India’s economic trajectory marked with stability, fiscal discipline, fiscal prudence, structural reforms, aatmanirbhar bharat. These efforts delivered high growth rate of 7% with employment generation. India continues to take higher steps to expand trades, boost growth, macro economic stability.
PM made proposals for this Yuva Shakti Budget.
This is first budget prepared in kartavya bhawan with three kartavyas
First kartavya to accelerate sustainable economic growth and build resilience
Second kartavya to fulfill aspirations of people by making strong partners
Third kartavya is sabka saath sabka vikas – every family has access to meaningful resources.
This requires
- Robust financial sector
- Management of risks
- Having cutting edge technologies
After PM announcement on 15.08.2025- rationalisation has taken place , deregulation, gst rates rationalisation and simplification , new labor laws
To develop india as bio pharma hub- 10,000 crores to boost pharma sector- Biologic medicines , bio pharma focus network , upgrading seven existing ones Accrediting and strengthen existing sector
Semi conductor sector capabilities enhanced- 40,000 crores mission for semi conductor sector
Electronic components manufacturing machines outlay increased
Mineral rich states of kerala Tamil Nadu and Odisha – technologies to be enhanced for mining
High tech tool rooms to be established to locally design and test manufacturing
Scheme introduced
For lifts in multi storey apartments,
Container manufacturing ecosystem with budget allocation of 10,000 crore
For labor intensive sector
Natural fibres-
National handloom and handicrafts program for weavers and artisans
Smarth 2.0 to upgrade textile ecosystem
Mega textile parks in challenge mode – on agenda
Affordable sports goods proposed
Rejuvenation and revive industrial clusters for technology upgradation
Creating champion MSMEs – three point support
Dedicated fund 10,000 crores for equity to them
Top up self reliance fund with 2000 crores
Liquidity support to MSMEs- mandate treds as settlement mechanism
Introduce credit guarantee support mechanism
Link gems with treds to encourage charter finance
Introducing transactions settlement
Professional support from ICAI ICSI to develop courses on corporate mitra
Infrastructure
Govt has undertaken large measures for the upgradation
Develop infrastructure for tier 2 and tier 3 cities
Public
Allocation of 11 lac crores increased to 12 lac crores
Strengthen
Proposed to accelerant recycling of real estate assets
Propose to establish freight corridor to dunkuni in east to Surat in west
In Odisha , water ways to connect ports – be enhanced which would benefit youth to train and acquire the skills
Launch costal cargo scheme
Incentive to indigenise
Carbon capture utilisation and storage technologies- outlay of 20000 crores proposed
Focus on tier 2 and tier 3 cities and temple towns – infra to be increased
Allocation of 5000 crores proposed
Promote environmental system – develop 7 high speed rail corridors
Financial sector
Banking sector covers 98% of india – propose high level committee on banking of viksit bharat
While safeguarding public interests
Restructure power finance corporation and rural electric corporation
Corporate bond market -Introduce100 crores allocated for single bond issuance of more than 1000 crores – current scheme under Amrit – to support smaller and medium terms
PMS- portfolio investment limit increased from 5% to 10% with overall limit increased from 10% to 24% for NRIs
Second kartavya -Close to 25 crore individuals have come out from poverty
Renewed emphasis on employment
High powered committee for service sector enhancement for 10% share in global share
Create range of skilled career pathways –
health – existing institutions to be upgraded – focus on 10 disciplines with 1 lac AHPs in next 10 years
Combine wellness yoga for health benefits
Hubs for medical tourism – establishing 5 regional medical hubs with private partnerships
Hubs to provide jobs opportunities in health sector
Yoga was taken to UN and got universal acceptance- more steps being taken – set up three all india institutes , Ayush institutes
Upgrade WHO medical centre at Jamnagar
Animal husbandry
Capital subsidy propose scheme – collaboration with Indian and foreign institutions
2 million professionals required by 2030
Institute to be set up in mumbai
Indian design industry – establish thru challenge route -a new institute of design in eastern india
One girl hostel to be established in every district
Tourism sector
Purpose to set up national institute of hospitality
Function as a bridge between govt and academia
Train guides in collaboration with IIM
Digitally document all places of tourism
Creating new ecosystem of jobs in Himachal Uttrakhand and J & K
World class trekking experience
Develop trek corridors
Bird watching places
India is hosting first ever Big Cat summit to deliberate on strategies for conversation
Cultural destinations to be set up
Khelo india mission to transform sports sector
Training centres
Coaches and support staff Competitions
For Third kartavya- proposals to
Increasing farmers incomes
Training divyang
Fisheries – strengthen value chain
Animal husbandry – support thru credit linked subsidy program
Integrate value chains
High value agriculture
Diversify and enhance farmers incomes
India’s is world largest producer of coconuts – enhance dedicated program for cashew and coco
Transform to premium global brands
Sandalwood linked to social and cultural heritage
Enhance farmers incomes with AI support
Purpose artificial limb corporation to set up and scale production
Strengthen and reaffirm commitment for mental trauma and healthcare
National institute in Ranchi proposed
Focus on north east states
Development of corridors
Creation of 5 tourism destinations
E buses to be built
Buddhist circuits to be created with pilgrimage amenities and centres
On 17.11.2025- pay commission submitted the report – accepted the report – provision of 1.4 lac crore to states as finance commission grants
Fiscal consolidation
To strive for fiscal discipline- debt to gdp ratio to be reduced- declining ratio to free up resources by reducing interest outgo
Commitment of 2021 fulfilled to reduced fiscal deficit below 4.5 by 2025
The revised estimates of total expd is 49.6 lac crores with capex of 11 lac crores
Centres net tax receipts 27 lac crores
Gross market borrowings 17.2 lac cores
Attracting global business investment- purpose tax holiday for foreign companies providing cloud services
FM Nirmala Sitharaman proposes a review of FEMA rules to modernise the framework for foreign investments.
FM also announces Total Return Swaps on corporate bonds, aimed at deepening India’s debt markets
Budget 2026 – Taxation Highlights (Part B)
Key Direct Tax Proposals at a Glance
1. New Income Tax Law & Compliance
- A New Income Tax Act, 2025 will replace the existing law with effect from 1 April 2026.
- Simplified and redesigned return forms to improve ease of filing.
- Form 15G / 15H submission process streamlined.
- Revised return filing window extended up to 31st March (earlier December).
- Staggered Return filing due dates:
- Individuals / HUFs – 31 July
- Trusts & others non auditable cases – 31 August
2. Direct Tax Relief & Rationalisation
Interest on motor accident compensation made fully tax-exempt.
TCS rates reduced:
•Foreign tour packages – 2%
•Education under LRS – reduced from 5% to 2%
TDS simplification measures:
Easier process for Lower/Nil TDS certificates.
NRI property purchases – TDS can be deducted using PAN (no TAN required). No tan property sold to NRIs – For NRIs selling immovable property, TDS will now be deducted by the resident buyer, eliminating the need for the buyer to obtain and quote a TAN.
Manpower services brought under TDS at 1% / 2%.
3. Disclosure & Compliance Measures
- Overseas Income & Asset Disclosure Scheme:
- Up to ?1 crore – 30% tax + 30% additional tax
- Up to ?5 crore – ?1 lakh fixed fee
- Updated return allowed even if reassessment proceedings have started (with 100% additional tax).
- Stricter action proposed for non-disclosure of foreign assets.
4. Appeals, Penalties & Prosecution
- Interest provisions on appeals clarified.
- Pre-deposit for stay of demand reduced from 20% to 10%.
- Penalty reforms:
- Penalties for Tax Audit & Transfer Pricing Audit to be converted into fixed fees.
- Prosecution relief:
- No prosecution for non-production of books or non-payment of TDS.
- Maximum imprisonment under the Income-tax Act reduced to 2 years.
5. Sectoral & Investment Incentives
- Co-operatives: Exemption extended to cotton seed and cattle feed.
- Global investment push:
- Tax holiday till 2047 for foreign companies providing data centre services.
- Safe Harbour margin fixed at 15%.
6. Corporate & International Tax Changes
- Ind AS to be aligned with ICDS for disclosure consistency.
- Buy-back of shares:
- Capital gains for minority shareholders to be taxed as LTCG / STCG.
- STT increased on options trading.
- MAT reforms:
- MAT credit carry-forward allowed up to 25% of tax liability under the new regime.
- MAT not applicable from 1 April 2026 under the new regime.
7. No changes in the tax slabs and tax rates
For companies – FY 2026-27, additional surcharge called the “Health and Education Cess on income-tax” shall be levied at the rate of 4% on the amount of tax computed, inclusive of
surcharge (wherever applicable), in all cases. No marginal relief shall be available in respect of such cess.
8. Rationalising the due date to credit employee contribution by the employer to claim such contribution as deduction Section 29 of the Act provides for deductions related to employee welfare. Clause (e)(i) of sub-section (1) of the said section provides for deduction of any amount of contribution received by the assessee being an employer, from an employee to which the provisions of section 2(49)(o) apply, if such amount is credited by the assessee to the account of the employee in the relevant fund or funds by the due date.
For the purposes of said clause, “due date” means the date by which the assessee is required as an employer to credit employee contribution to the account of an employee in the relevant fund under any Act, rule, order or notification issued under it or under any standing order, award, contract of service or otherwise.
It is proposed to amend section 29(1)(e) to provide that the due date for the said clause shall be the due date of filing of return of income under section 263(1) of the Act.
The amendment will take effect from the 1st day of April, 2026 and will, accordingly, apply to tax year 2026-27 and subsequent tax years.
9. Non furnishing of tax audit report , transfer pricing report to be paid thru fees
10. Non production of books of accounts to be decriminalised- payment of fines
11. No penalty on non disclosure of movable assets till 20 lacs – immunity granted since 1.10.2024
12. Safe harbour threshold for IT services raised to ?2,000 crore
Indirect Tax & Customs Measures
- Removal of obsolete customs exemptions
- Duty relief for marine, leather and textile exports
- Customs duty exemptions for clean energy, nuclear power and critical minerals
- Concessional duty for SEZ sales to Domestic Tariff Area
- Customs duty on personal imports reduced from 20% to 10%
- 17 life-saving drugs exempted from customs duty
- End-to-end digital customs clearance and AI-based scanning
Author | CA Jatin Minocha
