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Budget 2026 Preview: Tax Reforms, IFSC Boost & Investor Certainty Highlighted

The Finance Ministry has reviewed the significant announcements from the previous budget as the presentation of Union Budget 2026-27 approaches. Key reforms from the Finance Act 2025 include comprehensive changes to the Personal Income Tax structure under the New Tax Regime, providing relief to individuals. The Act also extended tax benefits for Sovereign Wealth Funds and Pension Funds investing in infrastructure until 2030. Furthermore, the government has implemented measures to provide taxation certainty for Alternative Investment Funds and expanded activities for the International Financial Services Centre.

Key Points: Budget 2026 Preview: Key Tax Reforms & Economic Progress

  • New Personal Income Tax slabs leave more money with taxpayers
  • Corporate tax rates set at 22% and 15% for new manufacturing
  • Tax exemption for SWFs & Pension Funds extended to March 2030
  • Certainty of taxation provided for Alternative Investment Funds (AIF)
  • International Financial Services Centre (IFSC) activities expanded
2 min read

Budget 2026: Finance Ministry reflects on significant announcements

Finance Ministry reviews major Budget 2025 reforms ahead of 2026. New tax slabs, corporate rates, and IFSC extensions boost investor confidence.

"The government has fulfilled the Budget promise to provide 'certainty of taxation' for Alternative Investment Funds (AIF) - Finance Ministry"

New Delhi, Jan 20

As the government nears the presentation of the Union Budget 2026-27 on February 1, the Finance Ministry on Tuesday reflected on the significant Budget announcements and the progress made under them.

The Finance Act 2025 introduced comprehensive changes to the Personal Income Tax structure under the New Tax Regime (NTR), leaving more money in taxpayers' hands.

"These changes are effective from FY 2025-26 (AY 2026-27)," Finance Ministry said in a post on X.

The Income Tax Bill, 2025, marks a significant step towards replacing India's six-decade-old direct tax framework with the government seeking to balance investor confidence, taxpayer relief, and administrative efficiency with the new law.

The tax policy reforms include those in corporate tax, where a tax rate of 22 per cent was provided to those companies that do not claim specified deductions and exemptions and a 15 per cent for new manufacturing companies for a specified period, and in individual taxation, where the new tax regime provide for liberal slabs and lower rates with increased rebates. The individuals earning up to Rs 12 lakh (Rs 12.75 lakh effectively for salaried tax payers, due to standard deduction of Rs. 75,000) are not required to pay tax by these slabs, rates and rebates.

Finance Act 2025 also extended Section 10 (23FE) benefits. Eligible SWFs and Pension Funds can now make qualifying infrastructure investments till 31 March 2030, with continued tax exemption on dividends, interest and LTCG, the ministry highlighted.

Additional activities and date extensions for the International Financial Services Centre (IFSC) is fully implemented through the Finance Act, 2025. The amendments took effect from the April 1, 2025.

"The government has fulfilled the Budget promise to provide 'certainty of taxation' for Alternative Investment Funds (AIF) by clarifying the classification of their income from securities," the ministry said.

Moreover, additional activities and date extensions for the International Financial Services Centre (IFSC) is fully implemented through the Finance Act, 2025. The amendments took effect from the April 1, 2025.

- IANS

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Reader Comments

R
Rohit P
Good to see the focus on simplifying the tax structure. The old system was too complex. However, I wish there was more clarity on capital gains tax for retail investors like us. The new regime is a step forward, but the journey isn't complete.
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Aman W
Extending tax benefits for infrastructure investments till 2030 is a visionary move. This will attract long-term foreign capital which is crucial for building our roads, ports, and renewable energy projects. Jai Hind! 🇮🇳
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Sarah B
While the tax cuts are welcome, I'm concerned about the fiscal deficit. Giving relief is good, but the government must also show a clear roadmap for increasing revenue through other means to fund development projects.
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Karthik V
The push for IFSC and certainty for AIFs is excellent for making India a global financial hub. Gujarat's GIFT City is already buzzing. This policy stability will bring more fund managers and fintech companies to our shores.
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Nisha Z
My small manufacturing unit started last year. The 15% tax rate for new manufacturing companies is a blessing. It helps us reinvest more into the business and create local jobs. Aapka dhanyavaad, sarkar.

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