Union Budget 2026–27: Corporate Tax Expectations

The Union Budget 2026–27 is expected to focus on economic stability, encouraging public consumption, and building faster and simpler compliance systems. For corporates, the emphasis is likely to be on clarity, neutrality, and long-term growth rather than major tax rate changes.

Key Corporate Tax Expectations

1. Simplification of Tax Laws

Simplification of tax laws and procedures is expected to reduce compliance burden, lower disputes, and improve ease of doing business.

2. Tax Neutrality for Mergers and Acquisitions

Granting tax-neutral status to fast-track demergers and business reorganisations may help companies restructure efficiently and unlock growth.

3. Rationalisation of TDS Rates

Consolidation and simplification of TDS rates could reduce reporting complexity and support smoother compliance.

4. Increased Depreciation for Manufacturing

Additional depreciation benefits for manufacturing industries are expected to encourage capital investment and support Make in India.

5. Relaxation under Section 80JJAA

Relaxation in threshold limits under Section 80JJAA may incentivise companies to generate new employment.

6. IFSC Taxation

Extension of tax exemptions on investments made by NRIs in Offshore Derivative Instruments and OTC investments is expected.

Other Budget Highlights

  • Fiscal deficit target of around 4.2 percent of GDP
  • Higher capital expenditure in AI, space, and robotics
  • Increase in defence spending and modernisation

The Union Budget 2026–27 will be presented on 1 February 2026 at 11:00 AM.