The Finance Bill has been passed by the Lok Sabha on Wednesday, marking a key step in implementing the Central Government’s Budget proposals for the fiscal year 2026–2027. Finance Minister Nirmala Sitharaman had moved the bill in the House on Monday.

A Finance Bill is a key legislative step that will give legal backing to the proposals announced in the Union Budget. The Finance Bill will now bring into force changes in income tax rates, duties and other levies, directly affecting how much individuals and businesses pay to the exchequer. The provisions are expected to shape citizens’ disposable income, savings and investment returns, among other measures.

"Finance Bill 2026-27 rests on five clear principles; trust- based tax administration is being improved; members mocking ease of living for common citizens and ease of doing business, we should continue on that process," said the Finance Minister Nirmala Sitharaman in the Lok Sabha.

For millions of taxpayers, Budget 2026-27 has quietly changed how and when income tax returns (ITRs) must be filed. While there was no change in tax slabs, the government has redrawn ITR timelines, linking deadlines directly to the ITR form you use. In her Budget speech, Nirmala Sitharaman announced two major compliance-friendly steps: more time to revise returns and staggered ITR filing deadlines. Soon after, the Finance Ministry issued detailed FAQs to clarify how these changes will work in practice. Filing deadlines now depend on your ITR form Until now, most taxpayers rushed to meet a common July 31 deadline. That changes from the 2026-27 tax year onwards, when filing dates will depend on the type of return you file.

The Union Budget 2026–27 has brought important compliance relief for Non-Resident Indians (NRIs), especially those dealing with property transactions, return filing, and small business taxation in India. The proposals aim to reduce paperwork, simplify tax procedures, and provide more time and flexibility to meet Indian tax requirements, making life easier for NRIs who continue to have financial ties with India. Easier property sales for NRIs One of the most important announcements for NRIs relates to the sale of immovable property in India. Earlier, when an NRI sold property, the resident buyer was required to obtain a Tax Deduction and Collection Account Number (TAN) to deduct and deposit TDS. This often delayed transactions and discouraged buyers, as TAN was needed only for a single property deal.

Budget 2026-27 marks a decisive shift in India’s fiscal and tax policy narrative—from expansion and experimentation towards consolidation and credibility. Anchored around three kartavyas—accelerating growth, meeting citizen aspirations, and ensuring inclusion—it signals a clear directional intent: India is now optimising its economic architecture for durability, predictability, and long-term capital formation. The FM has remained committed to the consolidation path, with the fiscal deficit estimated at 4.3% and central government debt placed on a declining trajectory at 55.6% of GDP in FY27. This macroeconomic stability forms the bedrock of the Budget’s investment-led growth strategy. Public capital expenditure has been raised to a record `12.2 lakh crore, complemented by targeted policy support and measures aimed at easing MSME liquidity constraints.

For companies and promoters, the buyback tax regime continues to represent stability rather than change, with overall liabilities largely unaffected. Under the earlier system, buyback proceeds were treated as dividend income, requiring promoters to pay tax at 22%. This was structured to prevent tax arbitrage, as promoters could otherwise have used buybacks to avoid dividend distribution tax and reduce their liability. Restoring Fair Taxation Manvinder Singh, Partner at JSA Advocates & Solicitors, said, “The Finance Bill, 2026 proposes to restore the taxation of share buybacks under the capital gains framework by correcting an unintended anomaly introduced in October 2024, where even the original investment was taxed as income. This change brings fairness and repositions buybacks as a legitimate mechanism for returning capital.” With this correction, the cost of acquisition will no longer be taxed. Only the actual gain will be subject to capital gains tax, similar to the sale of shares. This makes buybacks once again a viable and tax-efficient option for companies to return capital to shareholders, alongside dividends.

In an earlier article (“History doesn’t end today, our old compass has run its course”, IE, December 31, 2025), we examined India’s policy challenges in an unsettled global environment. This article revisits that framework. Assessing the Union Budget against the templates we had outlined, we find that it has been marked by much greater openness to recognising trade as an engine of growth. The Finance Minister’s mantra this year has been capital, technology, and export competitiveness. This philosophy was behind the trade agreements with the EU and the UK, as well as Australia, the UAE and Oman. Global Trade and Geopolitical Challenges Yet, geopolitical uncertainty has intensified debates on inflation and growth, capital flows, currency management, and India’s attractiveness as an investment destination. The US and China deploy tariffs, export controls, and licensing regimes, while restrictions on advanced technologies signal a fragmented order.

At a time when the foreign portfolio investors are fleeing the Indian stock market in hordes, the Union Budget has proposed to tap persons resident outside India (PROI) aggressively by more than doubling their investment limits in equities. Finance Minister Nirmala Sitharaman on Sunday proposed to increase the equity investment limit for a PROI to up to 10% of the paid-up capital from 5% and the combined limit of such investments to a maximum of 24% from 10%. With this new limit, experts said, PROIs will be encouraged to invest more aggressively in Indian equities directly. The proposal to hike the PROI investment limit comes at a time when the Indian equity market has been witnessing persistent sell-off by foreign investors. Foreign investors have sold shares of over Rs 1.95 lakh crore since 2025—the highest ever.

The Union government of India on Sunday presented companies like Apple among others with a New Years gift. Finance Minister Nirmala Sitharaman on Sunday announced a landmark initiative where it would allow foreign companies to provide machines to their contract manufacturers in certain areas for five years without any tax risk. This recent announcement from the Indian government provides strategic benefits to companies like Apple which has been growing its manufacturing presence in India in an effort to diversify its manufacturing process beyond China. According to a market intelligence firm, Counterpoint Research iPhone’s share of the Indian market has doubled to 8% since 2022.

Artificial intelligence has been given a sharper policy push in the Union Budget, with targeted spending across semiconductor manufacturing, data centre infrastructure and AI software development, signalling a more integrated approach to building a domestic AI ecosystem. On the hardware side, the government has continued backing the India Semiconductor Mission, with the focus shifting to accelerating chip fabrication, advanced packaging and electronics manufacturing. While no fresh headline allocation was announced for the mission, the emphasis has moved towards attracting investments in packaging, testing and component manufacturing, segments seen as critical for building a viable semiconductor value chain in the near term.

The Union Budget 2026-27 places a decisive bet on strengthening India’s manufacturing base, with a sharp focus on strategic sectors such as semiconductors, electronics, biopharma, rare earths, textiles, transportation, energy storage and capital goods. To meet future demand in a tech-driven world, the government announced India Semiconductor Mission (ISM) 2.0 to scale up domestic production of semiconductor equipment and materials, develop full-stack Indian IP, strengthen supply chains, and drive industry-led research and skilling. The Electronics Components Manufacturing Scheme has also been expanded, with its outlay nearly doubling to Rs 40,000 crore.

The Union Budget has proposed a five-year tax exemption on global income for non-resident experts, as the government seeks to attract overseas professionals to work in India for longer periods. Under the proposal, the global income of a non-resident expert, income not sourced in India, will be exempt from tax in India for a period of five years. During this period, only income earned from Indian sources will be taxable in the country, irrespective of the length of the individual’s stay. Eligibility linked to prior non-residency, government schemes According to the budget, to qualify for the exemption, the individual must have been a non-resident for the five years immediately preceding their visit to India. In addition, the expert must be providing services under the notified government schemes.

The Union Budget 2026 proposed a tax holiday until 2047 for foreign companies that provide cloud services to customers globally, using data centres located in India, signalling the government’s push to make the country a major hub for AI and digital infrastructure. The big push on data centres comes at a time when India is gearing up to take the centre stage in global discourse on Artificial Intelligence. It is expected to position India not just as a consumer of global cloud and AI services, but as a thriving base for the world’s digital backbone. Presenting the Budget, Finance Minister Nirmala Sitharaman said: “Recognising the need to enable critical infrastructure and boost investment in data centres, I propose to provide tax holiday till 2047 to any foreign company that provides cloud services to customers globally by using data centre services from India.”

Finance Minister Nirmala Sitharaman on February 1 presented her record ninth Union Budget. Sitharaman laid out an economic roadmap that looks to be in continuity with targeted shifts aimed at growth, resilience and long-term competitiveness. Framing her speech around “three core kartavyas” guiding the government’s vision, Sitharaman said the administration had consistently chosen “reforms over rhetoric” since coming to power. Below are the key business and economy highlights from Union Budget 2026: Capital expenditure raised Public capital expenditure has been raised to Rs 12.2 lakh crore for FY27, up from Rs 11.2 lakh crore in FY26. The government reiterated that infrastructure-led growth remains a central policy lever.

In Budget 2026, Finance Minister Nirmala Sitharaman said the target for capex will be raised to Rs 12.2 lakh crore for FY27 from Rs 11.2 lakh crore earmarked for the current fiscal year and announced a slew of measures to boost infrastructure in the country. The Finance Minister said that the government also proposes to set up a risk guarantee fund for the infrastructure sector. GDP growth projection In the Budget 2026, Nominal GDP growth is estimated at 10 per cent GST collection projection In Budget 2026, the FY27 GST revenue collection is projected at Rs 10.19 lakh crore, compared to Rs 10.46 lakh crore in FY26. For FY27, the RBI dividend to the government is projected at 3.16 lakh crore.

A much-awaited demand of taxpayers falling in two jurisdictions have been met by the finance minister Nirmala Sitharaman. Budget 2026 has proposed to extend the deadline for filing revised ITR by three months. However, this can be done by paying a nominal fee. Fee on revised ITR filing after December 31 Taxpayers can now file revised income tax returns until March 31 for a fee. This extension offers more time to correct errors in their ITR. A new section 2341 has been inserted under Income Tax Act, 2025. The new section proposes a fee of Rs 5,000 (where taxable income is more than Rs 5 lakhs) and Rs 1000 (where taxable income is upto Rs 5,00,000). The compliance can to be done on or before March 31 from the end of the relevant tax year.

The current year has been significant in India’s tax reforms journey. It focused on structural simplification through the new Income tax Act, 2025, bringing greater ease of compliance and boosting consumption by providing tax relief for individual taxpayers. Budget 2026 must carry forward the reforms process to further reduce complexity, enhance certainty, build trust and boost investments. Some areas that need attention are discussed below. Rationalise TDS to simplify compliance and avoid disputes With 37 different types of payments to residents where TDS rates vary from 0.1% to 30%, TDS provisions become a fertile ground for disputes relating to categorisation and interpretation. In many instances, industry faces cash flow blockages awaiting refunds, and the government incurs avoidable interest cost on such refunds.

The Union Budget may provide Rs 5,000–6,000 crore in incentive support for domestic manufacturing of solar ingots and wafers, as the government looks to strengthen India’s upstream solar supply chain, officials familiar with the discussions said. The proposed outlay is being examined as part of a possible incentive or PLI-linked framework aimed at reducing import dependence in critical components and improving supply-chain resilience in the renewable energy sector. “The focus is on upstream manufacturing,” an official said on the condition of anonymity, adding that discussions are ongoing and no final decision has been taken.

The Union Budget to be presented on February 1 is expected to propose an incentive scheme of over Rs 13,000 crore for the construction equipment sector, as the government looks to strengthen domestic manufacturing and reduce reliance on imports, according to officials familiar with the discussions. The proposed scheme is likely to be part of the government’s broader effort to build domestic capacity in capital goods that are critical to infrastructure creation, at a time when public investment continues to anchor economic growth. In the current financial year, the government has earmarked Rs 11.11 lakh crore for capital expenditure, or about 3.4% of GDP, with infrastructure accounting for a large share of the outlay.

The Union Budget to be presented on February 1 is expected to propose an incentive scheme of over Rs 13,000 crore for the construction equipment sector, as the government looks to strengthen domestic manufacturing and reduce reliance on imports, according to officials familiar with the discussions. The proposed scheme is likely to be part of the government’s broader effort to build domestic capacity in capital goods that are critical to infrastructure creation, at a time when public investment continues to anchor economic growth. In the current financial year, the government has earmarked Rs 11.11 lakh crore for capital expenditure, or about 3.4% of GDP, with infrastructure accounting for a large share of the outlay.

The government is likely to announce a dedicated Production Linked Incentive (PLI) scheme for manufacturing critical nuclear components, in the upcoming Union Budget, as part of efforts to strengthen India’s domestic nuclear supply chain and support long-term capacity expansion, a government official said on the condition of anonymity. People aware of the discussions said the incentive outlay being examined is in the range of Rs 18,000-20,000 crore, though final approvals, timelines and eligibility criteria are yet to be firmed up. The move follows opening up of the sector to the private sector via the recently enacted Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, with caps on accident-related penalties on equipment suppliers.