Budget 2026 Updates: Major Changes in GST Law

GST Changes Announced in Budget 2026 – Key Amendments Explained

The Finance Bill, 2026 proposes several significant amendments to the Central Goods and Services Tax Act, 2017 (CGST Act) with the intent of simplifying GST compliance, reducing litigation, and strengthening refund and appellate mechanisms.

Unless specifically stated otherwise, these amendments will become effective from a date to be notified, simultaneously with corresponding amendments by the States and Union Territories.

1. Amendment to Section 15(3): Post-Sale Discounts

Earlier Position

Post-sale discounts were allowed to be excluded from the value of supply only if:

  • The discount was agreed upon before or at the time of supply, and

  • The recipient reversed proportionate Input Tax Credit (ITC).

This condition led to frequent disputes where commercial discounts were offered after supply without explicit prior agreements.

Amendment Proposed (Finance Bill, 2026 – Clause 137)

  • The requirement of linking discounts to a pre-existing agreement has been removed.

  • Section 15(3) now allows exclusion of discounts based on issuance of a credit note under Section 34, subject to reversal of corresponding ITC by the recipient.

Impact

✔ Greater commercial flexibility
✔ Reduced valuation-related litigation
✔ Better alignment with real-world business practices

2. Amendment to Section 34: Credit Notes

Earlier Position

Section 34 did not explicitly link credit note provisions with valuation rules under Section 15, resulting in interpretational challenges.

Amendment Proposed (Clause 138)

  • Section 34 is amended to expressly reference Section 15.

Impact

✔ Clear legal linkage between valuation and credit notes
✔ Strengthens validity of post-sale discount adjustments
✔ Reduces objections during audits and assessments

3. Amendment to Section 54(6): Provisional Refund for Inverted Duty Structure

Earlier Position

Provisional refund of 90% was primarily available for zero-rated supplies, while refunds arising from Inverted Duty Structure (IDS) were excluded.

Amendment Proposed (Clause 139)

  • Provisional refund provisions are extended to IDS-related refunds.

Impact

✔ Improved cash flow for manufacturers
✔ Reduced working capital blockage
✔ Major relief for sectors with higher input tax rates

4. Amendment to Section 54(14): Removal of Refund Threshold Limit

Earlier Position

A threshold limit applied for sanctioning refunds, leading to procedural delays—especially for small exporters.

Amendment Proposed (Clause 139)

  • Threshold limit removed for refund claims relating to export of goods with payment of tax.

Impact

✔ Uniform refund processing
✔ Faster refunds for small exporters
✔ Reduced administrative discretion

5. Insertion of Section 101A(1A): Interim National Appellate Mechanism

Earlier Position

Conflicting Advance Ruling decisions were appealable to the National Appellate Authority (NAA), which was never constituted—leaving taxpayers without remedy.

Amendment Proposed (Clause 140)

  • New Section 101A(1A) empowers the Government to notify an existing authority or tribunal to hear such appeals until NAA is constituted.

  • Sub-sections (2) to (13) of Section 101A will not apply in such cases.

  • Explanation clarifies that “existing authority” includes a tribunal.

📌 Effective Date: 1 April 2026

Impact

✔ Resolves long-standing appellate vacuum
✔ Provides certainty in advance ruling disputes
✔ Strengthens GST dispute resolution framework

6. IGST Act Amendment: Place of Supply for Intermediary Services

Earlier Provision

Under Section 13(8)(b) of the IGST Act, intermediary services were deemed supplied at the location of the service provider, making overseas services taxable in India.

Amendment Proposed (Clause 141)

  • Section 13(8)(b) is omitted.

  • Place of supply will now be determined as per Section 13(2)—i.e., location of the recipient.

Impact

✔ Intermediary services to foreign clients qualify as export of services (subject to conditions)
✔ GST generally not applicable on such transactions
✔ Major relief for service exporters and consultants
✔ Long-pending litigation expected to subside

Conclusion

The GST amendments proposed in the Finance Bill, 2026 mark a decisive move toward taxpayer-friendly, litigation-free, and business-aligned GST administration. Key reforms in valuation, refunds, appellate remedies, and cross-border services are expected to significantly improve compliance efficiency and certainty.

Businesses and professionals should closely evaluate these changes and prepare for implementation once notified.

Budget 2026 Update: Changes in TDS and TCS from 1 April 2026

Budget 2026: Key Amendments in TDS & TCS Framework (Effective from 1 April 2026)

The Union Budget 2026 has introduced wide-ranging reforms in the TDS and TCS provisions under the Income-tax Act, 2025. These measures are aimed at rate rationalisation, simplification of compliance, removal of ambiguities, taxpayer relief, and selective decriminalisation of offences.

Unless specifically mentioned otherwise, all amendments will come into force from 1 April 2026 and apply from Tax Year 2026–27 onwards.

1. Rationalisation of TCS Rates – Section 394(1)

Earlier, Section 394(1) prescribed multiple and inconsistent TCS rates across different categories of transactions. Budget 2026 proposes to standardise TCS rates wherever feasible, while also granting rate relief in select cases.

Revised TCS Rate Structure

Sl. No. Nature of Receipt Existing Rate Proposed Rate
1 Sale of alcoholic liquor for human consumption 1% 2%
2 Sale of tendu leaves 5% 2%
3 Sale of scrap 1% 2%
4 Sale of minerals (coal, lignite, iron ore) 1% 2%
5(a) LRS remittance – education / medical treatment exceeding ₹10 lakh 5% 2%
5(b) LRS remittance – other purposes 20% 20% (unchanged)
6 Overseas tour programme package Tiered (5% / 20%) 2% flat

2. Overseas Tour Programme Package – Significant Relief

Earlier Regime

  • 5% TCS on amounts up to ₹10 lakh

  • 20% TCS on amounts exceeding ₹10 lakh

Budget 2026 Change

  • Uniform TCS rate of 2%

  • ₹10 lakh threshold removed

  • Applicable irrespective of transaction value

Impact

  • Substantial reduction in tax burden on travellers

  • Prevents diversion of business to foreign tour operators

  • Simplifies compliance for Indian tour operators

3. Liberalised Remittance Scheme (LRS) – Rate Reduction

For remittances under RBI’s LRS:

Purpose Earlier TCS Revised TCS
Education / Medical treatment (above ₹10 lakh) 5% 2%
Other purposes 20% No change

This amendment provides notable relief to students and individuals remitting funds for medical treatment abroad.

4. Electronic Filing for Lower / Nil TDS Certificates – Section 395

Earlier Position

  • Manual application before the Assessing Officer

  • Lengthy and compliance-intensive process

Amendment under Budget 2026

  • Payees can now apply electronically

  • Application to be made before a prescribed income-tax authority

  • Certificate may be:

    • Issued electronically, or

    • Rejected if conditions are not met or details are incomplete

Benefit

  • Faster processing

  • Improved transparency

  • Major compliance relief for small and medium taxpayers

5. TDS on Supply of Manpower – Ambiguity Clarified

Issue Earlier

Confusion existed on whether manpower supply should be classified as:

  • Contract work (1% / 2%), or

  • Technical / professional services (up to 10%)

Budget 2026 Clarification

  • Supply of manpower is explicitly included under “work” in Section 402(47)

Applicable TDS Rates

  • 1% – where payee is Individual or HUF

  • 2% – in all other cases

Outcome

  • Uniform tax treatment

  • Reduced litigation and interpretational disputes

6. Deduction Allowed to Non-Life Insurance Business for Delayed TDS

Earlier Issue

  • Expenses were disallowed if TDS was not deducted or paid on time

  • No explicit provision for allowing deduction in a subsequent year

Budget 2026 Amendment

  • Schedule XIV amended

  • New provision allows deduction in the year in which TDS is deducted and paid

Applicability

  • Non-life insurance businesses

  • Effective from AY 2026–27 onwards

7. Decriminalisation and Rationalisation of TDS/TCS Offences

Fully Decriminalised Defaults

Failure to deposit TDS relating to:

  • Lottery or crossword puzzle winnings

  • Benefits or perquisites arising from business or profession

➡️ No imprisonment prescribed

Revised Punishment Structure (Selected Cases)

Applicable to:

  • Online gaming winnings

  • Virtual Digital Asset (VDA) transactions

Amount of TDS Default Punishment
Above ₹50 lakh Imprisonment up to 2 years / fine / both
₹10 lakh – ₹50 lakh Imprisonment up to 6 months / fine / both
Other cases Fine only

Wholly in-kind transactions involving online gaming or VDAs are excluded from prosecution.

8. TDS on Sale of Immovable Property by Non-Residents – Procedural Ease

Earlier

  • Buyer was required to obtain TAN for TDS compliance

Now

  • TDS can be deposited using PAN-based challan

  • No TAN required

Impact

  • Simplified property transactions with NRIs

  • Reduced compliance burden for resident buyers

Effective Date

✔ 1 April 2026
✔ Applicable from Tax Year 2026–27 onwards

Closing Note

With these comprehensive reforms, Budget 2026 significantly reshapes the TDS–TCS landscape, balancing automation, relief, and enforcement. Taxpayers, professionals, tour operators, insurers, and businesses engaged in manpower supply or cross-border remittances should realign systems, contracts, and compliance processes well ahead of 1 April 2026.

New Income Tax Slab Rates in Budget 2026: FY 2026-27 (AY 2027-28), ITR Deadlines & TDS/TCS Rules

Key Income Tax & ITR Updates – Budget 2026

  • No change in income tax slab rates under either tax regime.

  • Simplified ITR forms will be introduced shortly to ease compliance.

📅 Revised ITR Due Dates (Non-Audit Cases)

  • Business & Trust cases: Due date extended from 31 July to 31 August

  • Other non-audit cases: Due date continues to be 31 July

🔁 Revised Return – Section 139(5)

  • Time limit to file a revised return extended from 31 December to 31 March of the relevant assessment year.

🔄 TDS & TCS Updates

  • TDS and TCS rates rationalised to reduce complexity and mismatches.

🏠 Property Purchase from NRI – Key Relief

  • TAN requirement removed for buyers of property from an NRI.

  • A PAN-based challan system has been introduced for payment of TDS, simplifying the compliance process.

    Income Tax Slab Rates – Default (New) Tax Regime

    The following income tax slab rates will apply to individuals opting for the default new tax regime for FY 2026-27 (AY 2027-28):

    Total Income Tax Rate
    Up to ₹4,00,000 Nil
    ₹4,00,001 – ₹8,00,000 5%
    ₹8,00,001 – ₹12,00,000 10%
    ₹12,00,001 – ₹16,00,000 15%
    ₹16,00,001 – ₹20,00,000 20%
    ₹20,00,001 – ₹24,00,000 25%
    Above ₹24,00,000 30%

    These slab rates apply uniformly to all individuals, including salaried taxpayers, with no age-based differentiation.

    Key Features of the New Tax Regime

    1️⃣ Rebate under Section 87A

    Budget 2026 has enhanced tax relief through Section 87A:

    • Individuals with net taxable income up to ₹12,00,000 are eligible for a 100% tax rebate.

    • Consequently, the total tax liability becomes NIL for such taxpayers under the default regime.

    • This change significantly improves affordability for middle-income earners.

    2️⃣ Standard Deduction for Salaried Taxpayers

    • Salaried individuals can claim a standard deduction of ₹75,000 under the new tax regime.

    • Because of this deduction, effective tax-free income can extend up to ₹12.75 lakh.

    • This makes the default regime even more beneficial for salaried employees.

    Old Tax Regime (Optional)

    The old tax regime continues as an optional choice and follows a different slab structure. It allows various deductions and exemptions, such as HRA, Section 80C, Section 80D, and others.

    Income Tax Slabs under the Old Regime

    Income Slab Tax Rate
    Up to ₹2,50,000 Nil
    ₹2,50,001 – ₹5,00,000 5%
    ₹5,00,001 – ₹10,00,000 20%
    Above ₹10,00,000 30%

    While deductions are permitted under the old regime, it does not provide the higher rebate threshold available under the new tax regime. As a result, it may be less beneficial for taxpayers with limited deductions.

    Which Tax Regime Is Better for You?

    • Taxpayers with minimal deductions or exemptions may benefit more from the new default tax regime due to lower slab rates, higher rebate, and standard deduction.

    • Taxpayers who claim substantial deductions, such as housing loan interest, insurance premiums, and eligible investments, may still find the old regime more suitable.

    • It is advisable to perform a comparative tax calculation before choosing the appropriate regime.

Budget 2026: Budget Speech, Highlights and Official Government Documents

The Union Budget 2026 is not limited to the Budget Speech delivered in Parliament. To fully understand the intent, scope, and legal implications of the Budget proposals, it is important to review the supporting documents released by the Government. These include the Budget Speech, the Memorandum explaining the provisions of the Finance Bill, and the Finance Bill, 2026 itself. Each of these documents has a specific purpose, and together they provide a complete picture of policy announcements, tax changes, and their practical implementation.

📄 Access all Budget Documents here: indiabudget.gov.in

While the Budget Speech outlines the Government’s vision and direction, the detailed impact of Budget 2026 is reflected in the Memorandum and the Finance Bill. Taxpayers and professionals should not rely solely on headlines or summaries but refer to these official documents for accurate information and compliance planning. Reviewing all Budget 2026 documents carefully is crucial to understanding tax implications, policy amendments, and their application in the upcoming financial year.

Income Tax Changes Announced in Union Budget 2026

Direct Tax Proposals in Budget 2026 – Key Highlights

In Union Budget 2026, the Government has announced a wide-ranging and future-oriented set of Direct Tax reforms aimed at simplifying tax laws, reducing disputes, improving compliance, and enhancing India’s appeal as a global investment destination. These measures signal a decisive shift from a complex, enforcement-driven regime to a trust-based, technology-enabled, and taxpayer-friendly tax system, aligned with the vision of Viksit Bharat.

1. New Income-tax Act, 2025 – A Structural Overhaul

One of the most significant announcements in Budget 2026 is the replacement of the Income-tax Act, 1961 with the Income-tax Act, 2025, effective from 1 April 2026.

The new legislation is designed to:

  • Be substantially shorter and simpler, with fewer sections and chapters

  • Use clear and unambiguous language to minimise interpretational disputes

  • Be easier for taxpayers and tax authorities to understand and implement

Simplified Income-tax Rules and redesigned return forms will be notified shortly, enabling individuals to comply without professional assistance.

2. Taxpayer Relief & Ease of Living Measures

The Budget introduces multiple measures to address long-standing taxpayer concerns:

MACT Interest Exemption

  • Interest awarded by the Motor Accident Claims Tribunal (MACT) to individuals will be fully exempt from tax.

  • No TDS will apply, irrespective of the amount received.

Rationalisation of TCS under LRS

  • TCS on overseas tour packages reduced to 2% (from 5% / 20%), without any threshold.

  • TCS on education and medical remittances under LRS reduced from 5% to 2%.

Clarity on TDS for Manpower Supply

  • Manpower supply services classified as contractor payments.

  • TDS rate capped at 1% / 2%, eliminating ambiguity and litigation.

Automated Lower / Nil TDS Certificates

  • Eligible small taxpayers can obtain lower or nil TDS certificates through an automated, rule-based system without Assessing Officer interaction.

Simplification of Form 15G / 15H

  • Depositories authorised to accept declarations centrally and share them with multiple companies, reducing repetitive filings.

3. Rationalised Return Filing Timelines

To ease compliance pressure:

  • Belated and revised returns can now be filed up to 31 March (earlier 31 December) on payment of a nominal fee.

  • Staggered ITR due dates introduced:

    • ITR-1 & ITR-2 (Individuals): 31 July

    • Non-audit cases and trusts: 31 August

4. Relief for Property Transactions Involving NRIs

For purchase of immovable property from a non-resident:

  • Resident buyers are no longer required to obtain a TAN.

  • TDS can be deposited using a PAN-based challan, similar to resident transactions.

5. One-Time Foreign Asset Disclosure Scheme (FAST-DS, 2026)

A special 6-month disclosure window has been introduced for genuine hardship cases involving small taxpayers.

Category A

  • Undisclosed foreign income / assets up to ₹1 crore

  • Payment of:

    • 30% tax

    • 30% additional tax (in lieu of penalty)

  • Immunity from prosecution granted

Category B

  • Foreign assets up to ₹5 crore

  • One-time fee of ₹1 lakh

  • Full immunity from penalty and prosecution

Immunity from prosecution is also retrospectively extended for non-immovable foreign assets up to ₹20 lakh.

6. Rationalisation of Penalty & Prosecution Regime

Key reforms include:

  • Assessment and penalty proceedings to be concluded through a single consolidated order

  • No interest on penalty amounts during pendency of first appeal

  • Pre-deposit for appeal reduced from 20% to 10%, limited to core tax demand

Updated Returns Post Reassessment

  • Taxpayers can file updated returns even after reassessment initiation by paying an additional 10% tax.

Penalty to Fee Conversion

  • Certain technical defaults (audit, TP report, SFT) converted into fee-based non-criminal defaults.

Decriminalisation Measures

  • Minor offences punishable only with fines

  • Maximum imprisonment reduced to two years

  • Penalties graded based on tax evasion quantum

7. Targeted Tax Relief for Cooperatives

  • Deduction extended to supply of cattle feed and cotton seed by primary cooperatives

  • Inter-cooperative dividend income allowed as deduction under the new tax regime

  • Three-year dividend exemption for notified national cooperative federations, subject to redistribution

8. IT Sector Boost & Transfer Pricing Certainty

  • IT and IT-enabled services consolidated under “Information Technology Services”

  • Uniform safe harbour margin of 15.5%

  • Threshold enhanced from ₹300 crore to ₹2,000 crore

  • Automated safe harbour approvals valid for 5 years

  • Fast-track unilateral APA with targeted 2-year resolution

9. Measures to Attract Global Business & Talent

  • Tax holiday till 2047 for foreign cloud service providers using Indian data centres

  • 15% safe harbour margin for data-centre support entities

  • 5-year tax exemption for non-residents supplying capital goods to bonded zone manufacturers

  • Exemption of global income for foreign experts residing in India up to 5 years

  • MAT exemption for non-residents taxed on presumptive basis

10. Tax Administration Reforms

  • ICDS to be merged with Ind-AS from FY 2027-28

  • Definition of “accountant” rationalised to support global expansion of Indian advisory firms

11. Other Key Direct Tax Measures

  • Buyback taxation shifted to capital gains for all shareholders

  • Additional tax for promoters to prevent arbitrage

  • TCS on liquor, scrap and minerals reduced to 2%; tendu leaves from 5% to 2%

  • STT increased on futures and options

  • MAT to become final tax from 1 April 2026, rate reduced to 14%, with limited MAT credit set-off

Conclusion

The Direct Tax proposals in Budget 2026 mark a bold move towards simplicity, certainty, and trust-based taxation. With a new Income-tax Act, substantial compliance relief, rationalised penalties, and strong incentives for investment and global integration, the reforms aim to strike a balance between revenue mobilisation and taxpayer confidence, supporting long-term economic growth.

GST Advisory on GSTR-3B Updates Applicable from February 2026

Advisory on Interest Collection and Related Enhancements in GSTR-3B

GSTR-3B Filing Service

It is hereby informed that from January-2026 period onwards, few enhancements have been made in filing of GSTR-3B. For detailed advisory, kindly click on the link given below:

https://tutorial.gst.gov.in/downloads/news/advisory_on_interest_calculator.pdfThanks,
Team GSTN

 

The GST Network has issued an important advisory titled “Advisory on Interest Collection and Related Enhancements in GSTR-3B”, bringing multiple system-level changes in the filing of Form GSTR-3B, effective from the January-2026 tax period onwards.

These changes primarily focus on:

  • Revised interest computation methodology
  • System-driven population of tax liability breakup
  • Flexibility in ITC cross-utilisation
  • Interest recovery in GSTR-10 for cancelled registrations

The enhancements aim to align portal functionality with Section 50 of the CGST Act, 2017 and Rule 88B of the CGST Rules, 2017, while reducing disputes and ensuring fair interest computation.

Update in Interest Computation for GSTR-3B (Table 5.1)

1.1 What Has Changed from January-2026?

From the January-2026 tax period onwards, the interest calculation in Table 5.1 of GSTR-3B has been enhanced to provide relief to taxpayers by factoring in the minimum cash balance available in the Electronic Cash Ledger (ECL).

This change is made in line with the proviso to Rule 88B(1) of the CGST Rules, 2017.

➡️ Practical impact:
If a taxpayer had sufficient cash balance lying in the Electronic Cash Ledger from the due date of return till the actual date of tax payment (offset), interest will not be charged on that portion.

Applicability Timeline

  • Applicable for delayed GSTR-3B returns of January-2026
  • Interest will be auto-populated in February-2026 GSTR-3B

Revised Interest Computation Formula

Interest = (Net Tax Liability – Minimum Cash Balance in ECL from due date to date of debit)
× (Number of days delayed ÷ 365)
× Applicable Interest Rate

Tax Planning Service

Key Takeaway

Earlier, interest was calculated on the entire net cash liability. Now, idle cash balance already available with the Government is reduced before interest computation — a major relief for compliant taxpayers.

System-Computed Interest in Table 5.1 – Now Non-Editable

Non-Editable Downward

From January-2026 onwards:

Taxpayer Education Course
  • Interest auto-populated in Table 5.1 will be non-editable downward
  • Taxpayers cannot reduce the system-computed interest

Upward Modification Allowed

  • Auto-populated interest represents minimum interest payable
  • Taxpayers must self-assess their correct interest liability
  • Upward modification is permitted, if required

➡️ Compliance Note:
Responsibility of correct interest payment continues to rest with the taxpayer, despite system computation.

Auto-Population of Tax Liability Breakup Table in GSTR-3B

What Is the Tax Liability Breakup Table?

This table captures:

  • Supplies pertaining to previous tax periods
  • Reported in current period
  • For which tax is being paid now

New Enhancement from January-2026

The GST Portal will auto-populate the Tax Liability Breakup Table based on:

  • Document dates
  • Supplies reported in:
    • GSTR-1
    • GSTR-1A
    • IFF
  • Pertaining to earlier tax periods
  • Where tax liability is discharged in current GSTR-3B

Objective of This Enhancement

  • Accurate period-wise allocation of tax
  • Correct interest computation as per proviso to Section 50 of CGST Act
  • Reduction in manual errors and litigation

Important Characteristics

  • Auto-populated values are suggestive in nature
  • Taxpayers may revise the figures upwards
  • Downward revision may attract scrutiny

Navigation Path on Portal

Login → GSTR-3B Dashboard → Table 6.1 (Payment of Tax) → Tax Liability Breakup

Update in Table 6.1 – Suggestive Cross-Utilisation of ITC

Change in ITC Utilisation Logic

From January-2026 onwards:

  • Once IGST ITC is fully exhausted
  • The portal will allow payment of IGST liability
  • Using CGST and SGST ITC in any sequence

Benefit to Taxpayers

  • Increased flexibility
  • Reduced working capital blockage
  • Alignment with judicial interpretations on ITC utilisation

Collection of Interest in GSTR-10 for Cancelled Taxpayers

New Provision Introduced

For cancelled GST registrations:

  • If the last applicable GSTR-3B is filed after due date
  • Interest on delayed filing shall be:
    • Levied
    • Collected through Final Return (GSTR-10)

Practical Implication

Taxpayers can no longer avoid interest liability merely because registration is cancelled. Interest compliance is now linked to GSTR-10 filing.

Overall Impact & Professional Analysis

Area Impact
Interest Computation Fair, cash-balance adjusted
Editability System minimum enforced
Tax Liability Allocation Automated & document-driven
ITC Utilisation Flexible & taxpayer-friendly
Cancelled Registrations Interest leakage plugged

The January-2026 enhancements in GSTR-3B mark a significant shift towards system-driven, legally aligned GST compliance. While automation reduces errors, self-assessment responsibility remains intact. Taxpayers and professionals must closely monitor cash ledger balances, document dates, and interest computation, especially in delayed filings and past-period adjustments.

India–EU Trade Pact: Lower Prices, Bigger Gains—Here’s Who Benefits

India–EU Trade Deal Explained Simply: What It Means for India, Businesses, and Consumers

India has recently concluded a landmark trade agreement with the European Union (EU). This India–EU Free Trade Agreement (FTA) is being described as one of the most significant trade deals in India’s history, as it affects exports, imports, industries, employment, investments, and consumer prices.

While the reduction in luxury car prices has grabbed headlines, the scope of this agreement goes far beyond automobiles.

What Is the India–EU Trade Deal?

The India–EU Free Trade Agreement is a pact where:

  • India will lower import duties on selected European products

  • The European Union will reduce or eliminate duties on many Indian goods

  • Both sides will simplify procedures by reducing regulatory and non-tariff barriers

In simple terms, trade between India and Europe becomes cheaper, faster, and easier.

Why Is This Deal Important for India?

The European Union is one of India’s largest trading partners. Earlier:

  • Indian exports faced high tariffs and strict compliance requirements in Europe

  • European goods attracted high import duties in India

This agreement aims to:

  • Boost Indian exports

  • Lower the cost of imports

  • Improve investor and business confidence

  • Strengthen India’s position in global trade

1️⃣ Impact on Luxury Cars and Premium Vehicles

Why Luxury Cars Are Getting Cheaper

Most luxury cars—such as Audi, BMW, Mercedes, and Porsche—are imported from Europe or use European components.

Earlier:

  • High import duties made these vehicles extremely expensive

After the trade deal:

  • Import duties on premium vehicles are being reduced

  • Manufacturers are passing on the benefit to buyers

Real-World Example

  • Earlier price of a luxury SUV: ₹2.30 crore

  • New price after duty reduction: ₹1.60 crore

  • Savings for the buyer: around ₹70 lakh

Who Benefits Most?

  • Buyers of high-end imported vehicles

  • The premium and luxury automobile segment

Mass-market vehicles are unlikely to see major price changes.

2️⃣ Impact on Indian Exports

Indian exporters stand to gain significantly from this agreement.

Key Beneficiary Sectors:

  • Textiles and garments

  • Leather products and footwear

  • Engineering goods

  • Chemicals and pharmaceuticals

  • Marine products

  • Gems and jewellery

With reduced European import duties:

  • Indian products become more price-competitive

  • Export volumes can rise

  • Indian manufacturers can expand their global footprint

3️⃣ Impact on Jobs and Manufacturing

As exports grow:

  • Production levels increase

  • New manufacturing units are established

  • Employment opportunities rise

Labour-intensive sectors such as textiles, leather, and jewellery are expected to generate large-scale employment, especially for semi-skilled workers. This also supports the Make in India initiative.

4️⃣ Impact on Services Sector (IT and Professionals)

India’s strength in services is another major advantage under this deal.

Expected benefits include:

  • Better market access for Indian IT and software firms

  • More opportunities for consultants, engineers, and professionals

  • Easier movement for short-term overseas assignments

  • Growth in services exports

This can significantly boost India’s service-based economy.

5️⃣ Impact on Foreign Investment

The agreement provides a stable and predictable framework for investors.

Likely outcomes:

  • Increased European investment in India

  • Establishment of manufacturing facilities

  • Technology transfer

  • Joint ventures with Indian companies

India becomes a preferred destination for European firms looking to expand in Asia.

6️⃣ Impact on Indian Consumers (Beyond Cars)

Consumers may benefit through:

  • Access to better-quality imported products

  • More competitive pricing in selected categories

  • Greater choice and variety

However:

  • Price reductions will happen gradually

  • Sensitive domestic sectors are protected

  • The government is ensuring local industries are not harmed abruptly

7️⃣ Strategic and Global Importance

This deal goes beyond trade numbers.

It reflects:

  • India’s commitment to global trade norms

  • Reduced reliance on a limited set of trading partners

  • Stronger economic ties with developed economies

It also enhances India’s image as a reliable and long-term trade partner.

8️⃣ Will the Benefits Be Immediate?

Not all benefits will be seen right away.

Key points to note:

  • Tariff reductions will be phased over time

  • Many benefits will unfold over 2–5 years

  • Certain sectors will open gradually to protect domestic players

Luxury car price reductions are among the first visible outcomes, but they are only the beginning.

Simple Conclusion

The India–EU trade deal is a win-win agreement.

  • Exporters gain better market access

  • Manufacturers get growth opportunities

  • Consumers enjoy better choices and pricing

  • Luxury car buyers see immediate savings

  • The economy benefits in the long term

Cheaper luxury cars may be the most noticeable change today, but the real impact of this trade deal will be felt across industries, employment, and economic growth in the years ahead.

GST New Valuation Rules Effective 1 February 2026: Tax Applicability Shifted to MRP

GSTN Advisory on RSP-Based Valuation for Notified Tobacco Goods

Clarification on Reporting Taxable Value and Tax Liability

The GST Network (GSTN) has issued an important advisory clarifying the manner of reporting taxable value and tax liability for notified tobacco goods taxed under RSP-based valuation. The clarification covers reporting requirements across e-Invoice, e-Way Bill, and GST returns (GSTR-1 / GSTR-1A / IFF).

This update is critical for manufacturers, wholesalers, distributors, and all taxpayers dealing in tobacco products notified for valuation based on Retail Sale Price (RSP).

1. Background: RSP-Based Valuation under GST

Under GST provisions, certain notified goods—particularly tobacco products—are subject to tax based on the Retail Sale Price (RSP) printed on the package, after allowing the prescribed abatement, rather than the actual transaction value.

In essence:

  • GST is not calculated on invoice value

  • GST is calculated on RSP minus notified abatement

  • This method is mandated under Section 15(4) of the CGST Act, read with relevant notifications

2. Objective of the GSTN Advisory

The advisory has been issued to:

  • Ensure consistent reporting of taxable value under RSP-based valuation

  • Prevent mismatches between reported value and tax liability

  • Align data reported in e-Invoice, e-Way Bill, and GST returns

  • Minimise system-generated notices and scrutiny due to incorrect valuation

3. Key Clarification by GSTN

(A) Taxable Value to be Reported

For notified tobacco goods covered under RSP-based valuation:

  • ✅ Taxable value must be the RSP-based value (after abatement)

  • ❌ Transaction value or invoice value must not be treated as taxable value

This principle applies uniformly across:

  • e-Invoice

  • e-Way Bill

  • GSTR-1 / GSTR-1A

  • Invoice Furnishing Facility (IFF)

4. Reporting in e-Invoice

While generating e-Invoices for notified tobacco goods:

  • The taxable value field must reflect:

    • RSP

    • Less: notified abatement

    • Resulting assessable value

  • GST rate and tax amount must be computed on this RSP-based taxable value

  • A difference between invoice value and taxable value is legally permissible

Common error to avoid:
Reporting transaction value as taxable value in the e-Invoice, leading to incorrect tax calculation.

5. Reporting in e-Way Bill

For e-Way Bill generation:

  • Taxable value must strictly follow RSP-based valuation

  • Auto-populated values from e-Invoice should not be incorrectly modified

  • Discrepancies between e-Invoice and e-Way Bill data may trigger system alerts

6. Reporting in GSTR-1 / GSTR-1A / IFF

In GST returns:

  • Outward supply details must reflect RSP-based taxable value and correct tax liability

  • This ensures accurate reflection in the recipient’s GSTR-2B

  • Prevents mismatch between tax paid and supplies reported

  • IFF filers must also strictly adhere to this valuation method

7. Impact on Taxpayers

This advisory directly affects:

  • Tobacco manufacturers

  • Cigarette traders

  • Wholesalers and distributors of notified tobacco goods

Incorrect reporting may result in:

  • System-generated notices

  • Return mismatches

  • Audit and assessment issues

  • Demand for differential tax along with interest and penalties

8. Recommended Action Points

Taxpayers should immediately:
✔ Review ERP and billing system configurations
✔ Ensure RSP-based valuation logic is correctly implemented
✔ Train accounting and compliance teams
✔ Reconcile taxable value across e-Invoice, e-Way Bill, and GSTR-1 / IFF
✔ Refer to the detailed GSTN advisory for technical guidance

Conclusion

The GSTN advisory dated 23 January 2026 provides crucial clarity on compliance requirements for notified tobacco goods under RSP-based valuation. Accurate reporting of taxable value across all GST systems is essential to avoid disputes and ensure seamless compliance.

Taxpayers are advised to promptly align their invoicing and return-filing processes with this clarification to remain fully GST-compliant.

🔹 Income Tax Relief for Individuals There may be further rationalisation of income tax slabs, higher basic exemption limits, or enhancements in standard deduction to boost disposable income.

Union Budget 2026 – Overview and Expectations

India’s Union Budget 2026 is slated to be presented on 1 February 2026 (Sunday) by the Finance Minister. Although presenting the Budget on a Sunday had earlier triggered discussion, it has now been formally confirmed, and the government is fully prepared for this key fiscal announcement.

This Budget assumes added significance as it follows the introduction of the Income-tax Act, 2025, which focused mainly on simplifying legal language and compliance procedures rather than making major policy changes. As a result, Budget 2026 is expected to carry the primary burden of announcing substantive tax and regulatory reforms.

I. Economic Background & Budget Direction

India’s macroeconomic position remains relatively stable, supported by steady growth, moderated inflation, and sustained investment in infrastructure. Budget 2026 is expected to strike a careful balance between managing fiscal pressures in the short term and driving long-term structural reforms.

The government is likely to continue prioritising capital expenditure, welfare schemes, digital transformation, and regulatory certainty, with focused attention on sectors such as agriculture, healthcare, women empowerment, start-ups, and emerging areas of the new digital economy.

II. Key Expectations from Budget 2026

1. Taxation – Areas of Anticipated Change

Personal Income Tax
Large-scale rate cuts are not widely expected; however, revisions in tax slabs, exemption limits, or thresholds may be introduced to improve household spending power and stimulate consumption.

Capital Gains Tax
Existing capital gains provisions are under review. Rationalisation measures may be announced to improve clarity, simplify compliance, and encourage investment activity.

TDS Simplification
The government may streamline TDS provisions to reduce administrative and compliance challenges faced by businesses and taxpayers.

ESOPs and Foreign Tax Credit
Budget 2026 may bring clarity or relief measures related to ESOP taxation, particularly for employees of multinational companies, along with smoother mechanisms for claiming Foreign Tax Credit.

2. Sectoral and Social Priorities

Women-Centric Initiatives
Expect announcements aimed at improving women’s participation in the workforce, access to finance, skill development, and social security.

Agriculture and Rural Economy
Measures may include enhanced credit availability, farm modernisation programs, and targeted income-support mechanisms for farmers and rural households.

Senior Citizens
The government may extend or enhance benefits related to healthcare, savings, and taxation for senior citizens.

III. Virtual Digital Assets (Cryptocurrency) – Emerging Developments

1. Enhanced Monitoring, AML & KYC Framework

In early January 2026, the Financial Intelligence Unit (FIU) introduced tighter AML and KYC norms for crypto exchanges and VDA service providers. These measures aim to align the crypto ecosystem with mainstream financial regulations and improve traceability. Key elements include:

  • Live selfie verification using liveness detection to prevent misuse of static images or deepfakes

  • Geo-location capture, including latitude, longitude, IP address, date, and time for onboarding and transactions

  • Expanded KYC documentation, requiring PAN plus an additional government-issued ID along with OTP verification

  • Bank account authentication through penny-drop verification

  • Periodic KYC updates, with more frequent reviews for high-risk users

  • Continuous transaction monitoring and reporting of suspicious activities

These steps reflect the government’s intent to curb money laundering, terror financing, fraud, and misuse of anonymous crypto transactions, while strengthening investor confidence and systemic oversight.

2. Crypto Taxation – Industry Expectations

Under the current framework:

  • Gains from VDAs are taxed at a flat 30%, without allowing loss set-off

  • A 1% TDS applies on each transaction, which industry participants argue restricts liquidity and pushes traders to overseas platforms

For Budget 2026, crypto stakeholders are seeking:

  • Reduction in TDS (suggested at 0.01%) to improve market liquidity

  • Permission to offset losses against gains, bringing parity with other asset classes

  • More nuanced tax treatment, possibly based on holding period or integration with slab-based taxation

There is also discussion around establishing a clear regulatory authority structure, potentially involving SEBI for exchange oversight and RBI for cross-border monitoring, subject to Budget and post-Budget policy announcements.

IV. Indirect Tax and Regulatory Environment

GST and Customs

  • Industry is likely to seek GST rate rationalisation and faster processing of refunds

  • Customs duty structures may be reworked to support domestic manufacturing, technology adoption, and exports

Regulatory Coordination

Efforts are ongoing to move toward a single, well-defined regulatory framework for VDAs, reducing overlap among regulators and improving compliance clarity.

V. Core Themes Likely to Shape Budget 2026

Area Anticipated Focus
Taxation & Compliance Slab rationalisation, TDS simplification, crypto tax clarity
Digital Assets Stronger oversight, tracking mechanisms, regulatory structure
Women & Social Welfare Financial inclusion, employment, empowerment schemes
Agriculture & Rural Development Farmer support, rural infrastructure
Senior Citizens Health coverage and tax relief
Infrastructure & Capex Continued emphasis on public investment
Technology & Innovation R&D incentives, AI and digital economy push
Indirect Taxes GST simplification and customs duty rationalisation

In essence, Budget 2026 is expected to focus on stability, reform, and future readiness—combining fiscal prudence with growth-oriented policy measures across taxation, technology, and social development.

VI. Conclusion

Budget 2026 is expected to be a transformative fiscal roadmap, aimed at achieving sustainable economic growth, deeper social inclusion, and forward-looking regulatory reforms. In particular, the evolving approach toward the crypto and virtual digital asset ecosystem—marked by stricter KYC/AML requirements and closer regulatory supervision—signals the government’s intent to bring greater transparency, accountability, and investor confidence into the sector.

At the same time, market participants and industry stakeholders are looking toward the Budget for pragmatic tax rationalisation and clearer policy direction that encourages innovation and legitimate participation without diluting compliance standards. Overall, Budget 2026 is likely to reflect a careful balance between risk management and growth facilitation, reinforcing India’s commitment to a stable, inclusive, and future-ready economic framework.

✅ Who is Eligible to File ITR-U? You may file an Updated Return if you need to: Report missed or under-reported income Correct wrong income details Amend an incorrect tax rate Reduce excess loss or depreciation claimed Update wrong deductions or exemptions File a return even if no return was filed earlier

Income-tax law ke andar voluntary compliance ko badhava dene ke liye Updated Return (ITR-U) ka concept laya gaya hai. Iska main objective ye hai ki agar kisi taxpayer se return file karte samay koi income reh gayi ho, galat details report ho gayi ho, ya return file hi nahi hui ho, to wo apni galti khud se sudhaar sake — bas shart ye hai ki uske saath due tax, interest aur additional tax ka payment kiya jaye.

Recent amendments ke baad ITR-U ki time limit aur additional tax structure dono me kaafi bade badlav kiye gaye hain. Is article me updated provisions ko simple language me samjhaya gaya hai.

ITR-U kya hota hai?

ITR-U (Updated Income-tax Return) ek special return hai jo Income-tax Act ke Section 139(8A) ke tahat file ki jaati hai. Ye tab file hoti hai jab:

  • Pehle file ki hui return me koi income disclose nahi hui ho

  • Income ya details galat report hui ho

  • Taxpayer ne pehle koi return file hi nahi ki ho

👉 Lekin dhyaan rahe, ITR-U sirf tab allowed hai jab usse extra tax payable banta ho.

Kaun ITR-U file kar sakta hai?

Neeche diye gaye taxpayers ITR-U file kar sakte hain:

  • Individual

  • HUF

  • Firm

  • Company

  • AOP / BOI

  • Trust ya anya entities

Aap ITR-U file kar sakte hain agar:

  • Aapne pehle original / belated / revised return file ki ho

  • Ya pehle return file nahi ki ho, lekin ab income disclose karne par tax payable ho raha ho

🔔 Important condition:
Updated return file karne ke baad tax liability increase honi chahiye. Agar tax nil ho ya refund ban raha ho, to ITR-U file nahi ki ja sakti.

Kaun ITR-U file nahi kar sakta?

Nimn situations me ITR-U file karna allowed nahi hai:

  • Agar updated return se:

    • Refund mil raha ho, ya

    • Pehle se due refund ki amount badh rahi ho

  • Agar updated return se:

    • Total tax liability kam ho rahi ho

  • Agar us assessment year ke liye:

    • Search u/s 132

    • Survey (specified cases)

    • Requisition u/s 132A
      jaise proceedings start ho chuki ho

  • Agar taxpayer:

    • Carry forward loss ko increase karna chahta ho
      (loss sirf reduce kiya ja sakta hai, badhaya nahi)

ITR-U file karne ki time limit (Updated Provision)

Purana rule:
ITR-U sirf 24 months ke andar file ki ja sakti thi.

Naya rule (1 April 2025 se effective):
Ab ITR-U 48 months (4 saal) tak file ki ja sakti hai, relevant assessment year ke end se.

Example:

  • Assessment Year: 2024-25

  • AY ka end: 31 March 2025

  • ITR-U ki last date: 31 March 2029

👉 Is extension ka purpose ye hai ki taxpayers ko zyada samay mile voluntarily income disclose karne ke liye.

ITR-U par Additional Tax (Section 140B)

ITR-U file karte waqt taxpayer ko ye payments karni hoti hain:

  • Applicable Income Tax

  • Interest (Section 234A / 234B / 234C, jo bhi apply ho)

  • Additional Income-tax

Additional tax ka calculation Tax + Interest ke total amount par hota hai.

Additional Tax Rates – Updated Structure

ITR-U Filing Period Additional Tax
12 months ke andar 25%
12–24 months 50%
24–36 months 60%
36–48 months 70%

⏳ Delay jitna zyada, additional tax utna hi zyada — isliye early compliance financially faydemand hai.

Simple Example

Maan lijiye:

  • Additional tax payable: ₹1,00,000

  • Interest: ₹10,000

  • Total (Tax + Interest): ₹1,10,000

12 months ke andar filing:

  • Additional tax @25% = ₹27,500

  • Total payable = ₹1,37,500

3rd year me filing (24–36 months):

  • Additional tax @60% = ₹66,000

  • Total payable = ₹1,76,000

Important Practical Points

  • ITR-U ka use refund claim ke liye nahi ho sakta

  • Ye facility sirf voluntary disclosure ke liye hai

  • Interest calculation me chhoti si galti additional tax ko bhi badha sakti hai

  • Har assessment year ke liye sirf ek baar ITR-U file ki ja sakti hai

  • Hamesha correct ITR-U form aur latest utility ka hi use karein