Budget 2026 Highlights: GST & Business Compliance Changes for Enterprises

Union Budget 2026, presented by the Union Finance Minister Smt Nirmala Sitharaman at 11:00 A.M. on 1st February 2026 (Sunday) at the Parliament. It is best understood as a Yuva Shakti-driven, execution-focused Budget that signals a shift from policy intent to system-level delivery. 

Key Takeaways

• Budget 2026 focuses on achieving Viksit Bharat, balancing ambition with inclusion.
• The GST proposals in Budget 2026 are aimed at implementing proposals approved by the 56th GST Council Meeting held in September 2025.
• It introduced targeted updates to the GST regime to enhance clarity and ease compliance. It includes greater procedural clarity, stronger refund mechanisms, and simplification of valuation rules to reduce litigation.
• Budget 2026 measures focus on simplifying direct tax administration while promoting investment. It emphasised new tax compliance frameworks, including revised ITR forms, extended return revision deadlines, and rationalised TDS/TCS rates.
• Customs and excise duty adjustments announced in Budget 2026 aim to rationalise tariff structures and support domestic manufacturing.
• Budget 2026 strengthens compliance frameworks to reduce risk and enhance transparency.

Budget 2026 Focuses on three Kartavyas:

• 1st Kartavya: Accelerating and sustaining economic growth by improving productivity, competitiveness, and resilience against global volatility.
• 2nd Kartavya: Building capacity and fulfilling aspirations by enabling people, enterprises, and institutions to become active partners in India’s growth journey.
• 3rd Kartavya: Ensuring inclusive participation so every sector, region, and community has access to resources, infrastructure, and opportunities under the vision of Sabka Sath, Sabka Vikas.

These are achievable with a supportive ecosystem: momentum from structural reforms, a robust and resilient financial sector, and cutting-edge technologies, including AI applications.

Budget 2026 Highlights

Union Finance Minister Nirmala Sitharaman has announced the below tax related amendments in Budget 2026:

Goods and Services Tax - Budget 2026 Proposals

• Amendment of section 15 & 34 of the CGST Act: Businesses will no longer need a pre-existing agreement to claim GST benefits on post-sale discounts. As long as a credit note is issued under Section 34 and the recipient reverses the related ITC, the discount can be excluded from the taxable value.
• Amendment of section 13 of the IGST Act: The special rule for intermediary services is being removed. So, the place of supply will be determined using the general rule (location of the recipient), which may reduce disputes and improve export clarity.
• Amendment of section 54(6) of CGST Act: Taxpayers claiming refunds due to an inverted duty structure will now be eligible for provisional refunds, improving cash flow while the final refund is processed.
• Amendment of section 54(14) of CGST Act: The minimum threshold for sanctioning refund claims is being removed for exports made with payment of GST, allowing refunds to be processed regardless of amount.
• Insertion of section 101A(1A): Until the National Appellate Authority (NAA) is constituted, the government can authorise an existing authority or tribunal to hear appeals under Section 101B. This change takes effect from 1 April 2026 and ensures there is no gap in the appellate process.

Income Tax - Budget 2026 Proposals

• Income Tax Return (ITR) filing:
  • Staggered ITR deadlines: For individuals (ITR-1/ITR-2) - 31st July and for non-audit business cases & trusts  - Extended to 31st August.
  • The deadline for filing revised ITR is proposed to be extended from 31st December to 31st March (subject to a nominal fee).
  • Depositories are proposed to be enabled to accept Forms 15G and 15H from investors holding multiple securities and provide them directly to the relevant companies.
• TDS simplification:
  • The supply of manpower services is proposed to be explicitly included under the scope of payments to contractors for TDS purposes to avoid ambiguity.
  • For the sale of immovable property by a non-resident, the TDS is proposed to be deducted and deposited by the resident buyer using a PAN-based challan, eliminating the need for a separate TAN.
• Tax Collected at Source (TCS) rationalisation: 
  • The TCS rate is proposed to be rationalized to 2% for sellers of specific goods like alcoholic liquor, scrap, and minerals. 
  • The TCS on Tendu leaves is also proposed to be reduced from 5% to 2%.
  • Reduction in TCS under LRS for education, medical purposes and overseas tour packages.
• Taxation of buybacks: Proposals were made to tax buybacks for all types of shareholders as capital gains to prevent improper use by promoters. Promoters would also be required to pay an additional buyback tax to discourage tax arbitrage, resulting in an effective tax of 22% for corporate promoters and 30% for non-corporate promoters.
• Securities Transaction Tax (STT): The STT rate is proposed to be raised on Futures to 0.05% and on Options (premium and exercise) to 0.15%.
• Corporate tax changes:
  • To encourage companies to shift to the simplified corporate tax regime, the existing Minimum Alternate Tax (MAT) credit is proposed to be set off up to one-fourth of the tax liability in the new regime.
  • MAT is proposed to be made a final tax from 1st April 2026, i.e, no further credit accumulation.
  • In line with this, the final tax rate is proposed to be reduced from the current MAT rate of 15% to 14%.
  • Existing brought-forward MAT credit will be fully allowed for set-off.
• Safe harbour, Transfer pricing and international tax reforms:
  • IT and IT-enabled services to be clubbed under a single category with a common safe harbour margin of 15.5%, simplifying transfer pricing compliance.
  • Safe harbour threshold increased from ₹300 crore to ₹2,000 crore, with automated, rule-based approvals and an option to continue for five years.
  • Fast-tracked unilateral APA process for IT services, targeted to conclude within two years, extendable by six months on request.
  • Tax holidays up to 2047 for foreign companies providing cloud services through India-based data centres; related entities to receive a 15% cost-based safe harbour.
  • Five-year income tax exemption for non-residents supplying capital goods, equipment, or tooling to toll manufacturers in bonded zones.
  • Safe harbour provided to non-residents for component warehousing in bonded warehouses..

Customs and Central Excise - Budget 2026 Proposals

• Simplification of tariff structure: Proposals aim to further simplify the tariff structure, support domestic manufacturing, promote export competitiveness, and correct duty inversion.
• Removal of exemptions: A proposal was made to remove certain customs duty exemptions on items that are currently being manufactured domestically or where the volume of imports is considered negligible.
• Rate incorporation: To simplify the process of ascertaining the applicable rate of duty, effective rates are proposed to be incorporated directly into the tariff schedule itself, moving away from reliance on separate customs notifications.
• Seafood export inputs: The limit for duty-free imports of specified inputs used for processing seafood for export is proposed to be increased from the current 1% to 3% of the Free On Board (FOB) value of the previous year's export turnover.
• Fish catch by Indian vessels in the Exclusive Economic Zone (EEZ) or high seas made duty-free, with landing at foreign ports treated as export of goods.
• Leather, textile, and garment exports: The time period for exporting the final product is proposed to be extended from the existing six months to one year for exporters of leather, textile garments, leather or synthetic footwear, and other leather products.
• Expansion of duty-free imports: The benefit of duty-free imports of specified inputs is proposed to be expanded to cover other relevant exports in the leather and synthetic footwear sectors.
• Battery energy storage systems: The basic customs duty exemption for capital goods used for manufacturing lithium-ion cells for batteries is proposed to be extended to those used for manufacturing lithium-ion cells for Battery Energy Storage Systems as well.
• Solar manufacturing: Basic customs duty is proposed to be exempted on the import of sodium antimonate, which is an input used in the manufacture of solar glass.
• Nuclear power projects: The existing basic customs duty exemption on imports of goods required for nuclear power projects is proposed to be extended until the year 2035 and expanded to cover all nuclear plants, irrespective of their capacity.
• Critical minerals processing: A basic customs duty exemption is proposed for the import of capital goods that are required for the processing of critical minerals within India.
• Biogas blended CNG: It is proposed to exclude the entire value of biogas when calculating the central excise duty payable on biogas blended Compressed Natural Gas (CNG).
• Civilian aircraft manufacturing: Basic customs duty is proposed to be exempted on components and parts required for the manufacture of civilian training and other aircraft.
• Defence MRO (Maintenance, Repair, and Overhaul): Basic customs duty is proposed to be exempted on raw materials imported for the manufacture of parts of aircraft that will be used in maintenance, repair, or overhaul requirements by units in the defence sector.
• Microwave oven manufacturing: Basic customs duty is proposed to be exempted on specified parts used in the manufacture of microwave ovens, with the intent to deepen value addition in the consumer electronic sector.
• Validity of advance rulings under Customs extended from three years to five years, improving certainty for importers and exporters.
• Enhanced duty-deferment period for Tier-II and Tier-III AEOs and eligible manufacturer-importers.
• Customs warehousing framework to shift to a warehouse-operator-centric, self-declaration-based model.

Budget 2026 PDF Downloads

Download Budget 2026 Highlights (PDF)
Download the Budget 2026 Speech (PDF)
Download the Finance Bill, 2026 (PDF)
Download the Explanatory Memorandum on Action Taken for Recommendations (PDF)

Focus of Union Budget 2026

Budget 2026 will mostly strengthen the foundation for our government’s Viksit Bharat goals, inclusive growth and energy efficiency. India’s Union Budget 2026 is also expected to include measures promoting a growth forecast of 7-7.5%. This year’s focus may include driving private investment, creating jobs through MSMEs and manufacturing, expanding insurance access, and stabilising the fintech sector, while balancing growth with welfare.

Most importantly, Budget 2026 could enhance financial stability, future-proof businesses, especially for AI and tackle key challenges in talent, infrastructure, and governance.