India Union Budget 2026-27
Home > India Union Budget 2026-27
February 3, 2026
Key Proposals
A. Budget anchored on Viksit Bharat with 3 Kartavya:
(i) Accelerate & sustain growth
(ii) Build aspirations & capacity
(iii) Ensure inclusive access across regions and communities
Focus on structural reforms, resilient finance, AI-led governance, and global integration.
B. Direct Tax, Transfer Pricing & Indirect Tax – Snippet:
• Structural Reset of India’s Tax System
Transition to the Income-tax Act, 2025 from 1 April 2026 marks a shift from fragmented amendments to a modern, rule-based tax framework.
• From Compliance Burden to Business Enablement
Strong focus on simplicity, certainty, digitisation and reduction of litigation for compliant taxpayers.
• Global Competitiveness at the Core
Tax policy aligned with India’s ambition to attract long-term capital, global services, manufacturing, data centres and cross-border trade.
• Technology-Led Tax Administration
Automation, rule-driven approvals, data integration and trust-based systems replace manual, discretionary processes.
• Transfer Pricing as a Growth Enabler
Predictable margins, automated safe harbours, faster APAs and IFSC incentives reposition India as a stable base for global operations.
• Indirect Tax as a Trade & Manufacturing Catalyst
Tariff rationalisation, export facilitation, duty relief for strategic sectors and digitised customs to improve supply-chain efficiency.
• Shift from Enforcement to Partnership
The framework signals a move from dispute-driven taxation to certainty-driven compliance.
• Unified Message
India is building a simple, predictable and globally integrated tax ecosystem to support scale, speed and sustainable growth.
India is shifting from incremental reform to structural transformation using technology, scale, and global integration to build a resilient, inclusive, and competitive economy.
Key Proposals
C. Individual Income-tax:
• There are no changes in the income tax rates and slabs under both the regimes.
• Individual Persons Resident Outside India (PROIs) may invest in equity instruments of listed Indian companies under the Portfolio Investment Scheme (PIS), with the individual limit increased from 5% to 10% and the overall PROI limit enhanced from 10% to 24%.
• Indian resident buyers of immovable property shall not be required to obtain TAN for TDS while purchase from Non-Resident.
• Immunity from prosecution for non-disclosure of non-immovable foreign assets valued below INR20 lakh, with retrospective effect from 01 October 2024, providing relief to taxpayers who may have inadvertently missed reporting such assets.
• Securities Transaction Tax (STT) has been increased on derivatives, with the rate on futures raised from 0.02% to 0.05%, and the STT on options both on premium and on exercise enhanced to 0.15% from the earlier rates of 0.10% and 0.125%, respectively.
• A special six-month window has been introduced allowing two categories of taxpayers to regularise their disclosures:
| Particulars | Category A | Category B |
|---|---|---|
|
Coverage |
Undisclosed income or
assets |
Foreign income disclosed
and tax paid, but foreign
assets not declared |
|
Maximum value eligible |
Up to ₹1 crore |
Up to ₹5 crore |
|
Tax payable |
30% of FMV of asset or 30%
of undisclosed income |
Not applicable |
|
Additional levy |
30% of tax (in lieu of penalty) |
Not applicable |
|
Fee |
Not applicable |
₹1,00,000 |
|
Immunity |
Immunity from prosecution |
Immunity from penalty and
prosecution |
|
Compliance window |
Special 6-month window |
Special 6-month window |
Other key proposals as enumerated below are summarised in the following pages
I. Transfer Pricing
II. Direct tax
III. Indirect tax
I. Transfer Pricing Proposals
| S. No. | Topic bucket | Key proposal (what changes) | Applicability | SBC Comments |
|---|---|---|---|---|
|
Safe Harbour and APA |
||||
|
1 |
Safe Harbour 2.0 – IT Services |
• All Software Dev + ITES +
KPO + Contract R&D
(software) proposed to
be clubbed into one
category “Information
Technology Services” • Single Safe Harbour margin of 15.5% • Threshold ₹300 cr increased to ₹2,000 cr • Automated rule-driven approval; option to continue 5 years |
Effective date
will flow from
Bill/Rules
when notified |
• Game-changer
for GCCs/IT
captives. • Larger coverage shall lead to lower friction along with longer certainty window |
|
2 |
Fast-track
Unilateral APA |
• Unilateral APA to be fast-
tracked • Endeavour for closure in 2 years, extendable by 6 months on request |
To be
evaluated
once notified |
Faster certainty than
typical APA cycle |
|
3 |
APA
consequence
management –
Associated
Enterprise (AE)
returns |
• Where income gets modified
due to APA, AE (not just APA
signatory) may file return /
modified return within 3
months from end of month
of APA (for years covered) • For APA entered on/after 1 April 2026 |
From 1 April
2026 and
applies to Tax
Year (TY)
2026-27
onwards |
Avoids group-level
mismatches and
unlocks
refunds/true-ups
across entities |
|
4 |
Safe Harbour –
Data centre
related-party
pricing +
broader global
cloud push |
Safe harbour 15% on cost for
resident entity providing data
centre services to a related
foreign company providing
cloud services globally |
From 1 April
2026 |
Predictable pricing
for digital infra /
cloud structures |
|
5 |
Exemption
framework for
foreign
company using
India data
centres (cross-
border model
enabling TP
certainty) |
Foreign company exemption
for income arising in India by
procuring data centre
services from “specified data
centre” (Indian
owned/operated under
approved scheme India users
routed via Indian reseller) till 31
Mar 2047
Section 11 read with Schedule
IV – ITA 2025 |
From 1 April
2026 (TY
2026-27
onwards) |
• Helps position
India as global
cloud hub. • Additionally, Complements TP safe harbour for related-party data centre services |
|
6 |
Transfer Pricing
audit report
default –
penalty
converted to
fee |
• Penalty for non-furnishing TP
report proposed to
be converted into
fee (reducing litigation for
technical defaults). • Section 447 of ITA 2025 penalty relates to report under section 172 (TP accountant report) |
From 1 April
2026;
applies
for TY 2026-
27 onwards |
• Technical defaults
become fee-
based and thereby
lower litigation,
higher automation
readiness
– Up to 1 month – ₹
50k or ₹ 1lakh
otherwise. |
|
7 |
Specified
domestic
transactions |
• Proposal to exclude
transactions with newly
established SEZ units from
the scope of SDT. |
From 1 April
2026;
applies
for TY 2026-
27 onwards |
• No deduction will be
allowed for
transactions
connected with
newly established
SEZ units for the
income enhanced
after ALP
computation. |
|
Other Administrative Proposals |
||||
|
1 |
Safe Harbour –
bonded
component
warehousing
(non-resident
margin) |
• Safe harbour for non-
residents for component
warehousing in bonded
warehouse at 2% of invoice
value |
As
proposed |
• Predictable low-
margin model for
electronics supply
chains |
|
2 |
Section
92CA(3A) – 60
days for TPO
order clarified |
• Courts differed on limitation
and many TP assessments
were quashed. It is clarified
that the date of limitation
u/s 153 / 153B is INCLUDED
while computing the 60
days. • This reflects legislative intent and overrides court rulings |
ITA 1961:
From 1 June
2007 ITA 2025: From 1 April 2026 |
• Removes technical
challenges to TP
orders before
appellate
authorities. • Protects assessments from being quashed on limitation grounds |
|
3 |
Section 144C(4)
& 144C(13) –
Final order
timelines |
• Conflicting judicial views on
whether 144C process must
fit within overall 153/153B
limits, despite explicit carve-
outs • Clarified that 153 / 153B govern only the draft order stage, while 144C(4) / (13) timelines override 153/153B for finalisation |
ITA 1961:
From 1 Apr
2009 (s.153)
and 1 Oct
2009
(s.153B) ITA 2025: From 1 April 2026 |
Restores certainty in
DRP timelines;
prevents annulment of
TP assessments due to
misinterpretation and
split judgement in the
case of Shelf Drilling by
the Honourable SC. |
II. Direct Tax Proposals
| S. No. | Topic | Key proposal (explained) | Applicability | SBC Comments |
|---|---|---|---|---|
|
Incentives and Exemptions (Tax Holidays) |
||||
|
1 |
Tax exemption
for foreign cloud
& data centre
players |
• Income earned by a foreign
company from procuring
data centre services from
an Indian “specified data
centre” will be exempt. • The data centre must be owned & operated by an Indian company under a notified scheme. • Where services are used by Indian customers, billing must be routed through an Indian reseller. • The exemption is available up to the tax year ending 31 March 2047. Section 11 read with Schedule IV – ITA 2025 |
From 1 April
2026 |
• This creates a
new India-hub
structure for
global cloud
players. • Group billing, transfer pricing, reseller arrangements and data localisation contracts must be re-designed to qualify. |
|
2 |
Five-year global
income
exemption for
non-resident
experts |
• A non-resident individual
who has not been resident in
India in the preceding five
years and who renders
services in India under
a notified Central
Government scheme will get
exemption on all foreign
source income for five
consecutive years. • Only income sourced outside India is covered. Section 11 read with Schedule IV – ITA 2025 |
From 1 April
2026 |
• Enables cost-
effective
deployment of
global experts. • Employers must track residency history and ensure scheme approval documentation. |
|
3 |
Electronics toll-
manufacturing
exemption |
• Income of a foreign
company providing capital
goods, equipment or
tooling to an Indian
contract manufacturer
located in a customs
bonded warehouse for
producing electronic goods • To be exempt up to tax year 2030-31 s.11 read with Schedule IV – ITA 2025 |
From 1 April
2026 |
• Supports PLI
and EMS
models. • Structures must ensure bonded status, ownership of tooling, and arm’s length pricing. |
|
4 |
Critical mineral
exploration
deduction
expanded |
• The list of minerals eligible
for deferred deduction of
prospecting and exploration
expenditure is expanded. • The deduction can be claimed once commercial production begins. Section 51 read with Schedule XII – ITA 2025 |
From 1 April
2026 |
Mining companies
can plan early-
stage investments
with future tax
shelter |
|
5 |
MAT exemption
for specified
non-resident
businesses |
• Certain non-resident
presumptive businesses
such as cruise ship
operators and technology
service providers for
electronics manufacturing
are excluded from MAT.
Section 206 – ITA 2025 |
From 1 April
2026 |
Eliminates MAT
cash-flow cost for
foreign
infrastructure
operators. |
|
TDS and TCS |
||||
|
1 |
No TDS on
interest to co-
operative banks |
• Interest paid to co-operative
banks, including co-
operative land mortgage
banks, other than interest on
securities, will not be
subject to TDS – Section
393(4) – ITA 2025 |
From 1 April
2026 |
Aligns with existing
ITA 1961 position
and removes
disputes for
borrowers. |
|
2 |
Correction in
property sale
TDS note |
• A wrong reference in the note
to the TDS table for property
transactions is corrected to
avoid misinterpretation.
Section 393(1) – ITA 2025 |
From 1 April
2026 |
Prevents
erroneous TDS
deductions in real
estate
transactions. |
|
3 |
TCS rate
rationalisation |
• Uniform 2% TCS for scrap,
minerals and liquor • TCS for Tendu leaves reduced from 5% to 2%. Section 394(1) – ITA 2025 |
From 1 April
2026 |
Reduces working
capital blockage
for traders and
manufacturers. |
|
4 |
Removal of
Ambiguity in TDS
Rates
Applicable to
Manpower
Supply |
• It is proposed to specifically
include supply of manpower
within the definition of
“work”, so that TDS
provisions applicable to
contract work will apply. • Clarified to be charged @ 1 or 2% |
From 1 April
2026 |
Ambiguity of
classification for
supply of
manpower
(contract work) v/s
Professional/
technical services
removed. |
|
5 |
TCS reduced on
LRS and
Overseas Tour
package |
• LRS remittances for
education or medical
treatment above ₹10 lakh:
TCS rate reduced from 5%
to 2%. • Overseas tour programme packages: TCS rate reduced to 2%, and the threshold is removed, making TCS applicable at 2% irrespective of the amount. Section 394 of ITA 2025 |
From 1 April
2026 |
These changes
reduce the cash-
flow burden on
individuals by
significantly
lowering upfront |
|
6 |
Electronic Filing
and Issuance of
Certificate for
Lower / Nil TDS |
It is proposed to allow
electronic filing and
electronic issuance of
certificates for lower or nil
deduction of TDS/TCS u/s 395
of ITA 2025, instead of the
existing physical process
before the Assessing Officer |
From 1 April
2026 |
The amendment
aims to reduce
compliance
burden, especially
for small taxpayers |
|
7 |
Centralised
Filing of No-TDS
Declaration with
Depository |
Investors earning dividend,
interest on securities, or
mutual fund income will be
allowed to submit a single no-
TDS declaration to the
depository, instead of filing
separate declarations with
each payer. |
From 1 April
2027 |
Payers will now
report such
declarations
quarterly instead
of monthly,
reducing
compliance
burden. The facility
will apply only to
listed securities or
units held in demat
form. |
|
8 |
No TDS on
Interest on
compensation
amount awarded |
Awarded by Motor Accidents
Claims Tribunal to an individual Section 393 of the ITA 2025 |
From 1 April
2026 |
Relief to the
individual and to
alleviate the
hardship caused
due to
Accident |
|
9 |
Quoting of PAN
instead of TAN
for sale of
immovable
property by NRIs |
A resident individual / HUF is
not required to obtain a TAN for
deducting TDS on
consideration paid under
section 393(2)
Section 397(1)(c) of ITA 2025 |
From 1
October 2026 |
Reduces
compliance
burden for the
resident individual
and HUF |
|
IFSC and Investments income |
||||
|
1 |
Tax rate for IFSC
post tax holiday
period |
Eligible business income of
units in IFSC will now be taxed
at 15% instead of the 22% or
30% rate applicable to income
earned after
the tax holiday period |
TY 2026-27 |
Further
incentivises the
IFSC. |
|
2 |
Extension of tax
holiday for IFSC
Units |
• It is proposed to increase the
period of deduction to 20
consecutive years out of 25
years for units in IFSC and 20
consecutive years for OBUs |
From 1 April
2026 onwards |
Govt states that
the same is to
increase the
competitiveness of
IFSC. |
|
3 |
No deduction of
interest against
dividend income |
• Taxpayers were allowed a
deduction for interest
expenditure up to 20% of
dividend income while
computing income under the
head ‘Income from other
sources’. • Such deduction shall not be allowed |
From 1 April
2026 onwards |
Passive income
discouraged from
claim of expenses
and to be offered
on gross basis. |
|
4 |
Buy back tax |
• Consideration received on
buy-back of shares
chargeable to tax under the
head ‘capital gains’ i.e., the
same shall not be treated
as dividend income. • Additional income tax on capital gains shall be payable by ‘promoter’ shareholders @22% (for domestic corporate shareholders) and @ 30% (for others) |
From 1 April
2026 onwards |
This move brings
parity between
buybacks and
other modes of
profit distribution
such as dividends,
while also
strengthening tax
neutrality and anti-
avoidance
safeguards.
Treaty benefit for
additional tax
levied on
promoter’s buy-
back entitlement
to be perused in
detail |
|
5 |
Sovereign Gold
Bonds (SGBs) |
• Capital gains exemption on
redemption of SGBs
restricted to original
subscribers holding till
redemption |
From 1 April
2026 onwards |
To be held
continuously until
redemption on
maturity for
exemption |
|
Litigation and Dispute Resolution |
||||
|
1 |
Jurisdictional
AO clarification
for
reassessment |
• It is clarified that
reassessment proceedings
will not fail merely because
the notice is not issued by
the “jurisdictional” AO,
resolving conflicting court
views
(Reassessment provisions
u/s 148 and 148A of ITA 1961
& corresponding provisions
in ITA 2025). |
ITA 1961:
Retrospective
from 1 April
2021
ITA 2025:
From 1 April
2026 |
Substantially
reduces writ
litigation against
reopening notices.
However, impact
on cases
pronounced to be
rechecked pending
adjudication
before Honourable
Supreme Court. |
|
2 |
DIN procedural
defects
neutralised |
• Courts quashed
notices/orders lacking DIN. • The law now clarifies if assessment order are referenced by such number in any manner, then such orders shall be valid |
ITA 1961:
Retrospective
from 1 October
2019
ITA 2025:
From 1 April
2026 |
Pending DIN-
based challenges
may not survive;
Focus may shift to
merits. |
|
3 |
Single order for
assessment &
penalty |
• Assessment and penalty
will be passed in one
consolidated order to avoid
parallel proceedings |
ITA 1961:
From 1 March
2026
ITA 2025:
From 1 April
2027 |
Reduces
procedural
litigation and
shortens dispute
lifecycle. |
|
4 |
No interest on
penalty during
first appeal |
• Interest will not accrue on
penalty while the first appeal
is pending (ITA 2025) |
ITA 1961:
From 1 March
2026
ITA 2025:
From 1 April
2027 |
Removes
compounding
financial pressure
during litigation. |
|
5 |
Pre-deposit
reduced to 10% |
• Mandatory pre-deposit for
filing appeal reduced from
20% to 10% of core tax
demand (ITA 2025) |
From 1 April
2026 |
Makes appellate
remedy financially
accessible,
especially for
MSMEs. |
|
6 |
Updated return
allowed after
reassessment
notice |
• Taxpayer may file
an updated return even
after reassessment is
initiated, with additional
10% tax (ITA 2025).
Section 263 |
ITA 1961:
From 1 March
2026
ITA 2025:
From 1 April
2026 |
Encourages early
settlement and
reduces prolonged
litigation. |
|
7 |
Immunity
extended to
misreporting
cases |
• Immunity from penalty and
prosecution extended to
misreporting, subject
to additional tax equal to
100% of tax .
Section 440 of ITA 2025 |
From 1 March
2026 for AY
2026-27 or any
earlier AY’s |
Allows settlement
even in aggressive
tax positions. |
|
8 |
Decriminalisation
of minor offences |
• Non-production of books
and TDS paid in kind
decriminalised; graded
prosecutions introduced
(ITA 2025). |
ITA 1961:
From 1 March
2026
ITA 2025:
From 1 April
2027 |
Reduces
prosecution
exposure and
compliance risk. |
|
9 |
Small foreign
asset immunity
scheme |
• One-time 6-month scheme
for disclosure of foreign
assets (≤ ₹20 lakh non-
immovable) with immunity
from prosecution (Black
Money Act). |
6-month
window (to be
notified) |
Strategic clean-up
window for NRIs,
students, tech
professionals. |
|
10 |
Time Limit for
Completion of
Block
Assessment |
• The time limit for
completion is extended to
18 months from the
initiation of the
search/requisition, aligning
group search cases under
a uniform timeline. |
From 1 April
2026 |
Ensuring
uniformity in time
limits for group
searches and
creating a more
coordinated
approach to
investigations and
assessments. |
|
11 |
Rationalization of
Block Period for
Other Persons |
• Restricted block period for
“other persons” (third
parties) involved in a
search or requisition. Rule
limits the block period to
only the relevant tax year(s)
where the undisclosed
income pertains. |
From 1 April
2026 |
This change
rationalizes the
assessment period
for third parties,
ensuring a more
proportionate and
targeted approach. |
|
12 |
Unexplained
Cash and Credits
rate rationalised |
• Tax rate is reduced from
60% to 30%. Further, a
penalty of 10% is omitted. • However, such an offence will continue to be subject to a penalty of 200% applicable for misreporting of income. |
TY 2026-27
onwards |
Immunity from
penalty can be by
making a payment
of 120% of the tax
payable on such
income. |
|
Others – Return filing, Computation of income and procedural issues |
||||
|
1 |
Time Limit for
Filing Revised
Return |
• Extends the time limit for
filing a revised return from
9 months to 12 months
from the end of the relevant
tax year, or before the
completion of assessment,
whichever is earlier. • Additionally, a fee will be applicable for revised returns filed after 9 months. Section 263(5) |
From 1 April
2026 |
This extension
provides taxpayers
with more
flexibility to file
revised returns,
but the imposition
of a fee after 9
months introduces
a costly incentive
to file revisions
promptly,
encouraging timely
compliance while
offering some
leeway. |
|
2 |
Relaxation in
Filing Updated
Return in case of
reduction of
losses |
• Allows taxpayers to file an
updated return even if a loss
continues. Additionally, it
permits the reduction of loss
in cases where the updated
return reduces the amount
of loss claimed in the original
timely filed return. • This relaxation addresses hardship by allowing voluntary correction of excessive loss claims. Section 263(6) |
From 1 April
2026 |
This amendment
offers a significant
relief for taxpayers
by enabling them
to correct
excessive loss
claims and file
updated returns
even when a loss is
still involved,
providing a more
flexible and fair
approach to loss
adjustments. |
|
3 |
Rationalization
of Minimum
Alternate Tax
(MAT) Provisions |
• MAT will be treated as a final
tax under the old tax regime,
with no further MAT credit
allowed. • The MAT rate is reduced from 15% to 14% of book profit for domestic companies under the old tax regime. • MAT credit set-off will only be allowed in the new tax regime for domestic companies, limited to 25% of the tax liability. |
From 1 April
2026 |
This amendment
simplifies the MAT
framework,
reducing the
burden of MAT
credits and
incentivizing the
shift to the new tax
regime, while
offering a reduced
MAT rate for
smoother
compliance. |
|
4 |
Allowing the
Filing of Updated
Return After
Issuance of
Notice of
Reassessment |
• The proposed amendments
allow taxpayers to file an
updated return even after the
issuance of a notice of
reassessment under Section
280. • Additionally, the additional income-tax payable for filing such updated returns will include a 10% extra charge, but the income on which this tax is paid will not be subject to penalty under Section 439. Section 280 |
From 1st April
2026 for Tax
Year 2026-27
and
subsequent
years. |
This change
facilitates
voluntary
compliance and
reduces litigation
by allowing
updated returns
during
reassessment
proceedings, while
the additional 10%
tax helps ensure
proper compliance
without penalizing
taxpayers for such
corrections. |
|
5 |
Exemption on
Interest Income
under the Motor
Vehicles Act,
1988 |
• Exemption on income in the
nature of interest awarded
under the Motor Vehicles
Act, 1988. • This exemption applies to interest received by an individual or their legal heir as compensation for death, permanent disability, or bodily injury under the Act. Section 11 |
From 1 April
2026. |
This exemption
provides much-
needed relief to
victims of motor
vehicle accidents
and their families. |
|
6 |
Rationalizing the
Due Date for
Employee
Contribution
Deduction |
• Changes the due date for
claiming deductions on
employee contributions
made by the employer. • Due date for claiming such contributions will be aligned with the due date for filing the income tax return under Section 263(1). Section 29 |
From 1 April
2026 |
This amendment
offers the
employers with
more flexibility in
meeting
compliance
requirements
without losing out
on deductions. |
|
7 |
Allowing
Deduction to
Non-Life
Insurance
Business When
TDS Not
Deducted Earlier
is Paid Later |
• Allows non-life insurance
businesses to claim
deductions for amounts
previously disallowed under
Section 35(b)(i) and 35(b)(ii)
due to TDS not being
deducted or paid on time. • when the TDS is subsequently deducted and paid. Section 35 |
From 1 April
2026 |
This amendment
brings fairness and
clarity to the tax
treatment of non-
life insurance
businesses by
allowing them to
claim deductions
for TDS expenses
once the overdue
TDS is settled |
|
8 |
Exemption of
Income on
Compulsory
Acquisition of
Land under the
RFCTLARR Act |
• Aligns the Income-tax Act
with the RFCTLARR Act,
2013. It provides an
exemption on income arising
from the compulsory
acquisition of land under the
RFCTLARR Act.
Section 11 |
From 1 April
2026 |
Ensures consistent
treatment of
compensation for
land acquisition,
aligning the
Income-tax Act
with the RFCTLARR
Act. |
|
9 |
Exemption for
Disability
Pension to
Armed Forces
Personnel |
• Provides exemption for
disability pension only to
armed forces personnel who
are invalided out of service
due to a bodily disability
attributable to or aggravated
by their military service. • The exemption will also extend to paramilitary personnel. |
From 1 April
2026 |
Limiting it to those
invalided out of
service due to
service-related
disabilities, while
extending the
benefit to
paramilitary
personnel as well. |
|
10 |
Rationalizing
Due Dates for
Filing of Income
Tax Return |
• Rationalize the due dates for
filing income tax returns for
different classes of
taxpayers. • For non-audited business cases and trusts, the due date is extended from 31st July to 31st August to provide more time for preparation and compliance. • For individuals filing ITR-1 & ITR-2, the due date remains 31st July. Section 263 |
ITA 1961 From
1 March 2026
ITA 2025 From
1 April 2026 |
This change
provides more
flexibility for
taxpayers engaged
in non-audited
businesses or
trusts, simplifying
their compliance
process and
reducing
grievances, while
maintaining the
filing deadlines for
most other
individuals and
businesses. |
III. Indirect Tax Proposals – GST
| S. No. | Topic bucket | Key proposal (what changes) | Applicability | SBC Comments |
|---|---|---|---|---|
|
1 |
Post-sale
discounts are
now simplified |
1. The amendment to Section
15(3)(b) OF CGST Act 2017
eliminates the need for a
pre-existing agreement or
invoice-specific linking for
post-sale discounts. 2. To exclude the discount from taxable value, the only requirements are: Ø The supplier issues a Credit Note Ø The recipient reverses the proportionate Input Tax Credit (ITC) 3. Consequential alignment of Section 34 of CGST Act 2017 with revised Section 15(3)(b) is proposed under the Finance Bill, 2026. |
To be
Notified. |
This taxpayer-friendly
move acknowledges
commercial reality,
where post-sale
discounts like year-
end or performance-
based incentives are
often granted without
a pre-existing
contract. By deleting
the ambiguous
requirement of
invoice-specific
linkage, it significantly
reduces litigation and
disputes over volume-
based and aggregate
discounts. |
|
2 |
Provisional
Refund now
applies to
Refunds under
Inverted Duty
Structure |
• Extension of Provisional
Refunds 54(6): Currently,
grant of 90% of the refund
claim on a provisional basis
is primarily available for
zero-rated supplies
(exports). This benefit is now
being extended to refunds
arising from an Inverted Duty
Structure. • Removal of Minimum Threshold for Exports 54(14): Generally, restricted refund claims less than ₹1,000 now removed specifically for cases where goods are exported out of India with payment of tax (IGST) |
To be
Notified. |
• Businesses with
accumulated credit
due to inverted
duty will get faster
access to cash flow
(90% of their claim)
while the final
verification is
pending • Exporters paying IGST can now claim refunds for any amount, even if it is below ₹1,000, ensuring no tax sticks to exported goods. |
|
3 |
GSTAT as
Interim
National
Appellate
Authority |
Section 101A(1A) empowers
the Government to authorise
an existing authority or tribunal
(such as GSTAT) to hear
appeals on conflicting advance
rulings. |
From 1 April
2026 |
The amendment
addresses the non-
functioning of the
NAA, reducing
uncertainty for
taxpayers. |
|
4 |
Place of Supply
of intermediary
services |
Section 13(8)(b) of the IGST Act
has been omitted, removing the
special place-of-supply rule for
intermediary services. The
place of supply will now be
determined under Section
13(2), i.e., based on the
location of the service
recipient. |
To be
Notified. |
This aligns
intermediary services
with general GST
rules, reduces
disputes, and enables
export benefits for
services provided to
foreign clients. |
Indirect Tax Proposals – Customs
| S. No. | Topic bucket | Key proposal (what changes) | Applicability | SBC Comments |
|---|---|---|---|---|
|
1 |
Custom Duty
Exemptions |
• BCD exemption on
components for the manufacture of
civilian, training and other
aircrafts. • Facilitation of sales by in SEZ to the DTA at export turnover. / parts required eligible manufacturing units concessional rates of duty. • Increase in limit for duty-free imports of specified inputs used for processing seafood products for export, from the current 1% to 3% of the FOB value of the previou |
As notified in
detail |
These measures
signal a strong pro-
manufacturing and
export-oriented
approach by
reducing input costs
and easing market
access across key
sectors. |
|
2 |
Ease of Doing
Business with
New Export
Opportunities |
• Approvals required for cargo clearance through a single &
interconnected digital
window.
• Customs Integrated System
(CIS) to be rolled out in 2 years as a single, integrated
and scalable platform
. Complete removal of current value cap of 710 lakh per
consignment on courier
exports.
• Fish catch by an Indian
fishing vessel in Exclusive Economic Zone (EEZ) or on
the High Seas to be made
free of duty. |
As notified in
detail |
These measures
significantly improve
ease of trade by
reducing clearance
bottlenecks, lowering
logistics and
compliance costs,
and enabling faster
market access—
particularly
benefiting exporters,
courier-based trade,
and the marine
sector through
greater operational
efficiency and
competitiveness. |
|
3 |
Healthcare
Relief &
Personal Import
Duty
Rationalisation |
• Reduction of tariff rate on all
dutiable goods imported for
personal use from 20% to
10%. • Basic customs duty on 17 drugs or medicines to be exempted to provide relief to patients, particularly those suffering from cancer. • Addition of 7 more rare diseases for the purposes of exempting import duties on personal imports of drugs, medicines and Food For Special Medical Purposes (SMP) used in their treatment. |
Refer
detailed alert
to be
released
shortly |
These measures
significantly reduce
the cost of essential
medicines and
personal imports,
improving
affordability and
access to life-saving
treatments while
reflecting a strong
policy focus on
patient welfare and
social impact. |
|
4 |
Strategic Duty
Relief for
Energy
Transition &
Resource
Security |
• Extension of the basic
customs duty exemption
given to capital goods used
for manufacturing Lithium-
Ion Cells for batteries and
battery energy storage
systems • Extension of the basic customs duty exemption on imports of goods required for Nuclear Power Projects till the year 2035 • Basic customs duty exemption to the import of capital goods required for processing of critical minerals in India • Exclusion of the entire value of biogas while calculating the Central Excise duty payable on biogas blended CNC |
Refer
detailed alert
to be
released
shortly |
These measures
reinforce long-term
policy commitment
to energy transition
and strategic self-
reliance by lowering
project costs for
lithium-ion batteries,
nuclear power,
critical minerals
processing, and
green fuels, thereby
improving
investment viability
and accelerating
sustainable
infrastructure
development. |
The above highlights capture the broad policy/tax direction and key changes. Our detailed Budget 2026 tax alert, covering section-wise amendments, industry impact, and compliance action points, will follow shortly.
