Parizad Sirwalla, Partner and Head, Global Mobility Services- Tax, KPMG in India
Budget 2026 emphasizes a compliance‑friendly, trust‑enhancing tax framework over rate cuts. Few highlights being decriminalizing minor offences, enhancing voluntary disclosures, extension of revised return deadlines, TCS / TDS rationalization, encouraging deeper market participation by PROI. Revamp of buyback‑tax framework and the rise in STT on futures and options will influence investor behavior and short-term sentiments.
Efforts are also made in direction of dispute resolution rationalization – amnesty scheme for undisclosed overseas income/ assets, certain offences decriminalized. Positive impact may be felt on cash flow on account of reduction of TCS on overseas tours, medical and education expenditure abroad.
There is also promise of new income tax rules and simplified forms. At the same time there is an eye on reforms to protect small taxpayers and individuals with a high-level committee on banking reforms, buy back now taxed as capital gains with specific measures for misuse etc.
However, overall, the focus is on stability, continuity and certainty of tax regime.
Himanshu Parekh, Partner, Tax, KPMG in India
With a view to provide a major boost to the IT/ ITeS sector, the safe harbour norms have been significantly relaxed by providing for a lower margin of 15.5% over cost for companies whose turnover does not exceed Rs 2000 crores. Also the classification into low end and high end activity profile has apparently been done away with. Also, APAs for this sector will now be fast tracked, thereby providing certainty in respect of their tax liability in India.
Abhishek Jain, Partner and Head, Indirect Tax, KPMG in India
The Budget adopts a calibrated, sector-specific approach to Make in India, including a near doubling of the outlay for electronics component manufacturing alongside targeted support across areas such as semiconductors, critical minerals, container manufacturing, R&D, design capabilities and textiles. In a challenging global environment, this approach signals policy resolve and could meaningfully influence long-term investment decisions and India’s positioning within global manufacturing value chains”
The Budget’s amendment to the place of supply provisions for intermediary services is a long-awaited relief for the services export sector, as facilitation services earning foreign exchange will now qualify for zero-rating instead of suffering an embedded 18% GST cost. Equally important, it should put to rest prolonged disputes where non-intermediary support and back-end services were incorrectly questioned as intermediary services, thereby reducing litigation, unlocking refunds, and improving overall ease of doing business for service exporters.
”The Budget reflects a calibrated, sector-specific approach to manufacturing, deploying tailored avenues across priority and emerging areas such as electronics components, semiconductors, critical minerals, R&D, design capabilities and textiles. On the customs front, the alignment with the Digital India vision through a more integrated customs system, wider access to deferred duty payment, technology-led and non-intrusive clearance processes, along with selective rate rationalisation for strategic sectors such as nuclear energy, batteries and energy storage systems, should support manufacturing competitiveness, while measures like electronic sealing for exports further strengthen trade facilitation. From a GST perspective, the amendment to the place of supply for intermediary services provides long-awaited relief to services exporters by enabling zero-rating of foreign exchange earning facilitation services and reducing prolonged classification disputes”
