Finance Minister Nirmala Sitharaman presented her ninth consecutive Budget on Sunday. PIC/PTI
Finance Minister Nirmala Sitharaman on Sunday kept income tax slabs unchanged in the Union Budget 2026, meaning taxpayers will continue to be taxed at the same rates as in the financial year 2025 26 under both the old and new tax regimes.
While there was no revision in slab rates, the Budget sought to address several long-standing concerns of middle-class taxpayers through targeted relief measures, including a reduction in tax collected at source rates and the introduction of new deductions related to dividend income.
As a result, salaried individuals and other taxpayers will not see changes in income tax slab rates, but may benefit from procedural and compliance-related easing announced in the Union Budget 2026.
Presenting her ninth consecutive Budget in Parliament, Finance Minister Nirmala Sitharaman proposed a tax holiday till 2047 for foreign companies providing global cloud services using data centre facilities located in India. Such firms will be required to serve Indian customers through an Indian reseller entity.
To provide certainty in taxation, the finance minister also announced a safe harbour margin of 15 per cent on costs where data centre services are provided from India by a related entity.
Aimed at improving logistics efficiency for electronic manufacturing, Sitharaman announced a safe harbour for non-residents using bonded warehouses for component storage, with profits capped at 2 per cent of invoice value.
She said this would translate into an effective tax rate of about 0.7 per cent, significantly lower than in competing jurisdictions.
To encourage toll manufacturing, the Budget also proposes a five-year income tax exemption for non-residents supplying capital goods, equipment or tooling to toll manufacturers operating in bonded zones.
In addition, the finance minister announced a set of indirect tax measures aimed at simplifying the tariff structure, supporting domestic manufacturing, boosting export competitiveness and correcting duty inversions.
The announcements follow the tabling of the Economic Survey 2025-26 in Parliament on Thursday, which outlined the state of the economy ahead of the Budget.
