The Union Budget for FY 2026-27 was presented on 1 February 2026. For Indian freelancers, the biggest single takeaway is continuity: the new tax regime stays the default, the Section 87A rebate at Rs. 12 lakh under the new regime carries over from FY 2025-26, the 44ADA presumptive ceiling is unchanged at Rs. 50 lakh (Rs. 75 lakh with the non-cash condition), and the Section 194J TDS threshold of Rs. 50,000 introduced in Budget 2025 continues. There are no surprise withdrawals of freelancer-relevant provisions.
One structural change sits underneath all of this: income from 1 April 2026 (tax year 2026-27) is taxed under the Income-tax Act, 2025, which renumbers the familiar sections — presumptive taxation is s.58 (formerly 44ADA), the rebate s.156 (formerly 87A), the regime rule s.202 (formerly 115BAC) and TDS s.393 (formerly 194J/194C/194-O). Rates and limits carried over; the old numbers still apply to your FY 2025-26 return.
That said, several smaller updates matter — the ITR due date for freelancers without an audit moves to 31 August, a revised return can now be filed until 31 March (with a fee after 31 December), an updated return (ITR-U) can now also follow a reassessment notice, and a lower-TDS certificate can be applied for online. This guide walks through every Budget 2026 provision that touches the Indian freelancer, what stayed the same (because continuity is itself news), and your action items for FY 2026-27.
Budget 2026 at a Glance — Freelancer Impact
| Topic | FY 2025-26 (Prior Year) | FY 2026-27 (Budget 2026) |
|---|---|---|
| Default tax regime | New regime | New regime (continues) |
| 87A rebate threshold (new regime) | Rs. 12 lakh taxable income | Rs. 12 lakh (no change) |
| 87A rebate amount (new regime) | Up to Rs. 60,000 | Up to Rs. 60,000 (no change) |
| 87A threshold (old regime) | Rs. 5 lakh taxable income (rebate up to Rs. 12,500) | Rs. 5 lakh (no change) |
| Standard deduction (salary income only, new regime) | Rs. 75,000 | Rs. 75,000 (no change) |
| 44ADA ceiling — cash mode | Rs. 50 lakh | Rs. 50 lakh (no change) |
| 44ADA ceiling — 95% non-cash | Rs. 75 lakh | Rs. 75 lakh (no change) |
| 194J TDS threshold | Rs. 50,000 (Budget 2025 change) | Rs. 50,000 (continues) |
| ITR-U updated return window | 48 months (extended from 24 by Budget 2025) | 48 months (no change; Budget 2026 also allows ITR-U after a reassessment notice) |
| ITR due date, freelancers without audit | 31 July | 31 August (Finance Act 2026; applies from the FY 2025-26 return) |
| Revised return | 31 December | 31 March of the following year, with a Rs. 1,000 / Rs. 5,000 fee if filed after 31 December |
| Surcharge cap (new regime) | 25% | 25% (no change) |
| Health & Education Cess | 4% | 4% (no change) |
Tax Regimes — New Regime Stays Default
The new tax regime has been the default since FY 2023-24 (Finance Act 2023, Section 115BAC; from tax year 2026-27 the rule is s.202 of the Income-tax Act, 2025). Budget 2026 leaves this unchanged. If you do nothing — file ITR-4 or ITR-3 without specifying — your income is taxed under the new regime slabs:
| Income Slab (FY 2026-27) | New Regime Rate |
|---|---|
| Up to Rs. 4 lakh | Nil |
| Rs. 4-8 lakh | 5% |
| Rs. 8-12 lakh | 10% |
| Rs. 12-16 lakh | 15% |
| Rs. 16-20 lakh | 20% |
| Rs. 20-24 lakh | 25% |
| Above Rs. 24 lakh | 30% |
Under the new regime almost all deductions are gone: no 80C, 80D or HRA. Salaried taxpayers keep a Rs. 75,000 standard deduction, but it applies only to salary income. A freelancer with no salary gets no standard deduction in either regime. For a freelancer with no salary, the new regime is usually cheaper unless your old-regime deductions run to roughly Rs. 5–8 lakh, depending on income. Run both before choosing; the regime calculator does it in a minute.
To stay on (or switch to) the old regime, you must file Form 10-IEA by the return due date, before filing your ITR. With business or professional income the choice then keeps applying in later years until you withdraw it, and you can withdraw it only once. Without 10-IEA, the e-filing portal applies the new regime.
Section 87A — Rebate Up to Rs. 12 Lakh
Section 87A is the single biggest tax saver for the median Indian freelancer. The continuing FY 2026-27 position:
- New regime: Taxable income up to Rs. 12 lakh gets a full rebate of up to Rs. 60,000 — meaning zero tax payable.
- Old regime: Taxable income up to Rs. 5 lakh gets a rebate of up to Rs. 12,500.
- Marginal relief: If your taxable income is Rs. 12,01,000 or so, the rebate gradually phases out so you do not pay a sudden Rs. 60,000 in tax on the first rupee over Rs. 12 lakh.
A professional who qualifies for 44ADA with Rs. 24 lakh gross receipts has Rs. 12 lakh taxable income — and zero tax payable under the new regime. If your profession is on the specified list, the Rs. 60,000 87A rebate plus the 44ADA 50% presumption is the combination to check first.
44ADA Presumptive Taxation — What Stayed
Budget 2026 left 44ADA untouched. The relevant numbers carrying into FY 2026-27:
- 50% presumed profit on gross receipts — declare half as taxable income, no books required.
- Rs. 50 lakh ceiling for the standard regime; Rs. 75 lakh if at least 95% of receipts are in non-cash modes (bank transfer, UPI, cheque, credit card — basically everything except cash and bearer instruments).
- Specified professions only: legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, and the CBDT-notified professions — information technology, company secretary, film artist and authorised representative.
- No lock-in for professionals: you can leave 44ADA to claim actual expenses in one year and return the next. The five-year bar in Section 44AD(4) applies to the business scheme, not to 44ADA.
TDS Thresholds — Budget 2025 Updates Carry Over
Budget 2025 raised several TDS thresholds; Budget 2026 confirms them at the same level. For freelancers, the relevant numbers:
| Section | Threshold (FY 2026-27) | Rate |
|---|---|---|
| 194J — Professional fees | Rs. 50,000 / year / deductor | 10% (2% for technical services) |
| 194C — Contractual payments | Rs. 30,000 / transaction or Rs. 1,00,000 / year | 1% (individual/HUF), 2% (others) |
| 194H — Commission / brokerage | Rs. 20,000 / year | 2% |
| 194O — E-commerce operator payments | Rs. 5,00,000 / year | 0.1% |
| 195 — Payments to non-residents | No threshold | Varies (10-40%) |
Surcharge Slabs
Surcharge applies on income over Rs. 50 lakh and remains unchanged in Budget 2026:
- Rs. 50 lakh - Rs. 1 crore: 10% surcharge
- Rs. 1 crore - Rs. 2 crore: 15%
- Rs. 2 crore - Rs. 5 crore: 25% (old regime), 25% capped (new regime)
- Above Rs. 5 crore: 37% (old regime only) / 25% (new regime)
The new regime caps maximum surcharge at 25%, making it noticeably better than the old regime for income above Rs. 5 crore. Most freelancers will not encounter surcharge, but if you are approaching Rs. 50 lakh in taxable income, planning around the threshold matters.
NPS, 80C, 80D — Old Regime Only
Worth restating clearly: the popular tax-saving deductions only work under the old regime:
- Section 80C — Rs. 1.5 lakh on PPF, ELSS, LIC, EPF, principal repayment
- Section 80D — Up to Rs. 25,000 (Rs. 50,000 for senior citizens) on health insurance, plus up to Rs. 25,000 more for parents (Rs. 50,000 if they are senior citizens)
- Section 80CCD(1B) — Rs. 50,000 additional on NPS Tier-I
- Section 80G — 50%-100% of donations to specified institutions
- Section 80E — Education loan interest (no cap)
- HRA exemption — Section 10(13A), if you have salary income
If you are not actively maxing out these deductions, the new regime is mathematically better for most freelancers. Use the free regime-comparison calculator to model your own numbers before committing for the year.
What Did Not Change
- GST rates: the 56th GST Council meeting (September 2025) moved most supplies to a two-rate 5% / 18% structure, with 40% for a few specified goods. Most freelance and professional services stay at 18%. Budget 2026 did not change GST.
- GST registration threshold — Rs. 20 lakh (services) / Rs. 40 lakh (goods).
- Composition scheme for goods — turnover up to Rs. 1.5 crore (Rs. 75 lakh for special states); 1% rate.
- LUT requirement for export of services (zero-rated supply).
- Advance tax due dates: 15 June, 15 September, 15 December, 15 March.
- Section 234B/C interest on advance tax shortfall — 1% per month.
Action Items for FY 2026-27
- Pick a working regime early, so your advance tax is right. If you will want the old regime for FY 2026-27, Form 10-IEA is due on or before your return due date (31 August 2027 if your accounts are not audited), not before 15 June. Estimating under the regime you will actually use keeps your instalments, and any 234C/s.425 interest, in line.
- Re-evaluate 80C/80D investments under the new regime. If you have been paying for tax-saving instruments out of habit, they may no longer be worth it under the new regime, which allows almost none of these deductions (the Rs. 75,000 standard deduction applies only if you also have salary income).
- Confirm 194J threshold with regular clients. Clients under the old Rs. 30K threshold may have stopped deducting TDS; clients above Rs. 50K should be deducting at 10%. Verify quarterly in 26AS.
- Set up advance tax reminders. Advance tax is due once your tax for the year after TDS is Rs. 10,000 or more. Most taxpayers pay 15% by 15 June and follow the four-date ladder; if you declare presumptive income (44ADA; s.58 from tax year 2026-27), the whole amount is due in one instalment by 15 March instead.
- Lock in 44ADA strategy. If you expect to cross Rs. 50 lakh in gross receipts, ensure 95%+ of receipts are non-cash to retain access to the Rs. 75 lakh ceiling.