Budget 2026 Pushes Tax Simplicity, Market Reforms and Foreign Investment Boost

Union Budget 2026 unveiled a broad overhaul of India’s tax and financial framework, with Finance Minister Nirmala Sitharaman announcing reforms focused on simplification, compliance ease and capital market depth. The highlight is the new Income Tax Act, 2025, set to take effect from April 1, 2026, replacing the 1961 law. The Act is revenue-neutral, retains existing tax rates and slabs, but sharply reduces complexity through fewer sections, clearer language and redesigned tax forms, aimed at cutting litigation and compliance costs.

To attract stable foreign capital, the government raised investment limits for overseas individual investors under the Portfolio Investment Scheme. Individual holdings in listed Indian companies can now go up to 10% from 5%, while the aggregate cap has been increased to 24%. Relief was also extended to non-resident Indians by allowing TDS on property purchases to be deposited using the buyer’s PAN-based challan, removing the need for a separate TAN and easing one-time transaction compliance.

In capital markets, the Budget raised Securities Transaction Tax on derivatives, with futures STT increased to 0.05% and options premium STT to 0.15%, signalling a cautious approach toward speculative trading. On the corporate side, the Minimum Alternate Tax rate was cut to 14%, while share buyback taxation was aligned with capital gains rules. The Budget also offered wide-ranging customs duty exemptions, including on cancer drugs, clean energy inputs and critical manufacturing components, reinforcing the government’s emphasis on predictability, long-term investment and targeted relief.

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