The Finance Act 2026, enacted on 30 March, implements the Union Budget 2026–27 measures. It introduces corporate tax cuts, IT sector incentives, customs duty relief, revised securities transaction taxes, and streamlined rules for foreign asset disclosure and personal tax filings.
India has enacted the Finance Act 2026 on 30 March 2026, giving legal effect to the tax and fiscal measures announced in the Union Budget for 2026–2027.
It introduces several changes that will affect businesses, the IT sector, investors and individual taxpayers.
Some of the key provisions include:
Corporate tax
The minimum alternate tax rate is cut from 15% to 14% and reclassified as a final tax, while share buybacks are now taxed as capital gains.
IT sector safe harbour
The budget consolidates software development, ITES, KPO, and contract R&D into one unified “Information Technology Services” category, replacing fragmented classifications with a single 15.5% safe-harbour margin. The eligibility threshold is raised sharply from INR 300 crore to INR 2,000 crore, bringing a much larger portion of the tech industry under its scope.
Tax holidays
Foreign cloud service providers using Indian data centres receive a 20-year tax holiday (or until 2047).
Non-residents supplying equipment to toll manufacturers in bonded zones get a five-year income tax exemption.
Data centre incentives
Resident entities providing data centre services to related foreign companies benefit from a 15% cost safe harbour.
Electronics logistics
To support just-in-time electronics manufacturing, non-resident warehousing components in bonded zones are covered by a 2% profit margin safe harbour, translating to an effective tax of roughly 0.7%.
Faster dispute resolution
Unilateral Advance Pricing Agreements (APAs) are targeted for conclusion within two years. The ability to file modified returns under APAs has also been extended to associated entities, broadening procedural relief.
Securities
The securities transaction tax (STT) on futures rises sharply from 0.02% to 0.05%, while the punitive rate on unexplained credits and investments is halved to 30%.
Indirect taxes
Import tariffs on personal goods are halved, customs duties are waived on essential medicines and rare disease treatments, and exemptions are extended to support the battery and solar energy industries.
Foreign asset disclosure
The new FAST-DS 2026 scheme offers taxpayers a path to declare undisclosed overseas assets up to INR 10 million by paying a combined 60% tax and penalty, with prosecution immunity.
Personal tax
The tax collected at source (TCS) rates on overseas remittances for travel, education, and healthcare are cut to a flat 2%, tax return deadlines are staggered across filer categories, and the window to revise returns is extended to 31 March.
Earlier, India’s Lok Sabha (lower house of parliament) approved the Finance Bill 2026 with amendments on 25 March 2026.
