We are pleased to share a comprehensive overview of the Highlights of India's Union Budget 2026–27 (Please click here to view the detailed analysis of Union Budget 2026), presented by the Hon'ble Finance Minister in her 9th Budget on 1st February 2026. The Budget reflects a balanced policy approach combining structural reform with fiscal discipline amid global economic uncertainties.
The Government has stayed the course on fiscal consolidation, with the fiscal deficit marginally reduced to 4.3% of GDP for FY 2026–27, while significantly enhancing public capital expenditure by 11.5% to approx. USD 133 billion. The overarching policy thrust remains focused on infrastructure development, manufacturing-led growth, and long-term capacity building, providing continuity and predictability for businesses and investors.
Tax Policy Direction
From a tax policy perspective, the Budget emphasizes simplification, rationalisation, and certainty over short-term stimulus. The intent is to:
- Reduce litigation
- Strengthen the compliance architecture
- Improve administrative efficiency across direct and indirect taxes
This supports sustained private investment and ease of doing business.
International Tax & Transfer Pricing – Key Reforms
A major highlight is the set of landmark reforms in international taxation and transfer pricing, including:
- Time-bound unilateral Advance Pricing Agreements (APAs) for IT services
- Permission for associated enterprises to file modified returns in APA cases to mitigate economic double taxation
- Expanded safe harbour framework with higher eligibility thresholds and uniform margins for IT services
- Automated safe harbour approvals
- Safe harbour for data centre services
- Extension of tax incentives for cloud infrastructure
- Procedural clarity on transfer pricing timelines
Together, these measures enhance certainty, reduce disputes, and lower compliance costs for multinational enterprises.
Overall, the reforms mark a structural shift toward a predictable, efficient, and business-friendly tax environment, strengthening India's position as a preferred jurisdiction for global capability centres, technology services, and cross-border operations.
Alongside tax reforms, the Budget reinforces long-term growth through targeted investments in skilling, healthcare infrastructure, MSME financing, regional connectivity, and technology-enabled agriculture, underscoring the Government's commitment to inclusive and sustainable economic development.
We hope you find this document useful. If you have any questions or need clarification, please feel free to reach out to us at info@akmglobal.in.
