Summary of Union Budget 2026-27 : Chiramrit

Summary of Union Budget 2026-27

Macroeconomic Overview India continues to demonstrate strong economic momentum, with an expected growth rate of 6.8–7.2% for FY27. The budget strategy prioritizes fiscal discipline, sustained growth, and reduced import dependency through structural reforms and public investment

Direct Tax Amendments (IT Act 2025)

• Taxation: The new tax regime remains the default structure. Marginal relief is now permitted in all surcharge cases.

• Corporate Tax: MAT is reduced to 14%, with provisions for setting off accumulated credits under the new regime. Consideration received from the buy-back of shares is now taxable as 'Capital Gains'.

• Compliance: TDS/TCS rates are rationalized, and new exemptions are introduced for interest on MACT compensation and payments to co-operative banks. Penalties for technical defaults are converted to mandatory fees, and deadlines for updated returns have been extended.

• Decriminalization: Prosecution proceedings have been significantly decriminalized, with punishments made proportional to the severity of the offenses.

Indirect Taxes

• Customs: Fishing activities by Indian-flagged vessels beyond territorial waters are now covered under the Act. The validity of advance rulings has been extended from three to five years. Additionally, the requirement for prior permission to transfer warehoused goods has been removed.

• GST: Post-supply discounts are rationalized, explicitly allowing for credit note issuance. Provisional refunds are expanded to cover cases of inverted duty structures.

• IGST: The place of supply for intermediary services now defaults to the recipient’s location, enabling export-related benefits.

Miscellaneous Announcements

• MSMEs & Manufacturing: Support includes a ₹10,000 crore SME Growth Fund and mandatory TReDS usage for CPSEs. Manufacturing initiatives target biopharma, semiconductors, and rare earth magnets.

• Finance: Bond market reforms include market-making frameworks and 'Total Return Swaps'.

• Social: 'SHE Marts' will be established to support women entrepreneurs from SHGs.