Union Budget 2026-27: Key Highlights for Businesses

A comprehensive analysis of the major tax and policy changes announced in the latest Union Budget and their impact on Indian businesses.

The Union Budget 2026-27 continues the government's stated direction of simplifying the tax code, broadening the base, and supporting investment-led growth. For most businesses the changes are evolutionary rather than disruptive, but the cumulative effect on tax planning, compliance, and cash flow over the year is significant.

This note summarises what we believe are the most relevant changes for our client base — corporates, professional firms, MSMEs, and high-net-worth individuals — and the practical decisions each group should make in the coming quarter.

Direct tax: the continued shift toward the new regime

The Budget reaffirms the new personal income-tax regime as the default. The slabs and rebate thresholds have been refined to make it more attractive for middle-income salaried taxpayers, while the old regime remains available for those who fully utilise deductions like 80C, HRA, home-loan interest, and 80D.

The practical takeaway: every salaried client should run a side-by-side computation for the year before the first TDS deduction is locked in. We circulate a regime-comparison worksheet to our retainer clients each April; non-retainer clients can request a one-off comparison through our taxation practice.

Corporate tax: stability with targeted incentives

Corporate tax rates remain unchanged. The Budget instead focuses on targeted incentives — extended sunset clauses for new manufacturing units, sector-specific deductions, and continued support for the IFSC at GIFT City.

For private companies considering capacity expansion, the timing of asset commissioning relative to the eligibility window is now a decision that materially affects tax outcomes. Our advisory team can model the comparison and integrate it into the capital-expenditure plan.

Indirect tax: a quieter year for GST

The Budget signalled continued rationalisation of GST rate structures rather than wholesale changes. Specific clarifications have been issued on ITC eligibility, reverse-charge applicability, and refund procedures — most of which align with how authorities were already adjudicating disputes.

What businesses should do now:

• Reconcile FY 2024-25 ITC claims against the revised guidance, before the time-bar under Section 16(4)
• Review the input services classification used in the GSTR-3B against the latest circulars
• Update the GST compliance calendar to reflect any due-date changes for GSTR-9 and 9C

Compliance simplification and digitisation

Several procedural changes continue the move toward faceless compliance and digital interaction with tax authorities. The expanded scope of the faceless assessment regime, updates to the e-Proceedings portal, and changes to AIS reporting categories all mean that **the tax department now has more data about your transactions than your books do** — making AIS reconciliation a critical pre-filing step.

This year more than ever, ITRs filed without an AIS reconciliation are likely to attract intimations under Section 143(1). We strongly recommend that all clients review their AIS and Form 26AS before any return is submitted.

Sectoral notes

• **Banking & NBFC** — Updated provisioning and tax-deduction interplay; NBFCs should review the impact on their P&L recognition timing.
• **Real estate** — Continued attention on TDS under Section 194-IA / 194-IB; capital-gains treatment on properties acquired before July 2024 remains beneficial under the old indexed-cost route in qualifying cases.
• **Professional firms and consultants** — Presumptive taxation thresholds revised; check whether 44ADA continues to be optimal versus regular books-of-account computation.
• **Startups and DPIIT-recognised entities** — Eligibility for tax holidays continues; documentation of the start-up status and qualifying period is critical for audit defence.

What we recommend doing this quarter

1. Run a regime-comparison computation for all individual clients before April salary cycles begin. 2. Refresh the corporate tax calendar including advance-tax instalments under the new estimated-liability framework. 3. Reconcile every entity's AIS and Form 26AS for FY 2024-25 before ITR filing season opens. 4. Review compliance-calendar implications of any TDS rate changes — particularly for partner remuneration, contractor payments, and rent.

Each of these is part of our standard year-end review for retainer clients. For non-retainer clients who would like a one-off review of how the Budget affects their position specifically, please reach out via the contact page.