Published on: February 10, 2026
KEY HIGHLIGHTS OF THE TAX REFORMS( UNION BUDGET 2026-2027)
KEY HIGHLIGHTS OF THE TAX REFORMS( UNION BUDGET 2026-2027)
Joint Committee of Ministry of Corporate Affairs and Central Board of Direct Taxes: For incorporating the requirements of Income Computation and Disclosure Standards (ICDS) in the Indian Accounting Standards (IndAS)=> eliminating separate ICDS-based accounting from tax year 2027–28
| New Income Tax Act, 2025: | Replaced the existing Income Tax Act, 1961 with a new, simplified Income Tax Act, 2025, effective from 1st April 2026. |
| Tax Rates | No changes to the tax slabs for FY 2026-27; stability maintained. |
| Tax Collected at Source (TCS) | On overseas tour packages and remittances for education/medical purposes under LRS is reduced to a uniform 2% |
| Tax Deduction at Source (TDS) | On the supply of manpower services is fixed at 1% (for Individuals/HUF) or 2% (for others). |
| Customs Duty Rationalization:
| The tariff rate on goods imported for personal use is reduced from 20% to 10%. Customs duty is fully exempted on 17 cancer drugs and medicines/foods for 7 rare diseases. |
| Securities Transaction Tax (STT): | Marginally increased (from 0.1% to 0.15% in certain segments) |
| Minimum Alternate Tax (MAT) | Exemption from Minimum Alternate Tax (MAT) to all non-residents who pay tax on presumptive basis. |
| Buyback Tax Shift: | Share buybacks will now be taxed as Capital Gains in the hands of the shareholder |
SIGNIFICANCE
- Simplifies tax laws by replacing the old 1961 Act
- Provides policy stability by keeping tax slabs unchanged
- Reduces tax burden on individuals
- Improves tax fairness and clarity by rationalising STT
