The Income Tax Slabs Budget 2026 announcements have brought clarity but limited relief for taxpayers. Union Finance Minister Nirmala Sitharaman confirmed that there will be no change in income tax slabs budget 2026 under both the old and new tax regimes. At the same time, a major policy shift was announced—share buybacks will now be taxed as capital gains for all shareholders.
These decisions are expected to influence individual tax planning, corporate actions, and overall revenue collection for the coming financial year.
No Change in Income Tax Slabs in Budget 2026
One of the biggest takeaways from the Income Tax Slabs Budget 2026 is that the government has chosen stability over restructuring. Under the old tax regime, the slab structure remains unchanged, with tax rates continuing to rise at income levels of ₹5 lakh, ₹10 lakh, and above.
The new tax regime also remains intact. The zero-tax bracket extends up to ₹4 lakh, after which tax rates increase gradually, reaching 30% for income exceeding ₹24 lakh. While no fresh relief was announced, maintaining existing slabs ensures predictability for salaried individuals and businesses.
New Income Tax Act to Take Effect from April 1
The Finance Minister announced that the New Income Tax Act will come into effect from April 1, with rules and updated income tax return (ITR) forms to be notified shortly. The new Act aims to simplify language, reduce litigation, and modernise tax administration.
Although tax rates remain the same, procedural improvements under the new law are expected to make compliance easier, particularly through digitisation and simplified disclosures.
Buyback of Shares to Be Taxed as Capital Gains
A major reform under the Income Tax Budget 2026 relates to taxation of share buybacks. The government has clarified that buybacks will be taxed as capital gains in the hands of all shareholders, removing earlier ambiguities.
This change aligns buyback taxation with other equity transactions and is expected to improve transparency while ensuring fair tax treatment. Investors will now need to factor capital gains tax while evaluating corporate buyback offers.
How the Government Earns Every Rupee: Revenue Breakdown
The Union Budget 2026-27 documents reveal that 64 paise of every rupee earned by the government will come from direct and indirect taxes. Income tax alone will contribute 21 paise, followed by corporation tax at 18 paise and GST at 15 paise.
Non-tax revenue such as disinvestment will contribute around 10 paise, while borrowings and liabilities will make up 24 paise per rupee. Customs duty and excise duty together account for another 10 paise of government revenue.
Where the Government Spends Its Money
On the expenditure side, interest payments and states’ share of taxes together account for over 40 paise per rupee. Defence spending remains a priority at 11 paise, while central sector schemes and centrally sponsored schemes together receive 25 paise.
Subsidies, pensions, and other expenditures form a smaller but significant portion of spending, reflecting the government’s balancing act between fiscal discipline and welfare commitments.
What Budget 2026 Means for Taxpayers
For individual taxpayers, the Income Tax Slabs Budget 2026 brings certainty rather than excitement. While there are no slab changes, taxpayers benefit from continuity and can plan investments without sudden surprises.
For investors, the buyback tax change is a critical development that may influence portfolio strategies. Businesses, meanwhile, can expect smoother compliance once the New Income Tax Act rules are fully notified.
The Income Tax slabs Budget 2026 focuses on stability, transparency, and predictable taxation. In Income Tax Slabs Budget 2026 with unchanged income tax slabs, a clearer buyback taxation framework, and a simplified tax law on the horizon, the government aims to strengthen compliance while sustaining revenue growth.
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