It’s Monday morning, February 2, 2026, and if you’ve been scrolling through the fine print of yesterday’s Budget, you’ve likely noticed a pattern: it’s less about “tax hikes” and more about a complete “structural reboot.” Finance Minister Nirmala Sitharaman’s 81-minute speech was a farewell to the 1961 law and a welcome to the Income Tax Act, 2025, which officially takes over on April 1, 2026.
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The thing is, your actual slab rates aren’t moving. But how you’re taxed on things like buybacks and foreign trips? That’s where the ground is shifting. Or nothing.
The “New Era” Tax Code: Field Notes
It’s an ongoing situation where the government is trying to make the taxman less of a “detective” and more of a “facilitator.” Here’s the ground reality:
The Slab Stability: Let’s be real—the tax slabs haven’t changed since the 2025 shake-up. You’re still looking at zero tax up to ₹4 lakh (and an effective zero up to ₹12 lakh if you count the ₹60,000 rebate under Section 87A). Those too.
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The Buyback “Relief”: Here’s the kicker—the 2024 rule that treated buybacks like dividends (taxing you at 30% on the full amount) is dead. Starting April 1, buybacks go back to being Capital Gains. You only pay tax on the profit. It’s 12.5% for long-term and 20% for short-term. Or nothing.
The Promoter “Sting”: To stop big bosses from gaming the system, promoters will pay a higher rate—22% for companies and 30% for individuals. It keeps things fair for the little guy.
The 2047 Cloud Bet: If you work for a foreign cloud company setting up shop here, you might be looking at a tax holiday until 2047. The government wants India to be the world’s data basement.
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Capital Gains: The Buyback Shift
| Transaction Type | Tax Rate (Current) | Tax Rate (From April 1, 2026) |
| Share Buyback (Retail) | Up to 30% (as Dividend) | 12.5% (LTCG) / 20% (STCG) |
| Share Buyback (Promoter) | Up to 30% | 22% (Corp) / 30% (Others) |
| Overseas Tour Package | 5% / 20% TCS | Flat 2% TCS |
| MACT Interest Awards | Taxable | Fully Exempt |
And Here’s the Kicker…
The TCS (Tax Collected at Source) on your foreign education and medical bills just got slashed from 5% to 2%. The thing is, they even removed the threshold for overseas tours—now it’s a flat 2% no matter what you spend. Those too.
One side comment—the government is introducing a 6-month “Foreign Asset Disclosure” scheme. If you’re a student or a techie who forgot to mention that foreign bank account or those ESOPs, this is your one-time “get out of jail free” card. No penalties, no prosecution. Just come clean. It’s an ongoing situation. Or nothing.
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End….
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