Union Budget 2026

Vision of Union Budget 2026

The 2026 budget emphasises growth-oriented financial planning based on three main pillars:

• Increasing investment and infrastructure through record capital expenditure.
• Simplifying tax compliance for individuals, businesses, and NRIs.
• Promoting domestic and foreign investment.

The budget aims to ensure financial growth while keeping an eye on fiscal challenges.

Changes in Taxation

1. Direct Tax

   Income tax slab rates remain the same for FY 2026-27 (AY 2027-28). The government will implement a simplified Income Tax Act from 1 April 2026. The new law will make filing easier, reduce disputes, and clarify rules for salaried taxpayers and NRIs. Extended ITR deadlines:

   • ITR-1 and ITR-2: 31 July
   • Other returns (non-audit): 31 August
   • ITR revision is allowed until 31 March with a small fee.

2. Corporate Tax

   • The government has simplified the Minimum Alternate Tax (MAT) to 14% as a final tax.
   • Companies can still use previous MAT credits, but only at 25% of their original value.
   • The 22% corporate tax option continues to encourage transparency and compliance.
   • Cooperatives now get wider deductions under Section 80P, including cattle feed, cotton sales, and inter-cooperative dividends.

3. New Tax Treatment for Capital Gains & Buybacks

   • Share buybacks will now be taxed as capital gains in shareholders' hands, which protects small investors.
   • Promoters may pay an effective tax of 22-30%, depending on the situation.
   • The government has updated Long-Term Capital Gains (LTCG) rules for ULIPs: plans with annual premiums above ₹2.5 lakh will be taxed as LTCG for gains exceeding ₹1.25 lakh.

4. TDS & TCS

   • TDS relief:
   • Manpower services will attract 1-2% TDS.
   • PAN-linked TDS can now be used for NRI property sales, removing the need for a separate TAN.
   • TCS relief:
   • Overseas travel: 2% flat TCS rate.
   • Education and medical remittances over ₹10 lakh: 2% (down from 5%).

5. Wealth and Gift Tax

   • Wealth tax remains abolished, but clear reporting rules for high-value assets have been introduced.
   • Gift tax on cash or immovable property continues to apply if thresholds are exceeded.

6. Goods and Services Tax (GST)

   • No major GST rate changes for FY 2026-27.
   • Compliance has been simplified through easier return forms for small businesses.

7. Customs and Excise Duties

   • Import duties on certain capital goods, electronic components, and critical inputs have been lowered to support domestic manufacturing.
   • Some luxury goods and non-essential imports now attract slightly higher duties to increase government revenue.

8. Other Indirect Levies

   • Stamp duty and registration fees remain mostly unchanged, but digitisation continues to simplify compliance.
   • Securities Transaction Tax (STT) rates have changed to control speculative trading:
     • Futures: 0.05% (up from 0.02%)
     • Options premium/exercise: 0.15%
   • These measures aim to keep equity markets stable while discouraging excessive speculation.

ULIP Taxation

A key point for investment planners this year was the taxation of Unit Linked Insurance Plans (ULIPs):

• From 1 April 2026, ULIPs with annual premiums above ₹2.5 lakh will be taxed as LTCG for gains above ₹1.25 lakh instead of as regular income.
• Capital gains treatment for buybacks and other investments is now clarified.
• This aligns ULIPs with mutual funds and other market investments in terms of how profits are taxed.

NRI Focus

This year's budget gave special attention to Non-Resident Indians (NRIs) by offering incentives and simplifications.

1. Higher Investment Limits

2. NRI investment limit in Indian listed companies has increased from 5% to 10%.
3. The total investment cap for NRIs has increased from 10% to 24%.
4. This allows NRIs to own larger stakes in Indian companies, encouraging long-term growth participation.

5. Simplified Property Tax Compliance

6. Previously, NRI property sellers had to use a separate TAN account for TDS.
7. Now, property TDS can be paid using the buyer's PAN, making real estate transactions simpler and faster.

8. Remittance Cost Relief

9. Lower TCS on overseas remittances for travel, education, and medical purposes reduces upfront tax.
10. This improves cash flow for families and students abroad.
11. It is particularly beneficial for NRIs supporting relatives or funding overseas education and healthcare.

12. Foreign Asset Disclosure Scheme

    • A six-month window allows voluntary disclosure of foreign assets without prosecution penalties.
    • This provides major compliance relief for globally mobile taxpayers.

Changes in New Tax Regime Tax Slabs

Even though there is no change in the tax slab in the Union Budget 2026, here are the tax slab changes introduced last year in the budget.

Conclusion

The Union Budget 2026–27 is a pragmatic, growth-focused blueprint that prioritises clarity, compliance ease, and investment direction:

• Tax changes reduce confusion and improve predictability
• NRI measures open investment opportunities and eases financial flows
• Government schemes accelerate manufacturing and long-term growth themes
• Investment environments strengthen across key sectors

If you use this Budget to rethink tax planning, diversify investments, and leverage government priorities, 2026–27 is not just another fiscal year but a decade-shaping opportunity.