Key Changes in Income Tax for FY 2026-27

Budget 2026-27 Highlights

The Finance Act has introduced several important changes affecting both individual and corporate taxpayers.

For Individuals

• **New Tax Regime** is now the default regime. Taxpayers must explicitly opt for the old regime.
• Standard deduction increased to ₹75,000 for salaried employees.
• Section 80C limit remains unchanged at ₹1.5 lakh.
• **NPS contribution** deduction for employers increased to 14% of salary.

For Businesses

• **Section 43B(h)** — Timely payment to MSMEs is now mandatory for claiming deduction.
• Presumptive taxation turnover limit increased to ₹3 crore for eligible businesses.
• Reduced tax rate of 25.17% for new manufacturing companies extended to March 2028.

TDS/TCS Updates

• TDS on rent under Section 194I threshold increased to ₹50,000 per month.
• TCS on foreign remittances under LRS capped at ₹7 lakh threshold for education/medical.

We recommend scheduling a tax planning review to optimize your tax position under the new provisions.