MM TAX CLUB

On 1 February 2026, India’s Union Budget for FY 2026–27 was tabled in Parliament by Nirmala Sitharaman, marking a significant moment in the country’s economic journey. This Budget is special not just for its scale, but because it is the first Budget prepared in Kartavya Bhawan, guided by a strong sense of duty (Kartavya) towards citizens and the nation.

At its core, the Budget reflects a clear vision: accelerated growth, empowered people, and inclusive development—all aligned with the goal of Viksit Bharat.

The Three Kartavyas: The Soul of Budget 2026–27

The Finance Minister structured the Budget around three guiding duties:

1️⃣ Accelerating and Sustaining Economic Growth

By strengthening productivity, competitiveness, manufacturing capacity, infrastructure, and resilience against global uncertainties.

2️⃣ Fulfilling Aspirations and Building Capacity

Ensuring people—especially youth, women, professionals, MSMEs, and farmers—are equipped to actively participate in India’s growth story.

3️⃣ Sabka Sath, Sabka Vikas

Guaranteeing that every family, region, and sector has access to opportunities, resources, and dignity.

Big Numbers, Strong Discipline

• Total Expenditure: ₹53.5 lakh crore
• Non-Debt Receipts: ₹36.5 lakh crore
• Capital Expenditure: ~₹11 lakh crore
• Fiscal Deficit (BE 2026–27): 4.3% of GDP
• Debt-to-GDP Ratio: Reduced to 55.6%

These numbers signal growth with fiscal responsibility, keeping long-term stability firmly in focus.

First Kartavya: Powering Growth Through Industry & Infrastructure

 Manufacturing in Strategic Sectors

• Biopharma SHAKTI with ₹10,000 crore outlay to make India a global biologics hub
• India Semiconductor Mission 2.0 to strengthen chip design, IP, and supply chains
• Boost to electronics components manufacturing (₹40,000 crore)
• Dedicated Rare Earth Corridors in mineral-rich states
• New Chemical Parks and advanced Hi-Tech Tool Rooms

 Textile Sector Transformation

From fibre to fashion, the integrated textile programme focuses on:

• Natural & man-made fibres
• Mega Textile Parks
• Handloom, handicrafts & khadi revival
• Global branding, skilling, and market linkages

 Infrastructure Push

• Public capex raised to ₹12.2 lakh crore
• New Dedicated Freight Corridors and 20 National Waterways
• Coastal cargo promotion & seaplane connectivity
• Seven High-Speed Rail Corridors connecting major growth centres

First Kartavya: Powering Growth Through Industry & Infrastructure

Manufacturing in Strategic Sectors

• Biopharma SHAKTI with ₹10,000 crore outlay to make India a global biologics hub
• India Semiconductor Mission 2.0 to strengthen chip design, IP, and supply chains
• Boost to electronics components manufacturing (₹40,000 crore)
• Dedicated Rare Earth Corridors in mineral-rich states
• New Chemical Parks and advanced Hi-Tech Tool Rooms

 Textile Sector Transformation

From fibre to fashion, the integrated textile programme focuses on:

• Natural & man-made fibres
• Mega Textile Parks
• Handloom, handicrafts & khadi revival
• Global branding, skilling, and market linkages

 Infrastructure Push

• Public capex raised to ₹12.2 lakh crore
• New Dedicated Freight Corridors and 20 National Waterways
• Coastal cargo promotion & seaplane connectivity
• Seven High-Speed Rail Corridors connecting major growth centres

Third Kartavya: Inclusion, Farmers & Regional Balance

 Farmers First

• Integrated development of 500 reservoirs and Amrit Sarovars
• Support for high-value crops like coconut, cocoa, and sandalwood
• Launch of Bharat-VISTAAR, a multilingual AI platform integrating AgriStack and ICAR

 Social Empowerment

• Divyangjan Kaushal Yojana for job-oriented skilling
• Expansion of mental health care with NIMHANS-2 and upgraded regional institutes

Regional Growth

• East Coast Industrial Corridor
• Tourism destinations in Purvodaya states
• Buddhist circuit development in the North-East
• 4,000 e-buses for sustainable mobility

Major Tax Reforms: Simpler, Fairer, Modern

???? New Income Tax Act, 2025

• Effective from April 2026
• Simplified rules & redesigned forms
• Extended timelines for return revisions
• Relief for small taxpayers and NRIs

 IT & Global Investment Boost

• Unified IT services category with 15.5% safe harbour
• Safe harbour threshold raised to ₹2,000 crore
• Tax holiday till 2047 for foreign cloud service providers using Indian data centres

 Rationalised Penalties

• Fewer prosecutions
• Decriminalisation of minor technical defaults
• One-time foreign asset disclosure window

Customs & Ease of Doing Business

• Import duty on personal goods cut from 20% to 10%
• Exemptions for critical minerals, lithium-ion batteries, drugs, and rare diseases
• Single digital window for cargo clearance
• Trust-based customs systems and faster exports for MSMEs and startups
• Final Takeaway
• The Union Budget 2026–27 is not just a financial document—it is a statement of intent. It combines ambition with inclusion, technology with tradition, and growth with responsibility.
• By putting people, productivity, and purpose at the centre, this Kartavya-driven Budget lays a strong foundation for India’s next phase of development—confident, inclusive, and future-ready.

The Union Budget 2026 has introduced a host of tax reforms and administrative measures aimed at simplifying compliance, reducing burdens on individuals and businesses, and fostering a transparent and efficient tax ecosystem. These initiatives are designed to enhance Ease of Doing Business and improve Ease of Living for taxpayers across India.

1. Simplifying Investments for Non-Residents

Persons Resident Outside India (PROIs) will now be allowed to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme (PIS). This step encourages foreign investment and strengthens India’s capital markets.

2. Tax Relief for Individuals

Several measures have been proposed to ease the financial burden on individuals:

• Exemption of interest awarded by Motor Accident Claim Tribunals to natural persons from income tax, with no TDS applicable.

• Reduction of TCS:

  • On overseas tour packages, from 5–20% to 2%, with no minimum threshold.

  • On education and medical remittances under Liberalized Remittance Scheme (LRS), from 5% to 2%.

• TDS on manpower services to be at 1% or 2%, reducing compliance costs.

• Obtaining lower or nil deduction certificates through a rule-based automated process for small taxpayers.

• Depositories can now accept Form 15G/15H from taxpayers holding securities in multiple companies.

3. Extending Timelines and Simplifying Compliance

• Time for revising income tax returns extended from 31st December to 31st March with a nominal fee.

• Filing deadlines maintained for individuals: ITR 1 & ITR 2 by 31st July, non-audit business cases or trusts by 31st August.

• TDS on sale of immovable property by non-residents can now be deducted through resident buyer’s PAN instead of TAN, simplifying compliance.

4. Supporting Small and Honest Taxpayers

• A one-time 6-month foreign asset disclosure scheme introduced for small taxpayers, allowing them to disclose below a certain asset size.

• Taxpayers can update returns even after reassessment by paying an additional 10% over the applicable tax rate.

• Penalty and prosecution immunity extended from underreporting to misreporting, promoting voluntary compliance.

• Decriminalisation: Non-production of books/documents and TDS non-compliance no longer attracts criminal liability.

• Immunity from prosecution for non-disclosure of non-immovable foreign assets under ₹20 lakh, retrospective from 1st Oct 2024.

5. Measures for Businesses

• Exemption from MAT for non-residents paying tax on a presumptive basis.

• Joint Committee of MCA & CBDT to integrate ICDS requirements into IndAS.

• Tax on share buybacks to be treated as Capital Gains, with promoters paying an additional buyback tax.

• Set-off using MAT credit allowed up to 1/4th of tax liability in the new regime.

• MAT proposed as final tax, simplifying compliance for companies.

6. Healthcare and Customs Reforms

• Exemption from Basic Customs Duty (BCD) on 17 cancer drugs/medicines.

• Single, interconnected digital window for cargo clearance approvals to reduce delays.

• Customs Integrated System (CIS) rollout planned over 2 years, promoting automation and efficiency.

7. Promoting Honest Tax Compliance

• Taxpayers willing to settle disputes voluntarily can close cases by paying an additional amount instead of penalties, encouraging transparent practices.

Conclusion

The 2026 tax reforms reflect a strong push towards simplifying compliance, reducing litigation, and incentivizing voluntary tax payments. By combining digitalization, process automation, and targeted exemptions, the government aims to enhance India’s Ease of Doing Business while improving the Ease of Living for individuals and businesses alike.

On 1 February 2026, India witnessed the presentation of a landmark Union Budget that blends ambition with inclusion. Presented by Nirmala Sitharaman, this is the first Budget prepared in Kartavya Bhawan, and it is deeply inspired by Kartavya—duty towards the nation and its people.

The Budget is unapologetically Yuva Shakti–driven, focusing on empowering the poor, the underprivileged, and the disadvantaged, while positioning India strongly in a volatile global economy.

The Three Kartavya Guiding the Budget

The Finance Minister framed the entire Budget around three core duties:

1️⃣ Accelerate and Sustain Economic Growth

By boosting productivity, competitiveness, infrastructure, manufacturing, and resilience to global shocks.

2️⃣ Fulfil Aspirations & Build Capacity

Ensuring people—especially youth, women, MSMEs, and professionals—are active partners in India’s growth journey.

3️⃣ Sabka Sath, Sabka Vikas

Making sure every region, community, and sector has access to opportunities in the march toward Viksit Bharat.

Big Push for Growth: Manufacturing, MSMEs & Infrastructure ????

 Biopharma SHAKTI – ₹10,000 Crore

A bold step to make India a global biopharma manufacturing hub, focusing on biologics and biosimilars. It includes:

• New and upgraded NIPER institutes
• 1,000+ clinical trial sites
• Faster, globally aligned drug approvals

 Textile Sector Revival

An integrated five-part programme covering:

• Natural & man-made fibres
• Modernisation of clusters
• Handloom & handicrafts
• Sustainable textiles
• Samarth 2.0 for skilling

 MSMEs as Future Champions

A ₹10,000 crore SME Growth Fund to identify and scale high-potential MSMEs into national and global leaders.

 Record Public Capex

Capital expenditure rises to ₹12.2 lakh crore, reinforcing infrastructure as the backbone of economic growth.

Connecting India: Rail, Waterways & Cities 

• 7 High-Speed Rail Corridors linking major growth centres like Mumbai–Pune, Hyderabad–Bengaluru, and Delhi–Varanasi
• New Dedicated Freight Corridors and 20 National Waterways
• City Economic Regions (CERs) with ₹5,000 crore per region over five years

This is infrastructure with intent—faster, greener, and future-ready.

Investing in People: Education, Skills & Sports 

 Girls in STEM

One girls’ hostel in every district to support women in higher education and research.

 AVGC & Creative Economy

AVGC Creator Labs in 15,000 schools and 500 colleges, preparing India’s youth for future digital careers.

 Tourism & Hospitality

• National Institute of Hospitality
• Upskilling 10,000 tourist guides with IIM collaboration
• Medical Tourism hubs across regions

 Khelo India Mission

A decade-long mission to transform sports through talent pathways, infrastructure, sports science, and leagues.

AI, Agriculture & Inclusion 

 Bharat-VISTAAR

A multilingual AI platform integrating AgriStack and ICAR, offering personalised advisory to farmers—boosting productivity and reducing risk.

 Mental Health Focus

• NIMHANS-2
• Upgraded mental health institutes in Ranchi and Tezpur

 Purvodaya & North-East

Tourism destinations, Buddhist circuits, e-buses, and industrial corridors to unlock regional growth.

Major Tax Reforms: Simpler, Fairer, Modern 

 New Income Tax Act, 2025

Effective April 2026, with:

• Simplified rules & forms
• Fewer penalties and prosecutions
• Easier return revisions
• Relief for small taxpayers and NRIs

 IT & Global Business Boost

• Unified IT services category
• Safe harbour margin of 15.5%
• Threshold raised to ₹2,000 crore
• Tax holiday till 2047 for foreign cloud service providers using Indian data centres

 Markets & Investors

• STT on futures increased
• Buybacks taxed as capital gains
• MAT rationalised and reduced to 14%

Customs & Ease of Doing Business 

• Lower duties on personal imports (20% → 10%)
• Exemptions for critical minerals, lithium-ion batteries, drugs, and rare disease medicines
• Faster cargo clearance via single digital window
• Warehouse operator–centric customs framework
• Removal of ₹10 lakh cap on courier exports—great news for startups and artisans

Fiscal Discipline with Growth Balance 

• Fiscal deficit: 4.3% of GDP
• Debt-to-GDP ratio on a declining path
• Strong borrowing plan without compromising capital investment
• Final Thoughts ????
• The Union Budget 2026–27 is not just about numbers—it’s about direction. It balances growth with compassion, technology with tradition, and global ambition with grassroots empowerment.
• A Budget that trusts India’s youth, strengthens its economy, and keeps inclusion at its heart—this is a confident step toward Viksit Bharat.

The Union Budget 2026 has introduced several targeted tax proposals aimed at supporting the fisheries sector and cooperative societies in India. These measures are designed to reduce the tax burden, encourage growth, and promote fair practices in these vital sectors.

1. Duty-Free Fish Catch in Indian Waters and High Seas

A major relief for the fisheries sector, the government has proposed that fish caught by Indian fishing vessels in the Exclusive Economic Zone (EEZ) or on the High Seas will be made free of duty.

Moreover, when such fish are landed at a foreign port, it will be treated as an export of goods, facilitating easier trade and enhancing the global competitiveness of Indian fisheries.

2. Enhanced Deductions for Primary Cooperative Societies

Primary cooperative societies engaged in agriculture or allied activities will benefit from deductions for supplies such as cattle feed and cotton seed produced by their members. This initiative aims to incentivize cooperative production and distribution, strengthening rural economies.

3. Dividend Income Benefits for Cooperatives

Under the new tax regime:

• Inter-cooperative society dividend income will be allowed as a deduction to the extent distributed to members, encouraging reinvestment and member benefits.

• Notified national cooperative federations will enjoy exemption from tax on dividend income from investments in companies made up to 31.1.2026, for a period of three years. However, this exemption will apply only to dividends distributed to member cooperatives, ensuring that benefits flow to the grassroots level.

Conclusion

These tax proposals demonstrate the government’s commitment to strengthening cooperative societies and the fisheries sector. By reducing duty burdens, providing deductions, and offering exemptions, these measures aim to support sustainable growth, enhance member benefits, and promote global competitiveness for Indian cooperatives and fisheries.