Taxmann's Analysis | Union Budget 2026 – Corporate Tax Changes at a Glance
Corporate taxpayers closely track the Union Budget for signals on tax policy, incentives, and the overall business environment. With the Budget 2026 now announced, it is important to review the proposals affecting companies, including those related to corporate taxation and sector-specific measures.
The Key Budget Announcements Relevant for Corporate Taxpayer:
1. MAT provisions are rationalised by reducing the MAT rate to 14%, treating MAT as final tax under the old regime without fresh MAT credit, and permitting a limited set-off of existing MAT credit up to 25% of tax liability under the new regime.
2. Income of a foreign company from supplying capital goods, equipment or tooling to an electronic goods contract manufacturer operating in a customs bonded area is exempt from tax up to tax year 2030-31.
3. Income of a foreign company from procuring data centre services from a specified Indian data centre is exempt from tax up to 31 March 2047.
4. Deduction under section 147 [Sec. 80LA of ITA 1961] is extended to 20 consecutive years out of 25 years for IFSC units and 20 consecutive years for Offshore Banking Units, with post-deduction business income taxed at 15%.
5. TCS rates are rationalised by prescribing largely uniform rates, including increasing TCS to 2% on alcoholic liquor, scrap and minerals, and reducing TCS to 2% on tendu leaves, LRS remittances for education or medical purposes, and overseas tour packages.
6. Taxation of share buy-backs is rationalised by taxing consideration received under the head “Capital gains” instead of dividend income, with effective tax rates of 30% for
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