Budget: No change in Income tax slabs, cuts TCS on foreign travel, education and medical remittances
Finance Minister Nirmala Sitharaman’s tax proposals in the Union Budget presented on Sunday, February 1, focused on providing stability, simplifying compliance and making targeted adjustments rather than announcing sweeping changes to tax rates.
The overall approach signalled continuity in the tax framework while fine-tuning specific areas to improve ease of living and ease of doing business.
For individual taxpayers, the Budget did not propose any major changes to income tax slabs, offering predictability and avoiding disruption. Instead, the emphasis was on streamlining processes and reducing friction in tax administration.
Measures were announced to simplify filing procedures, ease the issuance of certificates for lower or nil tax deduction, and rationalise certain thresholds to reduce unnecessary deductions at source for small and medium taxpayers.
The government also proposed changes to the tax treatment of specific transactions to align taxation with evolving market practices. Adjustments in transaction taxes on certain financial market instruments, including derivatives, were aimed at improving market discipline and widening the tax base. At the same time, select TDS and TCS provisions were rationalised to make compliance simpler for both taxpayers and deductors.
The Budget reiterated the government’s commitment to fiscal federalism by keeping the states’ share in central taxes unchanged at 41 percent for the 2026–31 period, ensuring continuity in tax devolution. While direct tax slabs were left untouched, the focus remained on simplifying compliance, streamlining collection processes and making selective tax changes instead of broad rate revisions, in an effort to combine taxpayer relief with fiscal discipline.
On the indirect tax front, the Budget focused on rationalising duties in a few sectors to support domestic manufacturing, improve supply chains and encourage value addition, without resorting to broad-based rate hikes. The finance minister reiterated the government’s commitment to stable and predictable taxation as a key pillar of investor confidence.
Overall, the tax proposals in Budget 2026 emphasised continuity, simplification and targeted reform, seeking to balance taxpayer convenience with revenue stability and fiscal prudence.