India Union Budget Highlights 2026-27
→The 2026 Budget is themed: “Budget of Consolidation, Renewed Resilience and Shared Prosperity”.
The Budget is framed against a backdrop of global economic uncertainty, supply chain realignments, and evolving investment dynamics, while reaffirming India’s focus on sustained growth and fiscal discipline.
This year’s Union Budget underscores the importance of regulatory certainty, ease of doing business, and targeted reforms to attract long-term capital and deepen India’s integration with global markets.
Let’s look at the key focus areas of the Union Budget 2026–27:
1. Direct Taxes
Direct Taxes, many new reforms are proposed in the Union Budget 2026-27. The New Income tax Act, 2025 will come into effect from April 2026
⇒ The Overseas tour program package is reduced from the current 5 percent and 20 percent to 2 percent without any stipulation of amount.
⇒ TCS for pursuing education and for medical purposes under the Liberalized Remittance Scheme (LRS) reduced from 5 percent to 2 percent.
⇒ The supply of manpower services to be brought within the ambit of payment to contractors for the purpose of TDS. TDS on these services will be at the rate of either 1 percent or 2 percent only. For small taxpayers, a rule-based automated process will enable obtaining a lower or nil deduction certificate instead of filing an application with the assessing officer.
⇒ The time available for revising returns is proposed to be extended from 31st December to up to 31st March with the payment of a nominal fee.
⇒ One-time 6-month foreign asset disclosure scheme for students, ge young professionals, tech employees, relocated NRIs, and such others to be introduced to disclose income or assets below a certain size.
⇒ Change in Late Fees for Tax Audit- Section 446
Budget 2026 proposes to :
• Omit penalty under section 446 and
• Convert it into a mandatory fee under proposed section 428(c).
Union Budget 2026–27 introduces strict fixed fees for late tax audit reports under Income-tax Act, 2025, with penalties up to ₹1,50,000 for delays from
April 1, 2026.
⇒ The current tax holiday period available to OBUs and IFSC Units is proposed to be extended from 10 consecutive years to 20 consecutive years for OBUs and
from 10 consecutive years out of 15 years to 20 consecutive years out of 25 years for IFSC Units.
⇒ As per the latest Union Budget of 2026, the MAT rates are as follows:
| Particulars | MAT Rate |
| MAT on Book Profit |
– 14% from 1 April 2026 – reduced from the previous 15% as part of tax simplification |
| Surcharge | 12% (if domestic profit is above₹1 crore) |
| Cess | 4% |
2. Indirect Taxes
The proposals pertaining to Customs and Central Excise are intended to further streamline the tariff structure, strengthen domestic manufacturing, enhanche export competetiveness, and address anomalies arising from inverted duty structures.
⇒ In Marine, Leather, and Textile products, the limit for duty-free imports of specified inputs used for processing seafood products for export, is to be increased from the current 1 per cent to 3 per cent of the FOB value. The duty-free imports of specified inputs, which is currently available for exports of leather or synthetic footwear will be allowed.
⇒ In Energy sector, the basic customs duty exemption given to capital goods used for manufacturing Lithium-Ion Cells for batteries will be extended and the basic customs duty on import of sodium antimonate for use in manufacture of solar glass will be exempted.
⇒ The existing basic customs duty exemption on imports of goods required for Nuclear Power Projects will be extended till the year 2035 and the basic customs duty on specified parts used in the manufacture of microwave ovens will be exempted.
⇒ In the Civil and Defence Aviation sector, the basic customs duty on components and parts required for the manufacture of civilian, training and other aircrafts will be exempted and the basic custom duty on raw materials imported for manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by Units in the Defence sector will be exempted.