I. Indirect Taxes

A. Goods & Services Tax (GST)

• Section 15 – Valuation of Post-Sale Discounts
  • Clarifies that ITC reversal is not required if discounts are pre-agreed and linked to the original supply.
  • Explanation: This reduces disputes in FMCG, pharma, and retail sectors where promotional schemes are common.
  • Impact: Distributors and manufacturers gain certainty; litigation burden decreases.
• Section 54(6) – Provisional Refunds for Exporters
  • Mandates 90% refund within 7 days of application.
  • Explanation: Provides liquidity support, especially for MSMEs engaged in exports.
  • Impact: Textile, gems & jewellery exporters benefit from faster working capital cycles.
• Section 2(13) – Intermediary Services Definition Rationalised
  • Excludes back-office support functions from “intermediary” classification.
  • Explanation: Aligns with global practice, reduces disputes for IT/ITES and consulting firms.
  • Impact: BPO/KPO units gain clarity; cross-border contracts face less tax risk.
• Section 96 – Advance Rulings Validity Extended
  • Validity increased from 2 years to 5 years.
  • Explanation: Provides long-term certainty for businesses.
  • Impact: Corporates and SMEs can plan strategically with reduced compliance costs.

B. Customs

• Section 47 – Duty Deferral for AEOs
  • Payment window extended from 15 to 30 days for Tier 2 & 3 operators.
  • Explanation: Incentivises compliance and eases liquidity.
  • Impact: Importers save financing costs; logistics efficiency improves.
• Section 28H – Advance Rulings Validity Extended
  • Extended to 5 years for customs matters.
  • Explanation: Ensures predictability in import/export planning.
  • Impact: Reduces uncertainty for long-term contracts.
• Section 67 – Simplified Inter-Warehouse Transfers
  • Single declaration allowed for multiple transfers.
  • Explanation: Streamlines compliance for SEZs and EOUs.
  • Impact: Warehousing and export units face lower transaction costs.
• Duty Waivers & Concessions
  • Notifications issued for life-saving medicines, reduced baggage duties, and personal imports.
  • Explanation: Supports healthcare affordability and individual consumers.
  • Impact: Hospitals and patients benefit from lower treatment costs.
• Jurisdiction Extended to International Waters
  • Customs Act now applies to Indian-flagged fishing vessels.
  • Explanation: Strengthens regulatory oversight in maritime trade.

C. Excise

• Section 136 – NCCD on Tobacco Products Increased
  • Duty raised by 15%.
  • Explanation: Public health measure to discourage consumption.
  • Impact: Tobacco industry faces higher retail prices and reduced demand.
• Relief on Blended CNG
  • Excise duty reduced to promote cleaner fuels.
  • Explanation: Encourages transition to green energy.
  • Impact: Transport operators benefit from lower fuel costs.
• Diesel Duty Hike Deferred
  • Proposed increase postponed.
  • Explanation: Provides relief amid inflationary pressures.
  • Impact: Logistics and transport sector gain temporary cost stability.

INDIRECT TAX – Comparison between Pre-Budget and Post Budge with Impact

A. GST Amendments

B. Customs Amendments — Comparison

C. Central Excise — Comparison

II. Direct Taxes

A. New Income Tax Act, 2025 (effective AY 2026-27)

• Section 115BAC – No Change in Slabs or Standard Deduction
  • Rates remain unchanged.
  • Explanation: Reflects fiscal discipline but disappoints middle-class taxpayers.
  • Impact: Stability for revenue, but limited relief for salaried individuals.

B. Compliance Simplification

• Simplified ITR Forms (ITR-1 to ITR-4)
  • Staggered filing deadlines introduced.
  • Explanation: Reduces portal congestion and eases compliance.
  • Impact: Individuals and SMEs benefit from smoother filing.

C. Section 206C(1G) – Rationalisation of TCS

• Lower rates on overseas tour packages, education, and medical remittances.
• Explanation: Reduces upfront cash burden for taxpayers.
• Impact: Students, patients, and travel industry gain relief.

D. Foreign Asset Disclosure Scheme

• One-time settlement option with immunity for small taxpayers.
• Explanation: Encourages voluntary compliance and transparency.
• Impact: Boosts confidence among global investors and individuals with foreign assets.

E. Section 194-IA – Real Estate Transactions

• Mandatory TDS on sale of immovable property by non-residents.
• Explanation: PAN-based tracking ensures transparency and reduces evasion.
• Impact: Real estate developers and buyers face stricter compliance.

F. Section 270A – Penalty & Prosecution Rationalisation

• Integrated assessment-penalty orders introduced.
• Explanation: Reduces litigation and speeds up resolution.
• Impact: Taxpayers benefit from faster dispute settlement.

III. Strategic Perspective

• Ease of Doing Business: GST and customs reforms reduce disputes and compliance costs.
• Revenue Neutrality vs Growth: Government balances fiscal discipline with industry competitiveness.
• Sector Winners: Manufacturing, exports, healthcare, IT/ITES.
• Sector Losers: Tobacco, derivatives traders, middle-class taxpayers.
• Policy Direction: Strong emphasis on simplification, certainty, and green energy.

Income Tax Slabs – FY 2026-27

1. New Tax Regime (default regime under Section 115BAC)

• Rs. 0 – Rs.3,00,000 - Nil
• Rs.3,00,001 – Rs.6,00,000 - 5%
• Rs.6,00,001 – Rs.9,00,000 - 10%
• Rs.9,00,001 – Rs.12,00,000 - 15%
• Rs.12,00,001 – Rs.15,00,000 - 20%
• Above Rs.15,00,000 - 30%

Notes:

• Standard deduction of Rs.50,000 continues for salaried taxpayers.
• Rebate under Section 87A ensures no tax liability if taxable income is up to Rs.7,00,000.
• This regime offers lower rates but fewer exemptions/deductions.

2. Old Tax Regime (optional regime with exemptions/deductions)

• Rs.0 – Rs.2,50,000 - Nil
• Rs.2,50,001 – Rs.5,00,000 - 5%
• Rs.5,00,001 – Rs.10,00,000 - 20%
• Above Rs.10,00,000 - 30%

Notes:

• Taxpayers can claim deductions under Sections 80C, 80D, HRA, LTA, etc.
• Rebate under Section 87A applies if taxable income is up to Rs.5,00,000.
• This regime is beneficial for individuals with significant deductions.

Comparative Snapshot

Strategic Note

• No slab changes in Budget 2026: focus remains on compliance simplification rather than rate relief.
• Middle-class taxpayers: disappointed due to lack of slab revision, though rebates continue to provide relief.
• Choice of regime: taxpayers must evaluate whether deductions under the old regime outweigh lower rates under the new regime.

DIRECT TAX — Comparison between Pre-Budget and Post Budget with Impact

OVERALL COMPARISION (PRE-BUDGET VS BUDGET 2026)