Union Budget 2026: An economic Dhurandhar

Indiarsquos Finance Minister Nirmala Sitharaman has delivered a budget designed to make compliance simpler reduce avoidable friction for genuine taxpayers and signal longrange strategic intent On the personal tax front the headline is continuity There is no change in slab rates surcharge or the four per cent education cessMATrsquos thatThe mother of all deals is Minimum Alternate Tax MAT for companies which the Budget proposes to simplify materially it reduces the MAT rate to 14 per cent and reframes MAT as a final tax rather than a rolling credit pool stopping further MAT credit accumulation going forward To ease the shift to the new corporate regime it also allows setoff of brought forward MAT credit but with a guardrail set off is capped at onefourth of the tax liability under the new regimeForeign assetsA major practical relief is aimed at students and families dealing with overseas education payments and the accidental nondisclosure of foreign bank accounts in Schedule FA To clean up legacy inadvertent cases the Budget introduces a onetime voluntary disclosure window mdash FASTDS 2026 mdash built for small genuine taxpayers The scheme provides a sixmonth disclosure window and two tracks 1 Category A for undisclosed foreign incomeassets up to R1 crore where the taxpayer pays 30 per cent tax plus an additional 30 per cent in lieu of penalty with immunity from prosecution under the Black Money law and 2 Category B where the income was disclosed and tax paid but the asset wasnrsquot declared for assets up to R5 crore which can be regularised via a onetime R1 lakh fee with immunity from penalty and prosecutionPain pointsOn easing compliance burdens the Budget tackles several recurring pain points Tax collection at source TCS on overseas tour packages and on Liberalised Remittance Scheme LRS remittances for education and medical treatment is reduced to a uniform two per cent removing the lsquocash flow taxrsquo effect that offered little incremental revenue gain beyond timing Employer contribution deductions such as towards recognised provident funds are aligned more realistically with return filing deadlines to reduce needless litigation over minor procedural delays For nonresidents selling property in India the buyer is no longer forced into obtaining a TAN just to deduct tax mdashPAN becomes sufficient removing a completely avoidable compliance stepNo bottleneckA noteworthy structural shift is the move toward a rulebased automated issuance of LowerNil TDS certificates leveraging historical data and the digital infrastructure expected under the Income Tax Act framework and enabling centralised handling of Form 15G15H by depositories The return filing calendar is also refined to reduce lastminute congestion ITR1ITR2 due dates remain July 31 while nonaudit business cases and trusts move to August 31 and the window for belatedrevised returns extends to March 31 of the assessment year with a fee after December 31Mardaani 30Finally the Budget continues the lsquotrustbasedrsquo tone with decriminalisation measures It reduces the harshness of prosecutions for procedural lapses The intention is clear reduce adversarial proceedings and encourage voluntary compliance unless the crime is severe The Goods and Services Tax reform arc continues with measures meant to simplify procedures The most significant disputereducer is that earlier when services were classified as intermediary the place of supply was treated as India supplier location blocking export status and refunds and triggering litigation Now by aligning the place of supply to the recipientrsquos location under the default rule exports of services where the recipient is outside India can more cleanly qualify as zerorated enabling refunds of not utilised input tax credit without the same level of scrutinyGambhir moveAgainst expectations the Budget sharply increased Securities Transaction Tax on equity derivatives mdash futures from 002 per cent to 005 per cent and options to approximately 015 per cent with a clear objective to cool excessive speculative churn in equity futures and options However the Commodity Transaction Tax has not been tightened in parallel which may create an incentive shift toward commodity derivatives The asymmetry may need clarification to determine whether itrsquos deliberate policy design or an omissionDomestic strengthNetnet Budget 2026 leans more on compliance rationalisation dispute reduction and strategic sectorbuilding mdash a domestic strengthening approach aimed at resilience when global trade winds feel increasingly hostile As the world builds walls India builds corridorsCA Dr Mitil Chokshi is senior partner Chokshi amp Chokshi