Finance Bill 2026 was introduced in Parliament on 1 February 2026 as part of the Union Budget 2026. While individual tax slabs and rates remain unchanged for the financial year 2026–27, the budget proposes important procedural and compliance amendments under the Income Tax Act, 2025, effective 1 April 2026. These changes affect return filing timelines, revised and updated return mechanisms, TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) provisions, and other obligations for employers and taxpayers.
The following summarises the key proposals. These are based on budget announcements and are subject to change once the Finance Bill 2026 is enacted.
• Up to 400,000 – Nil
• 400,001–800,000 – 5%
• 800,001–1,200,000 – 10%
• 1,200,001–1,600,000 – 15%
• 1,600,001–2,000,000 – 20%
• 2,000,001–2,400,000 – 25%
• Above 2,400,000 – 30%
Surcharge and Health and Education Cess remain at existing rates.
These proposals aim to streamline compliance under the new Income Tax Act and provide clarity on timelines, TDS and TCS obligations, and return filing mechanisms. Employers should review internal processes to ensure adherence to the revised deduction timings and reporting requirements. Taxpayers should prepare for extended filing windows and changes in filing revised and updated returns.
For further detailed guidance on tax, payroll and compliance developments in India, visit our India Global Insights page on the activpayroll website.
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