Union Budget 2026–27: Strengthening Ease of Doing Business and Ease of Living

The Union Budget 2026–27, presented by Nirmala Sitharaman, places strong emphasis on improving Ease of Doing Business (EoDB) and Ease of Living (EoL) through comprehensive tax, regulatory, and procedural reforms. The Budget adopts a reform-oriented approach aimed at reducing litigation, improving cash flows, and enhancing the overall quality of life.

Simplification of Tax Compliance and Relief to Taxpayers

To improve taxpayer convenience, the Budget proposes a rule-based automated process for obtaining lower or nil TDS certificates for small taxpayers, eliminating discretionary delays. Further, time for revising income-tax returns has been extended from 31st December to 31st March.

In addition, individuals filing ITR-1 and ITR-2 will continue to have a filing deadline of 31st July, while non-audit business cases and trusts are proposed to be allowed time till 31st August. Taxpayers are also permitted to update returns even after reassessment proceedings, by paying an additional 10% tax over and above the applicable rate, thereby promoting voluntary compliance.

To reduce litigation and fear of prosecution, the Budget introduces a framework for immunity from penalty and prosecution in cases of under-reporting and misreporting, and allows honest taxpayers to settle disputes by paying an additional amount instead of a penalty.

TDS, TCS, and Remittance Reforms

TDS on the supply of manpower services has been standardised at 1% or 2%, bringing clarity and reducing disputes. TDS on the sale of immovable property by non-residents will now be deducted and deposited using the resident buyer’s PAN instead of TAN, simplifying compliance.

To improve ease of living and reduce cash-flow blockage, TCS on overseas tour programme packages has been reduced to 2%, replacing earlier rates of 5% and 20%, without any threshold limit. Similarly, TCS under the Liberalised Remittance Scheme (LRS) for education and medical purposes has been reduced from 5% to 2%, making overseas education and healthcare more affordable.

Investor Convenience and Capital Market Reforms

To enhance investor participation and simplify compliance, interest awarded by the Motor Accident Claims Tribunal to natural persons has been exempted from income tax, and TDS on such interest has been removed.

Depositories have been enabled to accept Form 15G and Form 15H from taxpayers holding securities across multiple companies, reducing procedural complexity.

The Budget also allows Persons Resident Outside India (PROIs) to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme (PIS), thereby improving capital inflows and investor confidence.

Further, exemption from Minimum Alternate Tax (MAT) has been provided to non-residents paying tax on a presumptive basis, and MAT is proposed to be made a final tax, with set-off of existing MAT credit allowed up to one-fourth of tax liability under the new regime.

Corporate Tax and Disclosure Reforms

To improve transparency and alignment between tax and accounting standards, the Budget proposes to constitute a Joint Committee of the Ministry of Corporate Affairs and the Central Board of Direct Taxes to integrate Income Computation and Disclosure Standards (ICDS) into Indian Accounting Standards (Ind AS).

Additionally, tax treatment of share buybacks has been rationalised by taxing buybacks as capital gains in the hands of shareholders, while promoters will bear an additional buyback tax, ensuring equity and fairness in taxation.

Ease of Living Through Health, Trade, and Customs Reforms

The Budget exempts Basic Customs Duty (BCD) on 17 drugs and medicines used in cancer treatment, directly contributing to affordability and ease of living for patients.

To facilitate trade and logistics, the government has announced a single and interconnected digital window for cargo clearance approvals, along with the rollout of a Customs Integrated System (CIS) within two years.

Disclosure and Amnesty Measures

A one-time six-month foreign asset disclosure scheme has been introduced for small taxpayers holding foreign assets below a specified threshold. Additionally, immunity from prosecution has been granted retrospectively from 1 October 2024 for non-disclosure of non-immovable foreign assets with an aggregate value below ₹20 lakh.

By rationalising tax procedures, reducing litigation, easing remittance rules, improving investor convenience, and strengthening digital trade infrastructure, the Budget creates an environment where businesses can operate efficiently, and citizens can experience improved quality of life. These reforms, aligned with the broader vision of Viksit Bharat, lay a strong foundation for sustainable, inclusive, and resilient economic growth.

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