KEY HIGHLIGHTS OF BUDGET 2026–27
Direct & Indirect Tax
Direct Tax (DT)
Ease of Compliance & Relief
- Interest received from Motor Accident Claims Tribunal proposed to be exempt.
- Time limit for filing revised return extended up to 31 March.
- Simplified Income Tax Rules & Forms proposed alongside implementation of New Income Tax Act, 2025 from April 2026.
Decriminalisation & Rationalisation
Proposed decriminalisation of:
- Non-production of books of account.
- Procedural TDS defaults.
- Assessment and penalty proceedings proposed to be integrated through common orders.
- Pre-deposit for appeals reduced from 20% to 10% on core tax demand.
TDS / TCS Rationalisation
- TCS on overseas tour packages reduced to 2%.
- TCS under LRS for education and medical purposes reduced to 2%.
- Rationalised TDS rates for manpower services at 1% / 2%.
- Rule-based lower/NIL TDS certificate mechanism proposed.
- Form 15G/15H filing through depositories enabled.
International Tax & IT Sector
- Safe harbour margin for IT services proposed at 15.5%.
- Safe harbour turnover threshold increased from ₹300 crore to ₹2,000 crore.
- Fast-track APA mechanism for IT services.
- Tax holiday till 2047 proposed for eligible foreign cloud service providers operating through India.
MAT & Corporate Tax
- MAT proposed to become final tax in specified cases.
- MAT credit utilisation proposed up to one-fourth of tax liability.
- MAT exemption proposed for certain non-residents under presumptive taxation framework.
Amnesty & Disclosure
- One-time foreign asset disclosure scheme proposed for small taxpayers.
- Expanded immunity from penalty and prosecution in specified cases.
Indirect Tax (IDT)