Finance Minister Ms Nirmala Seetharaman presented her record 9th Budget on February 1, 2026 amidst a very volatile global geopolitical and economic scenario. In line with its priorities set out in the Economic Survey, the Government continues to focus on growth, has emphasised on the need to be integrated with global markets, exporting more and attracting stable long-term investments into the country.
On the policy front, the Government announced various measures to promote critical industry initiatives such as developing India as a global biopharma hub, expanding semi-conductor capabilities, announcing INR 10,000 crore (Indian Rupees ten thousand crore) SME Growth Fund, review of the Indian banking sector, etc. One of the other major announcements worth taking note of, was also the change to permit individual Persons Resident Outside India (“PROI”) to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme along with increasing the investment limit under this scheme from 5% to 10% and the overall investment limit for all individual PROIs to 24%.
From an income tax standpoint, the Government continues its effort to clarify ambiguities and aligning provisions to achieve the intended ease of compliance and administration. This has been the common thread this year, and changes have been made to Income-tax Act, 1961 (“IT Act 1961”) as well as Income-tax Act, 2025 (“IT Act 2025”) which will replace the IT Act 1961 from April 1, 2026. The Government seeks to align domestic priorities for establishing manufacturing businesses with present global economic conditions and has offered to take a slew of measures to attract international businesses by introducing tax holidays for non-residents providing cloud services to customers globally by using data centre services in India, and for entities providing capital goods to toll manufacturers operating within bonded warehouses in India. Acknowledging that the Information Technology Services sector can still provide employment to a large populace, a uniform safe harbour margin of 15.5% has been prescribed for any entity with a turnover of upto INR 2,000 crore (Indian Rupees two thousand crore). In order to make tax compliance easier, a host of changes have also been announced to decriminalise and simplify litigation proceedings, penalties, etc. under the IT Act 2025. Further, a joint committee of the Ministry of Corporate Affairs and the Central Board of Direct Taxes is proposed for incorporating requirements of Income Computation and Disclosure Standards in the Indian Accounting Standards.
With an objective to simplify the tariff structure, support domestic manufacturing, promote export competitiveness, and correct inversion in duty, several changes have been made to the Customs Tariff. The Budget brings no surprises on the Goods and Services Tax (“GST”) front, as most of the changes were already brought in by GST 2.0.
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