Union Budget 2026-27: LIVE

Nuclear Power:

FM propose to extend the existing basic customs duty exemption on imports of goods required for Nuclear Power Projects till the year 2035 and expand it for all nuclear plants irrespective of their capacity. 

Energy Transition and Security:

FM Sitharaman announced an extension of basic customs duty exemption on capital goods used for manufacturing lithium-ion cells for battery energy storage systems. 

She also proposed to exempt basic customs duty import of sodium antimonate for use in manufacture of solar glass. 

Promotion of Exports of Marine, leather and Textile Products 

FM proposed to increase the limit for duty-free imports of specified inputs used for processing seafood products for export, from the current 1% to 3% of the FOB value of the previous year’s export turnover.

She further proposed to allow duty-free imports of specified inputs, which is currently available for exports of leather or synthetic footwear, to exports of Shoe Uppers as well. 

Along with it, she proposed to extend the time period for export of final product from existing 6 months to one year, for exporters of leather, or textile garments, leather or synthetic footwear or other leather products. 

Indirect Taxes

Proposals for Customs and Central Excise aim to further simplify:

• the tariff structure,
• support domestic manufacturing,
• promote export competitiveness, and
• correct inversion in duty.

She Proposed to remove certain exemptions on items which are being manufactured in India or where the imports are negligible.

Similarly, to further simplify the process of ascertaining the rate of duty applicable on a particular item, she propose to incorporate certain effective rates in various customs notifications to the tariff schedule itself. 

STT

FM Sitharaman proposed to raise the STT on Futures to 0.05% from present 0.02%. STT on options premium and exercise of options are both proposed to be raised to 0.15% from the present rate of 0.1% and 0.125% respectively.

It is proposed to provide that consideration received by a shareholder on buy-back shall be chargeable to tax under the head “Capital Gains” instead of being treated as dividend income.

In the interest of minority share holders, she proposes to tax buy back for all types of shareholders as capital gains. However, to disincentivise misuse of tax arbitrage, promoters will pay an additional buy back tax. This will make effective tax 22% for corporate promoters, while for non-corporate promoters, the tax will account for 30%. 

TCS rates for sellers of specific goods namely, alcoholic liquor, scrap and minerals will be rationalised to 2%. On tendu leaves , tax will be reduced from 5% to 2%. 

Tax Holiday till 2047 

FM Sitharaman announces the proposal of Tax Holiday till 2047 to any foreign company that provides cloud services to customers globally by using Data Center services from India. However, It will need to provide services to Indian customers through Indian reseller entity. 

Rationalising Penalty and Prosecution

FM Sitharaman proposes to integrate assessment and penalty proceedings by way of a common order for both.

No interest liability on the taxpayer on the penalty amount for the period of appeal before the first Appellate Authority, irrespective of the outcome of appeal process.

Further, the Quantum of pre-payment is reduced from 20% to 10%

In an effort to reduce litigation, she proposes to allow taxpayer to update their return even after Re-Assessment proceedings have been initiated. 

One-time six-month foreign asset disclosure scheme

To address Practical issues of small taxpayers like students, young professionals, tech employees and relocated NRI, FM Sitharaman proposes a one-time six-month foreign asset disclosure scheme to disclose income or assets below a certain size.

This scheme will be applicable on two categories of tax payers:

• those who did not disclose their overseas assets or income and
• those who disclosed their overseas income and paid due tax but could not declare asset acquired

The Income Tax Act will come into effect from April 1, 2026. 

She proposes that any interest awarded by the Motor Accident Claims Tribunal to a natural person will be exempt from Income Tax and any TDS on this account will be done away with. 

FM also Proposes to reduce TCS rate on sale of OCS program package from current 5% and 20% to 2% without any stipulation of amount.

Along with it, she also proposed to reduce TCS rate for pursuing education and medical purposes under the liberalised remittance scheme from 5% to 2%.

The Union Budget 2026-27 presentation also witnessed proposal of a scheme for small taxpayer where a rule-based automated process will enable in obtaining a lower or nil deduction certificate.

Propose the extension of time available for revising returns from Dec. 31 to Mar 31 with the payment of a nominal fee. 

She further announced Staggering timeline for filing of returns where Individuals with ITR 1, ITR 2 will continue to file till July 31 and non-audit business cases or trusts are proposed to be allowed time till August 31.