Finance Minister Nirmala Sitharaman proposed a six-month foreign asset disclosure scheme for small taxpayers like students, tech professionals and relocated NRIs as she presented the Union Budget 2026-27.

She said there will be no interest liability on taxpayers on the penalty amount for the period of appeal before first appellate authority, irrespective of outcome.

The finance minister also proposed exemptions of three years for dividend income received by notified cooperatives on investments made up to January 31, 2026.

Finance Minister Nirmala Sitharaman proposed to exempt Minimum Alternate Tax (MAT) for non-residents who pay tax on presumptive basis.

In her Budget speech, she said the threshold for availing safe harbour for IT services is being enhanced from Rs 300 crore to Rs 2,000 crore.

Sitharaman added that the tax collected at source rate on liquor, scrap, and mineral has been rationalised to 2 per cent.

The minister also announced to rationalise definition of accountants for safe harbour rules to promote home-grown accounting firms.

She said the government would allow inter-cooperative societies dividend income as deduction under the new tax regime. 

Finance Minister Nirmala Sitharaman proposed to:

Finance Minister Nirmala Sitharaman's announcements included:

The New Income Tax Act will come into effect on April 1, Finance Minister Nirmala Sitharaman said.

Government has accepted the recommendations of 16th Finance Commission, retaining 41 per cent tax devolution formula.

Chartered accountant Himank Singla has urged a major rethink in how salaried individuals are taxed. Singla told NDTV that the current flat Rs 75,000 standard deduction fails to reflect the economic reality of most working Indians. 

"If companies are taxed on net profit and not on gross turnover, the same logic must apply to individuals," he said.

Singla pointed out a fundamental inconsistency in India's tax architecture. "In corporate taxation, a basic principle is universally accepted: tax is levied on net profit, not on gross turnover," he said. "Businesses are allowed to deduct rent, interest, depreciation, employee costs, and other unavoidable expenses before arriving at taxable income."

"Yet, when it comes to salaried individuals, this principle is abruptly abandoned," he added.

The income tax slabs and the method of calculating tax are usually in focus ahead of Budget day.

Calculating income tax on salary involves several steps. The process begins with computing gross salary, which includes basic salary, allowances, bonuses and other taxable components.

For FY 2023-24, 72 per cent of taxpayers, around 5.27 crore, chose the new tax regime. The figure is expected to climb further in AY 2025-26, as slab rationalisations and rebates continue to benefit middle-income earners.

Yet nearly 2 crore taxpayers, 28 per cent, still remain with the old regime, largely due to the deductions it offers. These include exemptions for House Rent Allowance, health insurance, home loan interest, and education loans.

The old regime is not expected to become history, but the Centre is likely to make the new regime sweeter, CA Suresh Surana told NDTV. He said that while a full phase-out of the old tax regime isn't on the table, the government is likely to steer taxpayers toward the new structure through additional incentives.

These nudges may include raising the standard deduction, introducing optional joint filing for married couples, and selectively restoring limited deductions for essentials like medical expenses or disability care.

Middle-class families staring at shrinking paycheques are desperate for relief in the Budget being presented by Finance Minister Nirmala Sitharaman. A push to raise the 30 percent slab to Rs 35 lakh could finally give them that breathing room, CA Suresh Surana told NDTV.

Surana says the proposed hike comes at a moment when salaried taxpayers feel the sharpest squeeze from rising household costs and stagnant tax thresholds. He notes that although the last Budget lifted the effective exemption limit to around Rs 12 lakh and pushed the 30 percent rate to Rs 24 lakh under the new regime, inflation has quietly eroded the impact and dragged earners back toward higher brackets.

Surana explains that shifting the 30 percent trigger to Rs 35 lakh would immediately lift take-home income for anyone earning between Rs 24 lakh and Rs 35 lakh, postponing entry into the top rate and easing pressure on monthly budgets.

The introduction of the New Tax Regime, with lower rates but significantly fewer exemptions, has revived public debate about the value of deductions.

The question on every taxpayer's mind this morning is simple. Will Finance Minister Nirmala Sitharaman give the middle class a bigger zero tax window or will the government hold back after last year's expensive overhaul.

At the heart of the debate is Section 87A, the quiet lever that makes income up to Rs 12 lakh tax free under the new regime. It is not just about slab rates. The rebate wipes out tax after the calculation is done, with marginal relief preventing a sudden spike for someone who crosses the threshold by a few hundred rupees. Any shift here can redraw the line between who pays tax and who does not.

Current Slabs Under New Regime

Zero to Rs 4 lakh: 0 percent

Rs 4 lakh to Rs 8 lakh: 5 percent

Rs 8 lakh to Rs 12 lakh: 10 percent

Rs 12 lakh to Rs 16 lakh: 15 percent

Rs 16 lakh to Rs 20 lakh: 20 percent

Rs 20 lakh to Rs 24 lakh: 25 percent

Above Rs 24 lakh: 30 percent

Standard Deduction

New regime: Rs 75,000

Old regime: Rs 50,000