Major Changes For Taxpayers In The Union Budget Of 2026-27

Recently, the Finance Minister of India, Smt Nirmala Sitharaman, announced and presented the specifics of the Union Budget for the year 2026-27. The people of India were desperately waiting for this announcement. As expected, there were several changes, like a revised return timeline 2026, income tax slabs unchanged 2026, changes in punitive measures, etc., introduced through it that will have a major impact on all the taxpayers of the nation.

Read the article to learn more about the changes introduced through the Union Budget 2026, such as changes in punitive measures of income tax compliance reforms and others.

Union Budget 2026 Tax Changes

There are several major and minor changes and upgrades in the Union Budget of 2026-27. Some of the major tax law changes India 2026 are described below in detail for one’s clarity and better understanding.

1. Changes In STT

Under this year’s Union Budget, the rate of Securities Transaction Tax (STT) on the sale of an option in securities has been raised from 0.125% to 0.15%. Also, from now on, the tax will be charged on the option’s intrinsic prices.

On the other hand, the rate of Securities Transaction Tax on the sale of a future in securities has been raised from 0.02% to 0.05%, and the tax will be charged on the traded price of the future.

This change of rate will have a significant impact on those taxpayers who are a part of financial markets, specifically futures and options (F&O) trading.

2. No Tax On Interest From Motor Accident Compensation

Earlier, the primary compensation amount received due to a motor accident was considered income, and therefore, it made the interest taxable. But from now on, this would not be the case. The interest earned on compensation awarded by the Motor Accident Claims Tribunal (MACT) to a person or their legal heirs due to various reasons, like death, disability, or injury, will be completely free from any kind of tax charges.

3. ITR Filing Deadline Changes

One of the major changes in the Union Budget of 2026 is the extension of the timeline for filing revised Income Tax Returns (ITR). Earlier, the last date was set at 31st December of an Assessment Year (AY). However, as per the revised return timeline 2026, the deadline has been extended to 31st March of the Assessment Year.

This change will help taxpayers, especially those who have missed filing for deductions, exemptions, or other related adjustments. This extension of the deadline will hopefully help the taxpayers comply with it much more effectively than before. Taxpayers can now take a bit more time for accurate accounting and planning for a better tax compliance strategy.

Read More: RBI Mandates Two-Factor Authentication For Digital Payments From April 1, 2026

4. Income Tax Slabs Unchanged 2026

Another major change brought about by the Union Budget of 2026 was no change in the income tax slabs or rates. The Budget of 2025-26 had some changes concerning tax slabs, following which tax liabilities were reduced for many people, and therefore, the people were expecting some more relief. However, the Finance Minister announced that the budget for 2026 will keep both the new tax regime and the old tax regime just the way they were last year.

This implies that no new introductions or changes will impact people either earning income below Rs. 2.5 lakh to Rs.10 lakh or more.

5. Budget 2026 Penalty Changes

The Finance Minister also announced changes to the punitive measures for 2026. Individuals found in non-compliance with the Income Tax laws will be required to face a 2-year punishment, reduced from 5 years, which was mentioned in the New Income Tax Act 2025. Also, the punishment for subsequent offences will be reduced from 7 years to 3 years in 2026.

Penalty charges for crypto assets have also been updated. Section 509 of the IT Act dealt with it, wherein it was clearly stated that, “penalty provision for non-furnishing of statement or furnishing inaccurate information in a statement on transaction of crypto assets”. The new budget for the year 2026 proposes a penalty of Rs. 200 per day for non-furnishing of statement and Rs. 500 for filing inaccurate particulars and the failure to correct such errors.

It is important to note over here that in the Income Tax Act of 2025, there is a section called Section 440, which allows an individual to seek immunity from penalties under Seciton 439 and from the beginning of prosecution as per Sections 478 and 479 related to underreporting of income, if all conditions are fulfilled.

6. Punishment For Non-Payment Of TDS/TCS

One of the Budget 2026 taxpayer changes is the introduction of punitive measures for those who fail to clear the payments concerning Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). From this year onwards, individuals who fail to pay their TDS or TCS dues will be forced to face imprisonment for at least 2 years or else fines.

Conclusion

As always, the people of India were expecting major changes with the announcement of the Union Budget for the year 2026, but in reality, it was not as controversial. This year’s budget is not only sorted and crisp but also strategic and to the point. The government has placed emphasis on industries and sectors that need it. It carefully made provisions keeping in mind not only people’s financial wellness but personal wellness as well.

We urge you to stay informed about all the specifics of the Union Budget of 2026 to operate in compliance with it for the whole year.

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