The presented budget proposed changes aimed to simplify tax laws, improve compliance, and reduce disputes for both individuals and businesses. The new law aims to replace the decades-old Income Tax Act, 1961, with clearer provisions, streamlined rules and easier filing processes. While several measures offer relief to taxpayers, others increase costs for specific segments.
Here’s a closer look at who stands to gain and who may lose under Budget 2026:
Who Gains
Students and families funding education or medical treatment abroad
Tax Collected at Source on overseas remittances under the Liberalised Remittance Scheme for education and medical treatment will be reduced from 5 per cent to 2 per cent from April 1, 2026, easing cash flow pressures.
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Taxpayers filing revised returns
The deadline to file revised returns will be extended from nine months to 12 months after the end of the relevant assessment year. This gives taxpayers who filed belated returns more time to correct errors.
Small taxpayers and salaried individuals
A new automated system will allow eligible small taxpayers to obtain lower or nil TDS certificates without approaching tax officers. Depositories will also be allowed to accept Form 15G and 15H and forward them to companies, simplifying compliance for investors.
Residents buying property from NRIs
Resident buyers will no longer need to obtain a Tax Deduction and Collection Account Number (TAN) when purchasing property from NRIs. Tax can now be deducted using PAN, reducing delays and compliance hurdles.
HNIs and long-term investors in buybacks
The Budget restores capital gains taxation on share buybacks, allowing investors to pay tax only on net gains rather than the full payout, making buybacks more attractive than dividends.
Who Loses
Equity derivatives traders
Security Transaction Tax on equity futures will rise from 0.02 per cent to 0.05 per cent, while STT on options trades will increase from 0.1 per cent to 0.15 per cent, raising transaction costs for traders.
Promoters using buybacks for tax arbitrage
While investors benefit, promoters will face a higher effective capital gains tax on buybacks to curb misuse, with stricter tax treatment than other shareholders.
Secondary market buyers of Sovereign Gold Bonds
Capital gains tax exemption on SGB redemption will be limited to investors who purchase bonds at the original RBI issue price and hold them till maturity. Those buying SGBs in the secondary market may lose this benefit.
Crypto exchanges and non-compliant taxpayers
Strict penalties have been proposed for crypto exchanges that fail to report transactions. Non-reporting could attract a penalty of Rs 200 per day, while incorrect reporting may lead to fines of up to Rs 50,000.
Mixed Impact Measures
Foreign asset disclosure scheme
A one-time six-month foreign asset disclosure window aims to encourage voluntary compliance. Small and partially compliant taxpayers benefit from reduced penalties, while fully non-compliant taxpayers will still face tax and penalty substitutes.
ITR deadlines clarified
The July 31 deadline for ITR-1 and ITR-2 remains unchanged, while non-audit taxpayers can file till August 31. Revised returns will be allowed until March 31 with a nominal fee.
