TaxTMI 
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TaxTMI 
I. Indirect Taxes
A. Goods & Services Tax (GST)
- Section 15 – Valuation of Post-Sale Discounts
- Clarifies that ITC reversal is not required if discounts are pre-agreed and linked to the original supply.
- Explanation: This reduces disputes in FMCG, pharma, and retail sectors where promotional schemes are common.
- Impact: Distributors and manufacturers gain certainty; litigation burden decreases.
- Section 54(6) – Provisional Refunds for Exporters
- Mandates 90% refund within 7 days of application.
- Explanation: Provides liquidity support, especially for MSMEs engaged in exports.
- Impact: Textile, gems & jewellery exporters benefit from faster working capital cycles.
- Section 2(13) – Intermediary Services Definition Rationalised
- Excludes back-office support functions from “intermediary” classification.
- Explanation: Aligns with global practice, reduces disputes for IT/ITES and consulting firms.
- Impact: BPO/KPO units gain clarity; cross-border contracts face less tax risk.
- Section 96 – Advance Rulings Validity Extended
- Validity increased from 2 years to 5 years.
- Explanation: Provides long-term certainty for businesses.
- Impact: Corporates and SMEs can plan strategically with reduced compliance costs.
B. Customs
- Section 47 – Duty Deferral for AEOs
- Payment window extended from 15 to 30 days for Tier 2 & 3 operators.
- Explanation: Incentivises compliance and eases liquidity.
- Impact: Importers save financing costs; logistics efficiency improves.
- Section 28H – Advance Rulings Validity Extended
- Extended to 5 years for customs matters.
- Explanation: Ensures predictability in import/export planning.
- Impact: Reduces uncertainty for long-term contracts.
- Section 67 – Simplified Inter-Warehouse Transfers
- Single declaration allowed for multiple transfers.
- Explanation: Streamlines compliance for SEZs and EOUs.
- Impact: Warehousing and export units face lower transaction costs.
- Duty Waivers & Concessions
- Notifications issued for life-saving medicines, reduced baggage duties, and personal imports.
- Explanation: Supports healthcare affordability and individual consumers.
- Impact: Hospitals and patients benefit from lower treatment costs.
- Jurisdiction Extended to International Waters
- Customs Act now applies to Indian-flagged fishing vessels.
- Explanation: Strengthens regulatory oversight in maritime trade.
C. Excise
- Section 136 – NCCD on Tobacco Products Increased
- Duty raised by 15%.
- Explanation: Public health measure to discourage consumption.
- Impact: Tobacco industry faces higher retail prices and reduced demand.
- Relief on Blended CNG
- Excise duty reduced to promote cleaner fuels.
- Explanation: Encourages transition to green energy.
- Impact: Transport operators benefit from lower fuel costs.
- Diesel Duty Hike Deferred
- Proposed increase postponed.
- Explanation: Provides relief amid inflationary pressures.
- Impact: Logistics and transport sector gain temporary cost stability.
INDIRECT TAX – Comparison between Pre-Budget and Post Budge with Impact
A. GST Amendments
Area | Earlier Provision | Budget 2026 Proposal | Practical Impact |
Post-sale discounts | Section 15(3)(b) required pre-agreement and invoice linkage; disputes on secondary discounts. | Clause 137 amends Section 15(3)(b) read with Section 34 to recognise commercial discount structures through credit notes. | FMCG, pharma, auto distribution models gain certainty; litigation reduces. |
Provisional refunds | Section 54(6) allowed provisional refund mainly for exports/SEZ. | Clause 139 extends 90% provisional refund to inverted duty refunds and specified categories. | Liquidity improvement for manufacturing exporters and MSMEs. |
Intermediary services | Section 2(13) and Section 13(8)(b) created disputes for support services treated as intermediary. | Clause 134 clarifies exclusion of back-office/support services from intermediary classification. | Major relief for IT/ITES, GCCs, consulting firms. |
Advance rulings (GST) | Sections 101A/101B framework existed but appellate authority not fully operational. | Clause 140 allows interim appellate mechanism notification. | Reduces conflicting rulings across states. |
B. Customs Amendments — Comparison
Area | Earlier Provision | Budget 2026 Proposal | Practical Impact |
Duty payment timeline (AEO) | Section 47 allowed 15-day duty payment window. | Clause 98 extends window to 30 days for Tier-2 and Tier-3 AEO. | Improves importer liquidity and supply-chain efficiency. |
Customs advance ruling validity | Section 28H rulings valid for shorter certainty period (transaction-specific interpretation). | Clause 102 extends validity to 5 years. | Long-term import contracts gain certainty. |
Inter-warehouse transfers | Section 67 required multiple declarations per transfer. | Clause 101 allows single declaration for multiple transfers. | Logistics and SEZ operations simplified. |
C. Central Excise — Comparison
Area | Earlier Provision | Budget 2026 Proposal | Practical Impact |
NCCD on tobacco | Existing NCCD rates applied. | Clause 112 increases NCCD by 15%. | Tobacco sector faces higher duty burden. |
Clean fuel incentives | No targeted excise relief for blended CNG. | Clause 115 reduces duty on blended CNG/alternative fuels. | Encourages energy transition. |
II. Direct Taxes
A. New Income Tax Act, 2025 (effective AY 2026-27)
- Section 115BAC – No Change in Slabs or Standard Deduction
- Rates remain unchanged.
- Explanation: Reflects fiscal discipline but disappoints middle-class taxpayers.
- Impact: Stability for revenue, but limited relief for salaried individuals.
B. Compliance Simplification
- Simplified ITR Forms (ITR-1 to ITR-4)
- Staggered filing deadlines introduced.
- Explanation: Reduces portal congestion and eases compliance.
- Impact: Individuals and SMEs benefit from smoother filing.
C. Section 206C(1G) – Rationalisation of TCS
- Lower rates on overseas tour packages, education, and medical remittances.
- Explanation: Reduces upfront cash burden for taxpayers.
- Impact: Students, patients, and travel industry gain relief.
D. Foreign Asset Disclosure Scheme
- One-time settlement option with immunity for small taxpayers.
- Explanation: Encourages voluntary compliance and transparency.
- Impact: Boosts confidence among global investors and individuals with foreign assets.
E. Section 194-IA – Real Estate Transactions
- Mandatory TDS on sale of immovable property by non-residents.
- Explanation: PAN-based tracking ensures transparency and reduces evasion.
- Impact: Real estate developers and buyers face stricter compliance.
F. Section 270A – Penalty & Prosecution Rationalisation
- Integrated assessment-penalty orders introduced.
- Explanation: Reduces litigation and speeds up resolution.
- Impact: Taxpayers benefit from faster dispute settlement.
III. Strategic Perspective
- Ease of Doing Business: GST and customs reforms reduce disputes and compliance costs.
- Revenue Neutrality vs Growth: Government balances fiscal discipline with industry competitiveness.
- Sector Winners: Manufacturing, exports, healthcare, IT/ITES.
- Sector Losers: Tobacco, derivatives traders, middle-class taxpayers.
- Policy Direction: Strong emphasis on simplification, certainty, and green energy.
Income Tax Slabs – FY 2026-27
1. New Tax Regime (default regime under Section 115BAC)
- Rs. 0 – Rs.3,00,000 - Nil
- Rs.3,00,001 – Rs.6,00,000 - 5%
- Rs.6,00,001 – Rs.9,00,000 - 10%
- Rs.9,00,001 – Rs.12,00,000 - 15%
- Rs.12,00,001 – Rs.15,00,000 - 20%
- Above Rs.15,00,000 - 30%
Notes:
- Standard deduction of Rs.50,000 continues for salaried taxpayers.
- Rebate under Section 87A ensures no tax liability if taxable income is up to Rs.7,00,000.
- This regime offers lower rates but fewer exemptions/deductions.
2. Old Tax Regime (optional regime with exemptions/deductions)
- Rs.0 – Rs.2,50,000 - Nil
- Rs.2,50,001 – Rs.5,00,000 - 5%
- Rs.5,00,001 – Rs.10,00,000 - 20%
- Above Rs.10,00,000 - 30%
Notes:
- Taxpayers can claim deductions under Sections 80C, 80D, HRA, LTA, etc.
- Rebate under Section 87A applies if taxable income is up to Rs.5,00,000.
- This regime is beneficial for individuals with significant deductions.
Comparative Snapshot
Income Range | New Regime Rate | Old Regime Rate |
Up to Rs.3,00,000 | Nil | Nil (Rs.2.5L limit) |
Rs.3,00,001 – Rs.6,00,000 | 5% | 5% (Rs.2.5–Rs.5L) |
Rs.6,00,001 – Rs.9,00,000 | 10% | 20% (Rs.5–Rs.10L) |
Rs.9,00,001 – Rs.12,00,000 | 15% | 20% |
Rs.12,00,001 – Rs.15,00,000 | 20% | 30% |
Above Rs.15,00,000 | 30% | 30% |
Strategic Note
- No slab changes in Budget 2026: focus remains on compliance simplification rather than rate relief.
- Middle-class taxpayers: disappointed due to lack of slab revision, though rebates continue to provide relief.
- Choice of regime: taxpayers must evaluate whether deductions under the old regime outweigh lower rates under the new regime.
DIRECT TAX — Comparison between Pre-Budget and Post Budget with Impact
Area | Earlier Provision | Budget 2026 Proposal | Practical Impact |
Tax regime (115BAC) | New regime already default with existing slab structure. | Clause 58 — No change in slabs or standard deduction. | Revenue stability; limited relief for salaried taxpayers. |
TCS on foreign remittances | Higher TCS rates under Section 206C(1G). | Clause 72 reduces TCS rates for education, travel, medical remittances. | Reduces upfront tax burden. |
Penalty framework | Separate penalty proceedings under Section 270A. | Clause 84 integrates penalty determination with assessment. | Faster dispute resolution. |
Real estate TDS compliance | Section 194-IA compliance challenges in non-resident transactions. | Strengthened reporting and compliance mechanism. | Increased transparency in property transactions. |
OVERALL COMPARISION (PRE-BUDGET VS BUDGET 2026)
Theme | Pre-Budget Framework | Budget 2026 Direction |
GST litigation | Frequent disputes on valuation and intermediary services | Clarification-based dispute reduction |
Refund mechanism | Export-focused | Liquidity support for manufacturing |
Customs compliance | Transaction-based facilitation | Compliance-based facilitation (AEO focus) |
Direct tax policy | Regime transition phase | Stability and compliance simplification |
Energy taxation | Limited incentives | Green-fuel encouragement |