Union Budget 2026–27 Updates: What the New Changes Mean for Businesses

Introduction

Finance Minister Nirmala Sitharaman presented the Union Budget 2026–27 on 1st February 2026. Instead of big tax shocks, this year’s Budget focused on making tax laws simpler, reducing confusion, and making compliance easier for businesses and taxpayers.

Many of these changes will come into effect from 1st April 2026, which means businesses need to understand them early to avoid mistakes later. Whether you are a company owner, professional, or someone handling regular filings, these updates directly affect how compliance will be done going forward.

Let’s break it down in a simple way.

A New Income Tax Law Is Coming from April 2026

One of the biggest announcements in Budget 2026 is the Income Tax Act, 2025, which will replace the current income tax law. This new Act will be effective from 1st April 2026. The government has also said that simplified tax rules and forms will be notified in advance, so taxpayers get enough time to adjust.

What does this mean in simple terms?

• Tax rates and slabs stay the same
• The confusing system of “previous year” and “assessment year” is removed
• There will be just one clear “tax year”, making timelines easier to understand

This change is especially helpful for businesses managing multiple filings every year.

Income Tax Relief for Individuals

For individual taxpayers, Budget 2026 does not change tax slabs, but it does make filing a little easier.

Key points you should know:

• Income tax slabs under the new regime remain unchanged
• The time limit to revise your Income Tax Return is extended till 31st March, instead of 31st December, by paying a small fee
• Even if you file your return late, you may still be able to claim TDS refunds (detailed rules will be notified soon)

This gives breathing room to people who miss deadlines due to genuine reasons.

Transfer Pricing Made Simpler for IT and Service Companies

Budget 2026 brings a big relief for companies dealing with transfer pricing, especially in the IT and services space.

What has changed:

• The turnover limit for safe harbour benefits has jumped from ₹300 crore to ₹2,000 crore
• Earlier, different rules applied for software, IT services, KPO, and R&D
• Now, all of them are grouped under one “IT services” category
• A flat 15.5% margin applies to everyone under this category
• Approvals will be automated and rule-based, not discretionary
• Safe harbour can be used for up to five years

This reduces paperwork, confusion, and long discussions with tax authorities.

Corporate Tax Updates You Should Be Aware Of

Some important corporate tax changes were also announced in Budget 2026–27.

Highlights:

• MAT rate reduced from 15% to 14%
• Share buybacks will now be taxed as capital gains, not dividend
• GIFT City tax benefits extended to 20 years, followed by a low 15% tax rate
• Foreign companies offering cloud services globally will get a tax holiday till 2047, if they use Indian data centres

These steps aim to attract long-term business and investment into India.

TDS and TCS Rules Are Now Clearer

Many businesses struggle with TDS and TCS due to unclear rules. Budget 2026 tries to fix that.

What’s new:

• TCS on overseas tour packages reduced to 2%
• TCS on education and medical remittances under LRS also reduced to 2%, with no minimum limit
• TDS on manpower supply is now clearly covered under Section 194C, with rates of 1%–2%
• Getting a lower or nil TDS certificate will now be automatic, not dependent on approvals

This makes monthly compliance smoother and more predictable.

Foreign Assets and NRI-Related Changes

Budget 2026 also helps people who have foreign assets or deal with NRI transactions.

Key updates:

• A one-time foreign asset disclosure window for small taxpayers, with protection from prosecution
• NRIs selling property in India can now handle TDS using PAN instead of TAN, making the process simpler
• This encourages honest disclosure and reduces compliance stress.

Fewer Penalties, Less Fear Around Compliance

Another strong message from Budget 2026 is that not every mistake should be treated like a crime.

What has changed:

• Many small procedural mistakes are no longer criminal
• Several penalties are converted into fixed fees
• Assessment and penalty orders will be combined
• Appeal deposits are reducedJail terms are capped for serious cases

This makes compliance less scary, especially for small and mid-sized businesses.

Why These Budget 2026 Changes Matter for Businesses?

The Union Budget 2026–27 is not about flashy announcements. It is about:

• Clearer rules
• Less confusion
• More automation
• Better planning

Knowing these changes early helps businesses avoid last-minute errors, penalties, and missed deadlines.

How Ebizfiling Helps Businesses Stay Compliant?

Understanding Budget changes is one thing. Applying them correctly every month is another.

At Ebizfiling, we help businesses stay updated with new tax and compliance rules, track due dates, and handle filings correctly so nothing gets missed when laws change.

Final Thoughts

Finance Minister Nirmala Sitharaman’s Union Budget 2026–27, presented on 1st February 2026, focuses on simplifying compliance rather than increasing taxes. With major changes starting from 1st April 2026, businesses that stay informed and prepared will find it much easier to adapt.

Keeping track of these updates is not optional anymore. It is essential for smooth business operations.

Suggested Read :

Union Budget 2025: New Updates & Highlights

Income Tax Bill 2025

Due Dates of GST return 2025-26

Check TDS return status with PAN No

Intimation notice of Income Tax Act

12A & 80G Compliance of Income Tax Act