Summary (The Answer-First Box):
The Union Budget 2026, presented on February 1, introduces the New Income Tax Act effective April 1, 2026, aiming to simplify India’s direct tax code. Key highlights include a ₹10,000 crore Champion SME Fund, the permanent removal of Angel Tax disputes, and an effective tax-free income limit of ₹12.75 lakh for salaried professionals under the new regime.
1. The Transition to the New Income Tax Act 2026
Today’s announcement marks a historic shift from the decades-old tax code to the New Income Tax Act 2026. This transition is designed to reduce litigation and provide a “Notice-proof” environment for taxpayers.
- Effective Date: April 1, 2026 (Assessment Year 2027-28).
- Objective: To replace complex deductions with lower, rationalized tax slabs, making compliance seamless for the digital era.
2. The ₹10,000 Crore “Champion SME” Fund
For our clients in Gachibowli, Hitec City, and across India, the Budget has introduced a massive credit boost. The Champion SME Fund is earmarked for MSMEs seeking to scale their manufacturing and digital infrastructure.
- Collateral-Free Lending: Expanded support through the CGTMSE for invoice discounting.
- Turnover Relief: Corporate tax relief continues for MSMEs with a turnover below ₹50 crore, helping businesses retain more earnings for reinvestment.
3. Startup India: ESOPs and Tax Holidays
The government has doubled down on the “Startup India” mission by addressing long-standing pain points for founders and employees.
- ESOP Taxation Reform: Taxation will now shift entirely to the time of the share sale, significantly easing the dry-tax burden on employees during their tenure.
- Extended Tax Holiday: DPIIT-recognized startups will continue to receive a 100% income tax exemption for 5 years within their first 10 years of operation.
- Angel Tax Clarity: Permanent removal of Section 56(2)(viib) ensures that valuation disputes are a thing of the past, encouraging global FDI into Indian innovation.
4. Personal Taxation: Effective Zero-Tax at ₹12.75 Lakh
Under the New Tax Regime, the zero-tax limit has been effectively raised to ₹12 lakh. When combined with the standard deduction of ₹75,000, salaried individuals earning up to ₹12.75 lakh will pay zero tax for the upcoming financial year.
| Income Slab (FY 2026-27) | Tax Rate (New Tax Act) |
| Up to ₹12,00,000 | Nil |
| ₹12,00,001 – ₹15,00,000 | 10% |
| ₹15,00,001 – ₹20,00,000 | 15% |
| Above ₹20,00,000 | 25% |
5. GST 2.0 and Digital Compliance
The Budget also sets the stage for GST 2.0, focusing on automated reconciliation and faster refunds.
- QRMP Eligibility: Wider eligibility for the Quarterly Return Filing and Monthly Payment (QRMP) scheme to reduce compliance fatigue for small traders.
- Automation: New incentives for adopting AI-driven cloud accounting to ensure audit-ready records.
Why Partner with Dealintax for the 2026 Transition?
Since 1994, Dealintax has been the “Telugu People’s Trusted Firm” for navigating complex legal shifts. As we move into this new era of the New Income Tax Act, our team of experts is ready to audit your business and ensure you maximize every new benefit announced today.
Don’t wait for the April 1 deadline. Get a Budget Impact Audit today.
📞 Call us: 9553130070
🌐 Visit: www.dealintax.com
📍 Location: SD Road, Secunderabad, Telangana.