MM TAX CLUB

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.

The Union Budget 2026 introduces a series of strategic tax reforms aimed at strengthening India’s services sector, especially in IT and technology-driven services. These reforms are designed to simplify compliance, incentivize investment, and enhance India’s position as a global hub for technology services.

1. Streamlining IT Services Taxation

To reduce complexity and provide clarity, all IT services will now be clubbed under a single category of information technology services, with a common safe harbour margin of 15.5%. This step simplifies tax treatment and ensures uniformity across the sector.

Additionally, the safe harbour threshold for IT services has been significantly increased from ₹300 crore to ₹2,000 crore, allowing more companies to avail of this facility. Approval of safe harbour for IT services will now be carried out through an automated, rule-driven process, enhancing efficiency and reducing delays.

Companies can also choose to continue safe harbour for a period of five years, providing certainty and predictability in tax planning.

2. Fast-Tracking Advance Pricing Agreements (APAs)

The government plans to fast-track the unilateral APA process for IT services, aiming to conclude cases within two years, with a possible extension of six months at the taxpayer’s request. This move ensures quicker resolution of transfer pricing issues.

Furthermore, entities availing APA can now extend the facility of modified returns to their associated entities, simplifying compliance for large corporate groups.

3. Incentives for Cloud and Data Centre Services

Foreign companies providing cloud services to global customers through India-based data centres will now enjoy tax holidays until 2047, creating a strong incentive for multinational investment.

Related Indian entities providing data centre services will also benefit from a safe harbour margin of 15% on cost, ensuring competitive and predictable taxation.

4. Incentives for Non-Resident Experts

To attract global talent, non-resident experts will be exempt from tax on global income for a stay period of five years under notified schemes. This encourages knowledge transfer and strengthens India’s services ecosystem.

Conclusion

These tax reforms demonstrate the government’s commitment to boosting the services sector by simplifying taxation, providing certainty, and promoting global competitiveness. With streamlined procedures, enhanced thresholds, and attractive incentives, India is set to become an even more attractive destination for IT services, cloud solutions, and data centre operations.

The Union Budget 2026–27 has unveiled a series of targeted tax and duty reforms aimed at strengthening India’s manufacturing ecosystem, enhancing competitiveness, and encouraging exports. These measures are designed to attract investment, simplify processes, and provide fiscal support to both domestic and non-resident manufacturers.

Key Reforms for Manufacturers

1. Income Tax Exemptions for Non-Residents

• Five-year tax exemption for non-resident entities providing capital goods, equipment, or tooling to any toll manufacturer in a bonded zone.

• Introduction of a safe harbour provision for non-residents operating component warehouses in bonded warehouses, providing certainty in taxation.

2. Customs Duty & Import Incentives

• Deferred duty payment window for trusted manufacturers to ease working capital constraints.

• Increase in the limit for duty-free imports of specified inputs for processing seafood exports from 1% → 3% of the previous year’s FOB export turnover.

• Duty-free imports extended to inputs used in the export of shoe uppers, along with leather and synthetic footwear.

• Exemption from basic customs duty on parts used in manufacturing:

  • Microwave ovens

  • Aircraft components and parts

  • Raw materials for aircraft parts used in defense maintenance, repair, and overhaul (MRO) units

3. Export Facilitation

• Extension of export timeline from 6 months → 1 year for exporters of leather/textile garments and leather/synthetic footwear.

• Export cargo using electronic sealing will now be cleared directly from factory premises to the ship, simplifying logistics.

4. Trusted Manufacturer Recognition

• Regular importers with longstanding and reliable supply chains will be recognized in the risk system, enabling faster clearances and reduced compliance burdens.

5. Special Measures for SEZ Units

• A one-time measure to allow eligible manufacturing units in SEZs to sell products in the domestic tariff area at concessional duty rates, promoting utilization of SEZ outputs in the local market.

Impact on the Manufacturing Sector

These reforms are expected to:

• Boost investments from non-resident manufacturers.

• Ease cash flow and compliance burdens for trusted domestic manufacturers.

• Encourage exports through duty exemptions and extended timelines.

• Strengthen India as a global manufacturing hub, particularly in electronics, footwear, aerospace, and seafood processing.

The Budget 2026–27 clearly signals the government’s commitment to creating a business-friendly environment and providing a level playing field for both domestic and international manufacturers, paving the way for sustainable industrial growth.

The Union Budget 2026–27 has proposed revisions in STT (Securities Transaction Tax) to rationalize the tax structure on derivatives:

Key Changes:
• STT on Futures: Increased from 0.02% → 0.05%
• STT on Options Premium: Increased from 0.10% → 0.15%
• STT on Exercise of Options: Increased from 0.125% → 0.15%

These changes are aimed at aligning taxation across equity derivatives, impacting traders and investors in the stock market.

What it means: Higher STT could slightly increase transaction costs for frequent traders but is expected to simplify tax compliance and uniformity in the derivatives segment.

Stay informed and plan your trading strategies accordingly!