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One of the most significant changes is the shift in the Minimum Alternate Tax (MAT) framework. From April 1, 2026, the MAT rate will reduce from 15% to 14%, and it will effectively become a final tax. While companies can continue to utilise MAT credits accumulated until March 31, 2026, no new credits will be generated thereafter. This calls for careful forecasting and timely utilisation of existing credits, especially for companies that have historically relied on MAT adjustments in their tax planning.
Another major reform is the change in buyback taxation. Buyback proceeds will now be taxed as capital gains in the hands of shareholders. This particularly impacts promoters, where effective taxation could reach approximately 22% for corporate promoters and 30% for non corporate promoters. The move is clearly aimed at curbing tax arbitrage, but it also alters the financial calculus for companies considering buyback strategies.
Transfer pricing provisions have also been rationalised. IT, ITeS, KPO, and software R&D activities are now consolidated under a single “Information Technology Services” category. With safe harbour margins increased to 15.5% and the eligibility threshold expanded to ₹2,000 crore, the sector benefits from greater clarity and reduced classification disputes. For mid sized and growing technology businesses, this simplifies compliance and enhances certainty in cross border transactions.
There are no GST rate revisions this year, but several clarifications are likely to significantly reduce disputes. Post-sale discounts have now been clearly recognised in valuation rules, resolving long standing ambiguity and offering relief to businesses that rely on volume based or performance linked pricing models.
The place of supply provisions for intermediary services have also been aligned with general GST principles, shifting the tax position to the recipient’s location from April 1, 2026. This is particularly beneficial for service exporters, strengthening India’s competitiveness in global markets.
Refund processes have been further strengthened, especially in cases involving inverted duty structures and exports. With tighter credit note rules and the introduction of interim appeals in advance ruling matters, the intent is evident: improve working capital efficiency while reducing unnecessary litigation.
From April 1, 2026, the Income Tax Act 2025 replaces the decades-old 1961 legislation. The new Act introduces simpler language, clearer structuring, and the formal adoption of the term “Tax Year.” Filing timelines have also been relaxed, with ITR-3 and ITR-4 deadlines extended to August 31 for non-audit cases.This legislative reset is designed to modernise compliance and make tax interpretation more straightforward, particularly for businesses navigating complex regulatory obligations.
The Budget also rationalises several TDS and TCS provisions. Rates on certain transactions, including LRS remittances and scrap sales, have been streamlined at 2%. The revised return filing window has been extended to 12 months, though additional fees apply for delayed submissions beyond December. TDS on NRI property transactions will now operate through PAN based challans, while manpower supply has been formally brought under the definition of “work” for TDS purposes.Assessment and penalty proceedings will be consolidated into a single order, and the pre-deposit requirement for filing appeals has been reduced to 10%, offering procedural relief to taxpayers. Additionally, depositories will centrally manage Forms 15G and 15H, improving administrative efficiency.
MSMEs receive targeted support through mandatory TReDS adoption for government payments, a ₹10,000 crore SME fund, and the introduction of “Corporate Mitras” to facilitate affordable compliance assistance. These measures aim to strengthen liquidity and reduce operational friction for smaller enterprises.At the same time, the increase in Securities Transaction Tax on futures and options marginally raises trading costs, a factor treasury and trading-focused entities must account for in their financial planning.
Union Budget 2026 reinforces a clear message: predictability and compliance discipline will define the next phase of India’s tax ecosystem. Businesses that proactively reassess their MAT positions, buyback structures, transfer pricing models, and GST processes will be better placed to navigate the transition smoothly.
At RVG India, we work closely with businesses to interpret policy changes beyond the surface level, align tax positions with evolving regulations, and build compliance systems that support long-term growth turning regulatory reform into measurable business advantage.
