Budget 2026-2027 
 
Speech of 
Nirmala Sitharaman 
Minister of Finance 
February 1, 2026 
 
Hon’ble Speaker, 
On the sacred occasion of Magha Purnima and the birth 
anniversary of Guru Ravidas, I present the Budget for the year 2026-2027. 
Introduction  
1. Since we assumed office 12 years ago, India’s economic trajectory 
has been marked by stability, fiscal discipline, sustained growth and 
moderate inflation. This is the result of conscious choices we have made, 
even in times of heightened uncertainty and di sruption. Our 
Government, led by Hon’ble Prime Minister Modi, has decisively and 
consistently chosen action over ambivalence, reform over rhetoric and 
people over populism.  
2. We have pursued far reaching structural reforms,  
fiscal prudence and monetary stability whilst
2. We have pursued far reaching structural reforms,  
fiscal prudence and monetary stability whilst  
maintaining a strong thrust on public investment.   
Keeping atmanirbharta as a lodestar, we have built domestic 
manufacturing capacity, energy security and reduced critical import 
dependencies.  Simultaneously, we have ensured that citizens benefit 
from every action of the Government, undertaking reforms to support 
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employment generation, agricultural productivity, household purchasing 
power and universal services to people.  
These measures have delivered a high growth rate of around 7% and 
helped us make substantial strides in poverty reduction and 
improvement in the lives of our people.  
3. Today, we face an external environment in which trade and 
multilateralism are imp
our people.  
3. Today, we face an external environment in which trade and 
multilateralism are imperilled and access to resources and supply chains 
are disrupted. New technologies are transforming production systems 
while sharply increasing demands on water, energy and critical minerals.  
4. India will continue to take confident steps towards Viksit Bharat, 
balancing ambition with inclusion. As a growing economy with expanding 
trade and capital needs, India must also remain deeply integrated with 
global markets, exporting more and attracting s table long -term 
investment. 
 
Part A 
5. As I begin Part A, I want to express my gratitude to the people for 
standing firmly with us as we forge our way together towards becoming 
one of the largest economies of the world. 
6. Our aim is
forge our way together towards becoming 
one of the largest economies of the world. 
6. Our aim is to transform aspiration into achievement and potential 
into performance, as we ensure that the dividends of growth reach every 
farmer, the scheduled caste, the scheduled tribes, the nomads, the youth, 
the poor and the women. 
7. In the Viksit Bharat Young Leaders Dialogue 2026, several 
innovative ideas were shared with our Prime Minister, which have 
inspired many of the proposals, making this a unique Yuva Shakti-driven 
Budget.  
8. Our Government’s ‘Sankalp’ is to focus on our poor, 
underprivileged and the disadvantaged . To deliver on this Sankalp, and 
given that this is the first Budget prepared in Kartavya Bhawan, we are 
inspired by 3 kartavya:  
9. Our first kartavya is to acce
dget prepared in Kartavya Bhawan, we are 
inspired by 3 kartavya:  
9. Our first kartavya is to accelerate and sustain economic growth, 
by enhancing productivity and competitiveness, and building resilience to 
volatile global dynamics. 
 3  
 
10. Our second kartavya is to fulfil aspirations of our people and build 
their capacity, making them strong partners in India’s path to prosperity. 
11. Our third kartavya, aligned with our vision of Sabka Sath, Sabka 
Vikas, is to ensure that every family, community, region and sector has 
access to resources, amenities and opportunities for meaningful 
participation.   
12. This threefold approach requires a supportive ecosystem. The first 
requirement is to sustain the momentum of structural reforms — 
continuous, adaptive, and forward -looking
ement is to sustain the momentum of structural reforms — 
continuous, adaptive, and forward -looking. Second, a robust and 
resilient financial sector is central to mobilising savings, allocating capital 
efficiently and managing risks. Third, cutting-edge technologies, 
including AI applications,  can serve as force multipliers for better 
governance.  
Reform Express 
13. Our Government has undertaken comprehensive economic 
reforms towards creating employment, boosting productivity and 
accelerating growth. After the Prime Minister’s announcement on 
Independence Day in 2025, over 350 reforms have been rolled out. These 
include GST simplification, notification of Labour Codes, and 
rationalisation of mandatory Quality Control Orders. High Level 
Committees have been formed and in paral
nalisation of mandatory Quality Control Orders. High Level 
Committees have been formed and in parallel, the Central Government 
is working with the State Governments on deregulation and reducing 
compliance requirements.  
14. The Reform Express is well on its way and will maintain its 
momentum to help us fulfil our kartavya. 
I now move to the specific proposals.  
15. Under our first kartavya to accelerate and sustain economic 
growth, I propose interventions in six areas: i) Scaling up manufacturing 
in 7 strategic and frontier sectors; ii) Rejuvenating legacy industrial 
sectors; iii) Creating “Champion MSMEs”; iv) Delivering a powerful push 
to Infrastructure; v) Ensuring long-term energy security and stability; and 
vi) Developing City Economic Regions.  
 
 
 4  
 
Scaling up manu
ergy security and stability; and 
vi) Developing City Economic Regions.  
 
 
 4  
 
Scaling up manufacturing in 7 strategic and frontier sectors: 
16. Biopharma SHAKTI (Strategy for Healthcare Advancement 
through Knowledge, Technology and Innovation) – India’s disease 
burden is observed to be shifting towards non -communicable diseases, 
like diabetes, cancer and autoimmune disorders. Biologic medicines are 
key to longevity and quality of life at affordable costs. To develop India as 
a global Biopharma manufacturing hub, I propose the Biopharma SHAKTI 
with an outlay of ₹ 10,000 crores over the next 5 years. This will build the 
ecosystem for domestic production of bio logics and biosimilars. The 
Strategy will include a Biopharma -focused network with 3 new National 
Institutes of Ph
ilars. The 
Strategy will include a Biopharma -focused network with 3 new National 
Institutes of Pharmaceutical Education and Research (NIPER) and 
upgrading 7 existing ones. It will also create a network of over 1000 
accredited India Clinical Trials sites. We propose to strengthen the Central 
Drugs Standard Control Organisation to meet global standards and 
approval timeframes through a dedicated scientific review cadre and 
specialists. 
17. India Semiconductor Mission (ISM)  1.0 expanded India’s 
semiconductor sector capabilities. Building on this,  
we will launch ISM 2.0 to produce equipment and materials, design full -
stack Indian IP, and fortify supply chains. We will also focus on industry -
led research and training centres to develop technology and skilled 
workforce. 
18. Th
n industry -
led research and training centres to develop technology and skilled 
workforce. 
18. The Electronics Components Manufacturing Scheme, launched in 
April 2025 with an outlay of ₹22,919 crore, already has investment 
commitments at double the target. We propose to increase the outlay to 
₹40,000 crore to capitalise on the momentum.  
19. A Scheme for Rare Earth Permanent Magnets was launched in 
November 2025. We now propose to support the mineral -rich States of 
Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated 
Rare Earth Corridors  to promote mining, processing, research and 
manufacturing. 
20. To enhance domestic chemical production and reduce import -
dependency, we will launch a Scheme to support States in establishing 3 
dedicated Chemical Parks, thro
endency, we will launch a Scheme to support States in establishing 3 
dedicated Chemical Parks, through challenge route, on a cluster -based 
plug-and-play model. 
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21. Strong capital goods  capability is a determinant of productivity 
and quality across different sectors. Towards building this capacity, I 
propose the following: 
(a) Hi-Tech Tool Rooms will be established by CPSEs at 2 locations 
as digitally enabled automated service bureaus that locally 
design, test, and manufacture high -precision components at 
scale and at lower cost. 
(b) A Scheme for  Enhancement of Construction and 
Infrastructure Equipment (CIE) will be introduced to 
strengthen domestic manufacturing of high -value and 
technologically-advanced CIE. This can range from lifts in a 
multi-story apartment, f
h -value and 
technologically-advanced CIE. This can range from lifts in a 
multi-story apartment, fire -fighting equipment, large and 
small, to tunnel-boring equipment for building metros and 
high-altitude roads.  
(c) I also propose a Scheme for Container Manufacturing to 
create a globally competitive container manufacturing 
ecosystem, with a budgetary allocation of ₹10,000 crore over 
a 5 year period.   
22. For the labour -intensive Textile Sector , I propose an Integrated 
Programme with 5 sub-parts: 
(a) The National Fibre Scheme for self -reliance  
in natural fibres such as silk, wool and jute,  
man-made fibres, and new-age fibres; 
(b) Textile Expansion and Employment Scheme to modernise 
traditional clusters with capital support for machinery, 
technology upgradation and com
modernise 
traditional clusters with capital support for machinery, 
technology upgradation and common testing and 
certification centres;  
(c) A National Handloom and Handicraft programme to integrate 
and strengthen existing schemes and ensure targeted 
support for weavers and artisans; 
(d) Tex-Eco Initiative to promote  globally competitive and 
sustainable textiles and apparels;  
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(e) Samarth 2.0 to modernize and upgrade the textile skilling 
ecosystem through collaboration with industry and academic 
institutions.  
23. Further, I propose to set up Mega Textile Parks in challenge mode. 
They can also focus on bringing value addition to technical textiles.   
24. I propose to launch the Mahatma Gandhi Gram Swaraj initiative 
to strengthen khadi, handloom and handicrafts. This
aunch the Mahatma Gandhi Gram Swaraj initiative 
to strengthen khadi, handloom and handicrafts. This will help in global 
market linkage and branding. It will streamline and support training, 
skilling, quality of process and production. This wi ll benefit our weavers,  
village industries, One - District – One - Product initiative and rural youth.  
25. India has the potential to emerge as a global hub for high quality, 
affordable sports goods. I propose a dedicated initiative for sports goods 
that will promote manufacturing, research and innovation in equipment 
design as well as material sciences.  
Rejuvenation of Legacy Industrial Clusters  
26. I propose to introduce a Scheme to revive 200 legacy industrial 
clusters to improve their cost competitiveness and efficiency through 
inf
ve 200 legacy industrial 
clusters to improve their cost competitiveness and efficiency through 
infrastructure and technology upgradation. 
Creating “Champion SMEs” and supporting micro enterprises: 
27. Recognising MSMEs as a vital engine of growth, I propose a three-
pronged approach to help them grow as ‘Champions’: 
Equity Support  
28. I propose to introduce a dedicated ₹10,000 crore  SME Growth 
Fund, to create future Champions, incentivizing enterprises based on 
select criteria. 
29. I also propose to top up the Self-Reliant India Fund set up in 2021, 
with ₹2,000 crore to continue support to micro enterprises and maintain 
their access to risk capital. 
 
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Liquidity Support   
30. With TReDS, more than ₹7 lakh crore has been made available to 
MSMEs. To leverage its full po
30. With TReDS, more than ₹7 lakh crore has been made available to 
MSMEs. To leverage its full potential, I propose 4 measures: (i) mandate 
TReDS as the transaction settlement platform for all purchases from 
MSMEs by CPSEs, serving as a benchmark for other corporates; (ii) 
introduce a credit guarantee support mechanism through CGTMSE for 
invoice discounting on TReDS platform; (iii) link GeM with TReDS for 
sharing information with financiers about government purchases from 
MSMEs, encouraging cheaper and quicker financing; (iv) introduce TReDS 
receivables as asset -backed securities, helping develop a secondary 
market, enhancing liquidity and settlement of transactions. 
Professional Support  
31. Government will facilitate Professional Institutions such as ICAI, 
ICSI, ICMAI to d
l Support  
31. Government will facilitate Professional Institutions such as ICAI, 
ICSI, ICMAI to design short -term, modular courses and practical tools to 
develop a cadre of ‘Corporate Mitras’, especially in Tier -II and Tier -III 
towns. These accredited para -professionals will help MSMEs meet 
compliance requirements at affordable costs.  
Infrastructure 
32. During this past decade our Government has undertaken several 
initiatives for large-scale enhancement of public infrastructure including 
through new financing instruments such as Infrastructure Investment 
Trusts (InVITs) and Real Estate Investment Trusts (REITs) and institutions 
like NIIF and NABFID. We shall continue to focus on developing 
infrastructure in cities with over 5 lakh population (Tier II and Tier III), 
which
s on developing 
infrastructure in cities with over 5 lakh population (Tier II and Tier III), 
which have expanded to become growth centres.  
33. Public capex  has increased manifold from ₹2 lakh crore in  
FY2014-15 to an allocation of ₹11.2 lakh crore in  
BE 2025-26. In FY2026-27, I propose to increase it to ₹12.2 lakh crore to 
continue the momentum. 
34. To strengthen the confidence of private developers regarding 
risks during infrastructure development and construction phase, I 
propose to set up an Infrastructure Risk Guarantee Fund to provide 
prudently calibrated partial credit guarantees to lenders.  
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35. Over the years, REITs have emerged as a successful instrument for 
asset monetisation. I propose to accelerate recycling of significant real 
estate assets of CPSEs thr
sset monetisation. I propose to accelerate recycling of significant real 
estate assets of CPSEs through the setting up of dedicated REITs.  
36. To promote environmentally sustainable movement of cargo, I 
propose to: a) Establish new Dedicated Freight Corridors  connecting 
Dankuni in the East, to Surat in the West; b) o perationalise 20 new 
National Waterways  (NW) over next 5 years, starting with NW -5 in 
Odisha to connect mineral rich areas of Talcher and Angul and industrial 
centres like Kalinga Nagar to the Ports of Paradeep and Dhamra. Training 
Institutes will be set up as Regional Centres of Excellence for 
development of the required manpower. Thi s will benefit youth in the 
entire stretch of the waterways to train and acquire skills.  
Further, a ship repair ecosystem  cate
ntire stretch of the waterways to train and acquire skills.  
Further, a ship repair ecosystem  catering to inland waterways will also 
be set up at Varanasi and Patna; c) launch a Coastal Cargo Promotion 
Scheme for incentivising a modal shift from rail and road, to increase the 
share of inland waterways and coastal shipping from 6 % to 12 % by 2047.  
37. To enhance last -mile and remote connectivity, and promote 
tourism, I propose to give incentives to indigenize manufacturing of 
seaplanes. A Seaplane VGF Scheme will be also be introduced to provide 
support for operations. 
Carbon Capture Utilization and Storage (CCUS) 
38. Aligning with the roadmap launched in December 2025, CCUS 
technologies at scale will achieve higher readiness levels in end -use 
applications across five indus
chnologies at scale will achieve higher readiness levels in end -use 
applications across five industrial sectors, including, power, steel, 
cement, refineries and chemicals.  An outlay of ₹20,000 crore is proposed 
over the next 5 years.  
City Economic Regions  
39. Cities are India’s engines of growth, innovation, and 
opportunities. We shall now focus on Tier II and Tier III cities, and even 
temple-towns, which need modern infrastructure and basic amenities. 
This Budget aims to further amplify the potential of cities  to deliver the 
economic power of agglomerations by mapping city economic regions 
(CER), based on their specific growth drivers.  An allocation of ₹ 5000 
crore per CER over 5 years is proposed for implementing their plans 
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through a challenge mode with a reform
over 5 years is proposed for implementing their plans 
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through a challenge mode with a reform -cum-results based financing 
mechanism.   
40. In order to promote environmentally sustainable passenger 
systems, we will develop seven High-Speed Rail corridors between cities 
as ‘growth connectors’, namely i) Mumbai-Pune, ii) Pune-Hyderabad, iii) 
Hyderabad-Bengaluru, iv) Hyderabad-Chennai, v) Chennai-Bengaluru, vi) 
Delhi-Varanasi, vii) Varanasi-Siliguri. 
Financial Sector 
41. The Indian banking sector today is characterised by strong balance 
sheets, historic highs in profitability, improved asset quality and coverage 
exceeding 98% of villages in the country. At this juncture, we are well -
placed to futuristically evaluate the measures needed to continue on the 
path of reform-led
well -
placed to futuristically evaluate the measures needed to continue on the 
path of reform-led growth of this sector. 
42. I propose setting up a “High Level Committee on Banking for 
Viksit Bharat” , to comprehensively review the sector and align it with 
India’s next phase of growth, while safeguarding financial stability, 
inclusion and consumer protection. 
43. The vision for NBFCs for Viksit Bharat has been outlined with clear 
targets for credit disbursement and technology adoption. In order to 
achieve scale and improve efficiency in the Public Sector NBFCs, as a first 
step, it is proposed to restructure the Power Finance Corporation and 
Rural Electrification Corporation.  
44. I propose a comprehensive review of the Foreign Exchange 
Management (Non -debt Instruments) Rules
. I propose a comprehensive review of the Foreign Exchange 
Management (Non -debt Instruments) Rules  to create a more 
contemporary, user -friendly framework for foreign investments, 
consistent with India’s evolving economic priorities.  
Corporate Bond Market 
45. I propose to introduce a market making framework with suitable 
access to funds and derivatives on corporate bond indices. I also propose 
to introduce total return swaps on corporate bonds.  
Municipal Bonds 
46. To encourage the issuance of municipal bonds of higher value by 
large cities, I propose an incentive of ₹100 crore for a single bond issuance 
 10  
 
of more than ₹1000 crore. The current scheme under AMRUT which 
incentivises issuances up to ₹200 crore, will also continue to support 
smaller and medium towns.  
Ea
centivises issuances up to ₹200 crore, will also continue to support 
smaller and medium towns.  
Ease of Doing Business 
47. Individual Persons Resident Outside India (PROI) will be permitted 
to invest in equity instruments of listed Indian companies through the 
Portfolio Investment Scheme. It is also proposed to increase the 
investment limit for an individual PROI under this sc heme from 5% to 
10%, with an overall investment limit for all  
individual PROIs to 24%, from the current 10%.  
Emerging technologies, including AI 
48. 21st Century is technology driven. Adoption of technology is for 
the benefit of all people - farmers in the field, women in STEM, youth 
keen to upskill and Divyangjan to access newer opportunities. The 
Government has taken several steps to support new tech
ivyangjan to access newer opportunities. The 
Government has taken several steps to support new technolo gies 
through AI Mission, National Quantum Mission, Anusandhan National 
Research Fund, and Research, Development and Innovation Fund.  
49. Our second kartavya  is to fulfil aspirations and build capacity. 
Close to 25 crore individuals have come out of multidimensional poverty 
through a decade of our Government’s sustained and reform -oriented 
efforts. 
50. Our Government has therefore decided to place a renewed 
emphasis on the Services Sector to provide a pathway to fulfilling 
aspirations of a youthful India, with the following measures. 
High-Powered ‘Education to Employment and Enterprise’ Standing 
Committee 
51. I propose to set up a High -Powered ‘Education to Employment 
an
nterprise’ Standing 
Committee 
51. I propose to set up a High -Powered ‘Education to Employment 
and Enterprise’ Standing Committee to recommend measures that focus 
on the Services Sector as a core driver of Viksit Bharat. This will make us 
a global leader in services, with a 10% global share  by 2047. The 
Committee will prioritise areas to optimise the potential for growth, 
employment and exports.  They will also assess the impact of emerging 
technologies, including AI, on jobs and skill requirements and propose 
measures thereof.  
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Creation of Professionals for Viksit Bharat 
52. To create a new range of skilled career pathways for our youth, I 
propose interventions in the following sectors: 
Health 
53.  Existing institutions for Allied Health Professionals (AHPs) will be
ollowing sectors: 
Health 
53.  Existing institutions for Allied Health Professionals (AHPs) will be 
upgraded and new AHP Institutions established in private and 
Government sectors. This will cover 10 selected disciplines, including 
optometry, radiology, anesthesia, OT Technology, Applied Psychology 
and Behavioural Health and add 100,000 AHPs over the  
next 5 years.  
54. A strong Care Ecosystem , covering geriatric and allied care 
services will be built. A variety of NSQF -aligned programmes will be 
developed to train multiskilled caregivers combining core care and allied 
skills, such as, wellness, yoga and operation of medical and assistive 
devices. In the coming year, 1.5 lakh caregivers will be trained.  
Hubs for Medical Value Tourism  
55. To promote India as a hub for medic
regivers will be trained.  
Hubs for Medical Value Tourism  
55. To promote India as a hub for medical tourism  
services, I propose to launch a Scheme to support States in establishing 
five Regional Medical Hubs, in partnership with the private sector. These 
Hubs will serve as integrated healthcare complexes that combine 
medical, educational and research facilities. They will have AYUSH 
Centres, Medical Value Tourism Facilitation Centres and infrastructure 
for diagnostics, post -care and rehabilitation. These Hubs will provide 
diverse job opportunities for health professi onals including doctors and 
AHPs.  
AYUSH 
56. Ancient Indian yoga, already respected in several parts of the 
world, was given mass global recognition when Hon’ble PM took it to the 
UN. Post -COVID, Ayurveda gai
rld, was given mass global recognition when Hon’ble PM took it to the 
UN. Post -COVID, Ayurveda gained a similar global acceptance and 
recognition.  
57. Exporting quality Ayurvedic products helps farmers who grow the 
herbs and the youth who process the products. To meet growing global 
demand, a few more steps are being taken. 
 12  
 
58. I propose to (i) set up 3 new All India Institutes of Ayurveda; (ii) 
upgrade AYUSH pharmacies and Drug Testing Labs for higher standards 
of certification ecosystem, and make available more skilled personnel; 
(iii) upgrade the WHO Global Traditional Medicine Centre in Jamnagar to 
bolster evidence-based research, training and awareness for traditional 
medicine.  
Animal Husbandry 
59. Livestock contributes close to  16% of farm income, including o
l 
medicine.  
Animal Husbandry 
59. Livestock contributes close to  16% of farm income, including of 
poor and marginal households. To scale up availability of veterinary 
professionals by more than 20,000, I propose to roll out a loan -linked 
capital subsidy support scheme for establishment of veterinary and para-
vet colleges, veterinary hospitals, diagnostic laboratories and breeding 
facilities in the private sector. Collaboration between Indian and foreign 
institutions will also be facilitated.  
Orange Economy 
60. India’s Animation, Visual Effects, Gaming and Comics (AVGC) 
sector is a growing industry, projected to require 2 million professionals 
by 2030. I propose to support the Indian Institute of Creative 
Technologies, Mumbai in setting up AVGC Content Creator La bs  
in 15
Indian Institute of Creative 
Technologies, Mumbai in setting up AVGC Content Creator La bs  
in 15,000 secondary schools and 500 colleges. 
Design 
61. The Indian design industry is expanding rapidly and yet there is a 
shortage of Indian designers. I propose to establish through challenge 
route, a new National Institute of Design to boost design education and 
development in the eastern region of India.  
Education 
62. Our Government will support States, through challenge route, in 
creating 5 University Townships  in the vicinity of major industrial and 
logistic corridors. These planned academic zones will host multiple 
universities, colleges, research institutions, skill centres and residential 
complexes. 
 13  
 
63. In Higher Education STEM institutions, prolonged hours of stud
residential 
complexes. 
 13  
 
63. In Higher Education STEM institutions, prolonged hours of study 
and laboratory work pose some challenges for girl students. Through 
VGF/capital support, 1 girls’ hostel will be established in every district. 
64. To promote Astrophysics and Astronomy via immersive 
experiences, 4 Telescope Infrastructure facilities  will be set up or 
upgraded - the National Large Solar Telescope, the National Large Optical-
infrared Telescope, the Himalayan Chandra Telescope and the COSMOS -
2 Planetarium. 
Tourism  
65. The Tourism sector has the potential to play a large role in 
employment generation, forex earnings and expanding the local 
economy. 
66. I propose to set up a National Institute of Hospitality  by 
upgrading the existing National Council for Hotel
to set up a National Institute of Hospitality  by 
upgrading the existing National Council for Hotel Management and 
Catering Technology. It will function as a bridge between academia, 
industry and the Government.   
67. I also propose a pilot scheme for upskilling 10,000 guides  in 20 
iconic tourist sites through a standardized,  
high-quality 12 -week training course in hybrid mode, in collaboration 
with an Indian Institute of Management.  
68. A National Destination Digital Knowledge Grid will be established 
to digitally document all places of significance —cultural, spiritual and 
heritage. This initiative will create a new ecosystem of jobs for local 
researchers, historians, content creators and technology partners. 
69. India has the potential and opportunity to offer world -cla
t creators and technology partners. 
69. India has the potential and opportunity to offer world -class 
trekking and hiking experience. We will develop ecologically sustainable 
(i) Mountain trails in Himachal Pradesh, Uttarakhand and Jammu and 
Kashmir; Araku Valley in the Eastern Ghats and Podhigai Malai in the 
Western Ghats. (ii) Turtle Trails along key nesting sites in the coastal areas 
 14  
 
of Odisha, Karnataka and Kerala; and (iii) Bird watching trails along the 
Pulikat lake in Andhra Pradesh and Tamil Nadu. 
70. Under the visionary leadership of Honorable Prime Minister, we 
established the International Big Cat Alliance in 2024. This year, India is 
hosting the first ever Global Big Cat Summit, where heads of governments 
and ministers from 95 range countries will d eliberate
l Big Cat Summit, where heads of governments 
and ministers from 95 range countries will d eliberate on collective 
strategies for conservation.  
Heritage and Culture Tourism  
71. I propose to develop 15 archeological sites including Lothal, 
Dholavira, Rakhigarhi, Adichanallur, Sarnath, Hastinapur, and Leh Palace  
into vibrant, experiential cultural destinations. Excavated landscapes will 
be opened to the public through curated walkways .  
Immersive storytelling skills and technologies will be introduced to help 
conservation labs, interpretation centres, and guides. 
Sports 
72. The Sports Sector provides multiple means of employment, 
skilling and job opportunities. Taking forward the systematic nurturing of 
sports talent which is set in motion through the Khelo India  
programme,
e systematic nurturing of 
sports talent which is set in motion through the Khelo India  
programme, I propose to launch a Khelo India Mission to transform the 
Sports sector over the next decade.  
73. The Mission will facilitate: a) An integrated talent development 
pathway, supported by training centres (foundational, intermediate and 
elite levels); b) systematic development of coaches and support staff; c) 
integration of sports science and technology; d) competitions and leagues 
to promote sports culture and provide platforms; and, e) development of 
sports infrastructure for training and competition. 
74. Our third kartavya  aligns with our vision of Sabka Sath, Sabka 
Vikas towards a Viksit Bharat.  
75. This requires targeted efforts for a) Increasing farmer incomes  
through pro
a Viksit Bharat.  
75. This requires targeted efforts for a) Increasing farmer incomes  
through productivity enhancement and entrepreneurship, with special 
 15  
 
attention to small and marginal farmers ; b) Empowering Divyangjan 
through access to livelihood opportunities, training and   
high-quality assistive devices ; c) Empowering the vulnerable to access 
mental health and trauma care; d) Focus on the Purvodaya States and 
the North -East Region  to accelerate development and employment 
opportunities.  
Increasing Farmer Incomes 
76. Fisheries: We will undertake initiatives (i) for integrated 
development of 500 reservoirs and Amrit Sarovars  
(ii) strengthen the fisheries value chain in coastal areas and enable 
market linkages involving start-ups and women-led groups together w
ain in coastal areas and enable 
market linkages involving start-ups and women-led groups together with 
Fish Farmers Producer Organisations.  
77. Animal Husbandry: To provide quality employment opportunities 
in rural and peri -urban areas,  we will support the Animal Husbandry 
Sector in  entrepreneurship development through: (a) a Credit -Linked 
Subsidy Programme (b) scaling -up and modernisation of livestock 
enterprises (c) enhance creation of livestock, dairy and poultry -focused 
integrated-value chains and (d) encourage creation of Livestock Farmer 
Producers Organisations. 
78. High Value Agriculture : To diversify farm outputs, increase 
productivity, enhance farmers’ incomes, and create new employment 
opportunities, we will support high value crops such as coconut, 
sandalwoo
d create new employment 
opportunities, we will support high value crops such as coconut, 
sandalwood, cocoa and cashew in our coastal areas. Agar trees in North 
East and nuts such as, almonds, walnuts and pine nuts in our hilly regions 
will also be supported. 
79. India is the world’s largest producer of coconuts.  
About 30 million people, including nearly 10 million farmers, depend on 
coconuts for their livelihood. To further enhance competitiveness in 
coconut production, I propose a Coconut Promotion Scheme to increase 
production and enhance productivity through various interventions 
 16  
 
including replacing old and non -productive trees with new 
saplings/plants/varieties in major coconut growing States.  
80. A dedicated programme is proposed for Indian cashew and cocoa 
to
jor coconut growing States.  
80. A dedicated programme is proposed for Indian cashew and cocoa 
to make India self -reliant in raw cashew and cocoa production and 
processing, enhance export competitiveness and transform Indian 
Cashew and Indian Cocoa into premium global brands by 2030.  
81. Sandalwood is closely linked to India’s social and cultural 
heritage. Our Government will partner with State Governments to 
promote focused cultivation and post -harvest processing to restore the 
glory of the Indian Sandalwood ecosystem.  
82. To rejuvenate old, low -yielding orchards and expand  
high-density cultivation of walnuts, almonds and pine nuts , we will 
support a dedicated programme to enhance farmer incomes and in 
bringing value addition by engaging youth. 
Bharat-VISTAAR (Virtuall
enhance farmer incomes and in 
bringing value addition by engaging youth. 
Bharat-VISTAAR (Virtually Integrated System to Access Agricultural 
Resources) 
83. I propose to launch Bharat -VISTAAR—a multilingual AI tool that 
shall integrate the AgriStack portals and the ICAR package on agricultural 
practices with AI systems. This will enhance farm productivity, enable 
better decisions for farmers and reduce risk by  providing customised 
advisory support.  
SHE-Marts for Rural Women-led Enterprises 
84. Building on the success of the Lakhpati Didi Programme, I propose 
to help women take the next step from  
credit-led livelihoods to being owners of enterprises.  
Self-Help Entrepreneur (SHE) Marts will be set up as community-owned 
retail outlets within the cluster level federations thr
HE) Marts will be set up as community-owned 
retail outlets within the cluster level federations through enhanced and 
innovative financing instruments. 
 17  
 
Empowering Divyangjan 
85. Divyangjan Kaushal Yojana : IT, AVGC sectors, Hospitality and 
Food and Beverages sectors offer task-oriented and process-driven roles, 
which are suitable for Divyangjans. We will ensure dignified livelihood 
opportunities through industry-relevant and customized training specific 
to each divyang group.  
86. Divyang Sahara Yojana : Timely access to high -quality assistive 
devices for all eligible Divyangjans is a fundamental need. I propose to (i) 
support the Artificial Limbs Manufacturing Corporation of India (ALIMCO) 
to scale up production of assistive devices, invest in R&D and AI 
integration,
of India (ALIMCO) 
to scale up production of assistive devices, invest in R&D and AI 
integration, (ii) strengthen PM Divyasha Kendras and support setting up 
of Assistive Technology Marts as modern retail -style centres where 
Divyangjans and senior citizens can see, tr y and purchase assistive 
products.  
Reaffirming our commitment to Mental Health and Trauma Care 
87. There are no  national institutes for mental healthcare in north 
India. We will therefore set up a NIMHANS -2 and also upgrade National 
Mental Health Institutes in Ranchi and Tezpur as Regional Apex 
Institutions.  
88. Emergencies expose families, particularly the poor and 
vulnerable, to unexpected expenditure. We will strengthen and increase 
these capacities by 50% in District Hospitals by establishing Emergency 
a
strengthen and increase 
these capacities by 50% in District Hospitals by establishing Emergency 
and Trauma Care Centres.  
Focus on the Purvodaya States and the North-Eastern Region 
89. Purvodaya: I propose the development of an integrated East 
Coast Industrial Corridor with a well -connected node at Durgapur, 
creation of 5 tourism destinations in the 5 Purvodaya States, and the 
provision of 4,000 e-buses.  
90. Buddhist Sites in North -Eastern Region: The  
North-Eastern Region is a civilizational confluence of Theravada and 
 18  
 
Mahayana/Vajrayana traditions. I propose to launch a Scheme for 
Development of Buddhist Circuits in Arunachal Pradesh, Sikkim, Assam, 
Manipur, Mizoram and Tripura. The Scheme will cover preservation of 
temples and monasteries, pilgrimage interpretat
and Tripura. The Scheme will cover preservation of 
temples and monasteries, pilgrimage interpretation centers, connectivity 
and pilgrim amenities. 
16th Finance Commission 
91. On 17th November 2025, the 16th Finance Commission submitted 
its report to the President. As mandated under Article 281 of the 
Constitution, the Government is to lay the Report along with the 
Explanatory Memorandum on the Action Taken Report on the 
recommendations of the Commission in Parliament. The Government has 
accepted the recommendation of the Commission to retain the vertical 
share of devolution at 41%. As recommended by the Commission, I have 
provided ₹1.4 lakh crore to the States for the FY 2026 -27 as Finance 
Commission Grants. These include Rural and Urban Local Body and 
Disaster Management Gr
as Finance 
Commission Grants. These include Rural and Urban Local Body and 
Disaster Management Grants.  
Fiscal Consolidation 
92. Government has been delivering on our fiscal commitments 
consistently without compromising on social needs. To strive towards 
accepted standards of fiscal management, in Budget 2025 -26, I had 
indicated that the Central Government would target reaching a de bt-to-
GDP ratio of 50±1 percent by 2030-31. 
93. In line with this, the debt -to-GDP ratio is estimated to be 55.6  
percent of GDP in BE 2026 -27, compared to 56.1 percent of GDP in RE 
2025-26. A declining debt -to-GDP ratio will gradually free up resources 
for priority sector expenditure by reducing the outgo on interest 
payments. 
94. One of the main operational instruments for debt targeting is
the outgo on interest 
payments. 
94. One of the main operational instruments for debt targeting is the 
fiscal deficit. I am happy to inform this august House that I have fulfilled 
my commitment made in FY 2021 -22 to reduce fiscal deficit below 4.5 
percent of GDP by 2025 -26. In RE 2025 -26, the  fiscal deficit has been 
 19  
 
estimated at par with BE of 2025 -26 at 4.4 percent of GDP. In line with 
the new fiscal prudence path of debt consolidation, the fiscal deficit in BE 
2026-27 is estimated to be 4.3 percent of GDP.  
Revised Estimates 2025-26 
95. The Revised Estimates of the non -debt receipts  
are ₹34 lakh crore   of which the Centre’s net tax receipts  
are ₹26.7 lakh crore. The Revised Estimate of the total expenditure is 
₹49.6 lakh crore, of which the capital expenditu
. The Revised Estimate of the total expenditure is 
₹49.6 lakh crore, of which the capital expenditure is about  
₹11 lakh crore.  
Budget Estimates 2026-27 
96. Coming to 2026 -27, the non -debt receipts and the  
total expenditure are estimated as ₹36.5 lakh crore  
and ₹53.5 lakh crore respectively. The Centre’s net tax receipts are 
estimated at ₹28.7 lakh crore. 
97. To finance the fiscal deficit, the net market borrowings from dated 
securities are estimated at ₹11.7 lakh crore. The balance financing is 
expected to come from small savings and other sources. The gross market 
borrowings are estimated at ₹17.2 lakh crore.  
I will now move to Part B. 
 20  
 
PART B 
Direct Taxes 
Speaker Sir,  
98. Now I present my proposals on Direct Taxes. 
New Income Tax Act 
99. In July 2024, I a
er Sir,  
98. Now I present my proposals on Direct Taxes. 
New Income Tax Act 
99. In July 2024, I announced a comprehensive review of the 
Income Tax Act, 1961. This was completed in a record time and the 
Income Tax Act, 2025 will come into effect from 1st April, 2026.   
100. The simplified Income Tax Rules and Forms will be notified 
shortly, giving adequate time to taxpayers to acquaint themselves 
with its requirements. 
101. The forms have been redesigned such that ordinary citizens 
can comply without difficulty.  
Ease of Living 
102. I propose that any interest awarded by the  
Motor Accident Claims Tribunal  to a natural person will be exempt 
from Income Tax, and any TDS on this account will be done away 
with. 
103. I propose to reduce TCS rate on the sale of overseas tour 
pr
account will be done away 
with. 
103. I propose to reduce TCS rate on the sale of overseas tour 
program package from the current 5 percent  
and 20 percent to 2 percent without any stipulation of amount. 
104. I propose to reduce TCS rate for pursuing education and for 
medical purposes under the Liberalized Remittance Scheme (LRS) 
from 5 percent to 2 percent. 
105. Supply of manpower services is proposed to be specifically 
brought within the ambit of payment to contractors for the purpose 
of TDS to avoid ambiguity. Thus, TDS on these services will be at the 
rate of either 1 percent or 2 percent only. 
106. I propose a scheme for small taxpayers wherein  
a rule-based automated process will enable obtaining a lower or nil 
deduction certificate instead of filing an application with t
will enable obtaining a lower or nil 
deduction certificate instead of filing an application with the 
assessing officer. 
 21  
 
107. For the ease  of taxpayers holding securities in multiple 
companies, I propose to enable depositories to accept Form 15G or 
Form 15H from the investor and provide it directly to various relevant 
companies. 
108. I propose to extend time available for revising returns from 
31st December to up to 31 st March with the payment of a nominal 
fee.   
109. I also propose to stagger the timeline for filing of tax returns. 
Individuals with ITR 1 and ITR 2 returns will continue to file till 31 st 
July and non -audit business cases or trusts are proposed to be 
allowed timetill 31st August. 
110. TDS on the sale of immovable property by a  
non-resident is pro
allowed timetill 31st August. 
110. TDS on the sale of immovable property by a  
non-resident is proposed to be deducted and deposited through 
resident buyer’s PAN based challan instead of requiring TAN. 
111. To address practical issues of small taxpayers like students, 
young professionals, tech employees, relocated NRIs, and such 
others, I propose to introduce a one -time 6 -month foreign asset 
disclosure scheme for these taxpayers to disclose income or assets 
below a certain size. 
112. This scheme would be applicable for two categories of 
taxpayers namely,  
(A) who did not disclose their overseas income or asset and  
(B) who disclosed their overseas income and/or paid due tax, but 
could not declare the asset acquired.  
For category (A), the limit of undisclosed income/asset i
t 
could not declare the asset acquired.  
For category (A), the limit of undisclosed income/asset is proposed to 
be up to 1 crore rupees.  They need to pay 30 percent of Fair Market 
Value of asset or 30 percent of undisclosed income as tax and 30 
percent as additional income tax in lieu of penalty and would thereby 
get immunity from prosecution. 
For category (B), asset value is proposed to be  
up to 5 crore rupees. Here, immunity from both penalty and 
prosecution will be available with the payment of fee  
of 1 lakh rupees. 
 22  
 
Rationalizing Penalty and Prosecution 
113. Multiplicity of proceedings are a hindrance to the ease of 
doing business. I propose to integrate assessment & penalty 
proceedings by way of a common order for both. There will be no 
interest liability on t
& penalty 
proceedings by way of a common order for both. There will be no 
interest liability on the taxpayer on the penalty amount for the period 
of appeal before the first appellate authority irrespective of the 
outcome of appeal proc ess. Further, quantum of pre -payment is 
being reduced from 20 percent to 10 percent and will continue to be 
calculated only on core tax demand. 
114. As an additional measure for reducing litigation,  
I propose to allow taxpayers to update their returns even after 
reassessment proceedings have been initiated, at an additional 10 
percent tax rate over and above the rate applicable for the relevant 
year. The assessing officer will then use only this updat ed return in 
his proceedings. 
115. There is already a framework for immunity from penalty an
updat ed return in 
his proceedings. 
115. There is already a framework for immunity from penalty and 
prosecution in the cases of underreporting. I propose to apply this 
framework of immunity to misreporting too. However, in such a case 
the taxpayer will need to pay 100 percent of the tax amount as an 
additional income tax over and above the tax and interest due. 
116. Penalties for certain technical defaults such as failure to get 
accounts audited, non-furnishing of transfer pricing audit report and 
default in furnishing statement for financial transactions, are 
proposed to be converted into fee. 
117. I propose to rationalise prosecution framework under the 
Income Tax Act while maintaining a careful balance for deterrence in 
some serious offences.  
118. Non-production of books
ntaining a careful balance for deterrence in 
some serious offences.  
118. Non-production of books of account and documents, and 
requirement of TDS payment, where payment is made in kind, are 
being decriminalised. Further, minor offences will attract fine only.  
119. The remaining prosecutions will be graded commensurate 
with the quantum of offence. They will entail only simple 
imprisonment, with maximum imprisonment reduced to two years, 
and power to courts to convert even those into fine. 
 23  
 
120. There is no penalty presently for non -disclosure of non -
immovable foreign assets with aggregate value less than 20 lakh 
rupees. I propose to also provide them with immunity from 
prosecution with retrospective effect from 1.10.2024. 
Cooperatives 
121. Deduction is already allow
prosecution with retrospective effect from 1.10.2024. 
Cooperatives 
121. Deduction is already allowed to a primary cooperative society 
engaged in supplying milk, oilseeds, fruits or vegetables raised or 
grown by its members. I propose to extend this deduction to also 
include supply of cattle feed and cotton seed produced by its  
members.  
122. I propose to allow inter-cooperative society dividend income 
as deduction under the new tax regime to the extent it is further 
distributed to its members. 
123. I further propose to allow exemption for a period  
of 3 years, to dividend income received by a notified national co -
operative federation, on their investments made in companies up to 
31.1.2026. This exemption would be allowed only for dividends 
further distributed to its member
o 
31.1.2026. This exemption would be allowed only for dividends 
further distributed to its member co-operatives. 
Supporting IT sector as India’s growth engine 
124. India is a global leader in software development services, IT 
enabled services, knowledge process outsourcing services and 
contract R&D services relating to software development. These 
business segments are quite inter-connected with each other.  
125. All these services are proposed to be clubbed under a single 
category of Information Technology Services  
with a common safe harbour margin of 15.5 percent applicable to all.  
126. The threshold for availing safe harbour for IT services is being 
enhanced substantially from 300 crore rupees to 2,000 crore rupees. 
127. Safe harbour for IT services shall be approved by an
m 300 crore rupees to 2,000 crore rupees. 
127. Safe harbour for IT services shall be approved by an 
automated rule-driven process without any need for tax officer to 
examine and accept the application. Once applied by an IT Services 
company, the same safe harbour can be continued for a period of 5 
years at a stretch at its choice.  
 24  
 
128. For IT services companies who want to conclude Advance 
Pricing Agreement (APA), I propose to fast track Unilateral APA 
process for IT services and endeavour to conclude it within a period 
of 2 years. The period of 2 years can be extended by a further period 
of 6 months on taxpayer’s request. 
129. I propose to extend the facility of modified returns available 
to the entity entering APA to its associated entities also. 
Attracting global b
returns available 
to the entity entering APA to its associated entities also. 
Attracting global business and investment 
130. Recognising the need to enable critical infrastructure and 
boost investment in data centres, I propose to provide tax holiday till 
2047 to any foreign company that provides cloud services to 
customers globally by using data centre services from India. It wi ll, 
however, need to provide services to Indian customers through an 
Indian reseller entity. 
131. I also propose to provide a safe harbour of 15 percent on cost 
in case the company providing data centre services from India is a 
related entity.  
132. To harness the efficiency of just-in-time logistics for electronic 
manufacturing, I propose to provide safe harbour to non -residents 
for component ware
r electronic 
manufacturing, I propose to provide safe harbour to non -residents 
for component warehousing in a bonded warehouse at a profit 
margin of 2 percent of the invoice value. The resultant tax of about 
0.7 percent will be much lower than in competing jurisdictions. 
133. To provide fillip to toll manufacturing in India,  
I propose to provide exemption from income tax  
for 5 years, to any non -resident who provides capital goods, 
equipment or tooling, to any toll manufacturer in a bonded zone. 
134. To encourage vast pool of global talent to work in India for a 
longer period of time, I propose to provide exemption to global (non-
India sourced) income of a non-resident expert, for a stay period of 5 
years under notified schemes. 
135. I propose to provide exemption from Mini
for a stay period of 5 
years under notified schemes. 
135. I propose to provide exemption from Minimum Alternate Tax 
(MAT) to all non-residents who pay tax on presumptive basis. 
 
 25  
 
Tax administration 
136. I propose to constitute a Joint Committee of Ministry of 
Corporate Affairs and Central Board of Direct Taxes for incorporating 
the requirements of Income Computation and Disclosure Standards 
(ICDS) in the Indian Accounting Standards (IndAS) itself. Separate 
accounting requirement based on ICDS will be done away with from 
the tax year 2027-28. 
137. To support PM Modi’s vision of home -grown accounting and 
advisory firms to become global leaders, I propose to rationalise the 
definition of accountant for the purposes of Safe Harbour Rules. 
Other Tax proposals 
138. Change
definition of accountant for the purposes of Safe Harbour Rules. 
Other Tax proposals 
138. Change in taxation of buyback was brought in to address the 
improper use of buyback route by promoters. In the interest of 
minority shareholders, I propose to tax buyback for all types of 
shareholders as Capital Gains. However, to disincentivize misuse of 
tax arbitrage, promoters will pay an additional buyback tax. This will 
make effective tax 22 percent for corporate promoters. For non -
corporate promoters the effective tax will be 30 percent. 
139. TCS rate for sellers of specific goods namely alcoholic liquor, 
scrap and minerals will be rationalized to 2 percent and that on tendu 
leaves will be reduced from 5 percent to 2 percent. 
140. I propose to raise the STT on Futures to 0.05 perc
ill be reduced from 5 percent to 2 percent. 
140. I propose to raise the STT on Futures to 0.05 percent from 
present 0.02 percent. STT on options premium and exercise of 
options are both proposed to be raised to 0.15 percent from the 
present rate of 0.1 percent and 0.125 percent respectively.  
141. We reformed the taxation landscape for corporates in 2019 
by providing them a simplified regime with lower tax rate so that they 
could productively focus on business rather than on claim of 
deductions and exemptions. 
142. To encourage companies to shift to the new regime, set-off of 
brought forward MAT credit is proposed to be allowed to companies 
only in the new regime. Set-off using available MAT credit is proposed 
to be allowed to an extent of 1/4 th of the tax liability in the new
ailable MAT credit is proposed 
to be allowed to an extent of 1/4 th of the tax liability in the new 
regime. 
 26  
 
143. MAT is proposed to be made final tax. So, there will be no 
further credit accumulation from 1 st April 2026.  
In line with this change, the rate of final tax is being reduced to 14 
percent from the current MAT rate  
of 15 percent. The brought forward MAT credit of taxpayers 
accumulated till 31 st March 2026, will continue to be available to 
them for set-off as above.  
 
Indirect Taxes 
144. I shall now take up proposals related to Indirect Taxes. My 
proposals for Customs and Central Excise  
aim to further simplify the tariff structure, support domestic 
manufacturing, promote export competitiveness, and correct 
inversion in duty.  
 
Review of exemptions and
turing, promote export competitiveness, and correct 
inversion in duty.  
 
Review of exemptions and tariff simplification 
145. To continue weeding out long continuing customs duty 
exemptions, I propose to remove certain exemptions on items which 
are being manufactured in India or where the imports are negligible. 
Similarly, to further simplify the process of ascertaining the rate of 
duty applicable on a particular item, I propose to incorporate certain 
effective rates in various customs notifications  to the tariff schedule 
itself.  
146. I shall now take up sector specific proposals. 
Promotion of exports of marine, leather, and textile products 
147. I propose to increase the limit for duty -free imports of 
specified inputs used for processing seafood products for export, 
from
for duty -free imports of 
specified inputs used for processing seafood products for export, 
from the current 1 per cent to 3 per cent of the FOB value of the 
previous year’s export turnover. 
148. I also propose to allow duty -free imports of specified inputs, 
which is currently available for exports of leather or synthetic 
footwear, to exports of Shoe Uppers as well.  
 27  
 
149. I propose to extend the time period for export of final product 
from the existing 6 months to 1 year, for exporters of leather or 
textile garments, leather or synthetic footwear and other leather 
products. 
Energy transition and security 
150. I propose to extend the basic customs duty exemption given 
to capital goods used for  manufacturing Lithium -Ion Cells for 
batteries, to those used for manufac
o capital goods used for  manufacturing Lithium -Ion Cells for 
batteries, to those used for manufacturing Lithium -Ion Cells for 
battery energy storage systems too. 
151. I propose to exempt basic customs duty on import of sodium 
antimonate for use in manufacture of solar glass. 
Nuclear Power 
152. I propose to e xtend the existing basic customs duty 
exemption on imports of goods required for Nuclear Power Projects 
till the year 2035 and expand it for all nuclear plants irrespective of 
their capacity.  
Critical Minerals 
153. It is proposed to provide basic customs duty exemption to the 
import of capital goods required for processing of critical minerals in 
India.   
Biogas blended CNG 
154. I propose to exclude the entire value of biogas  
while calculating the Central Excise du
CNG 
154. I propose to exclude the entire value of biogas  
while calculating the Central Excise duty payable on biogas blended 
CNG. 
Civil and Defence Aviation 
155. I propose to exempt basic customs duty on components and 
parts required for the manufacture of civilian, training and other 
aircrafts. 
156. It is proposed to exempt basic customs duty on raw materials 
imported for manufacture of parts of aircraft to be used in 
maintenance, repair, or overhaul requirements by Units in the 
Defence sector. 
 28  
 
Electronics 
157. To deepen value addition in the consumer electronics sector, 
I propose to exempt basic customs duty on specified parts used in the 
manufacture of microwave ovens. 
Special Economic Zone 
158. To address the concerns arising about utilization of capacities
vens. 
Special Economic Zone 
158. To address the concerns arising about utilization of capacities 
by manufacturing units in the Special Economic Zones due to global 
trade disruptions, I propose, as a special one -time measure,  
to facilitate sales by eligible manufacturing units in SEZs to the 
Domestic Tariff Area (DTA) at concessional rates of duty. The quantity 
of such sales will be limited to a prescribed proportion of their 
exports. Necessary regulatory changes will be undert aken to 
operationalise these measures while ensuring level -playing field for 
the units working in the DTA. 
Ease of Living 
159. To rationalize the customs duty structure for goods imported 
for personal use, I propose to reduce the tariff rate on all dutiable 
goods imported for personal use from 20 per
se, I propose to reduce the tariff rate on all dutiable 
goods imported for personal use from 20 per cent to 10 per cent. 
160. To provide relief to patients, particularly those suffering from 
cancer, I propose to exempt basic customs duty on 17 drugs or 
medicines.  
161. I also propose to ⁠add 7 more rare diseases for the purposes of 
exempting import duties on personal imports of drugs, medicines 
and Food for Special Medical Purposes (FSMP) used in their 
treatment.   
Customs Process 
162. India's role and share in global trade is poised for a major leap, 
in line with our ambition and journey towards 'Viksit Bharat'. In this 
regard, I propose many measures for custom processes to have 
minimal intervention for smoother and faster movement  
of goods and greater certainty to the tra
e 
minimal intervention for smoother and faster movement  
of goods and greater certainty to the trade. 
 29  
 
Trust-based systems 
163. I propose to enhance duty deferral period for  
Tier 2 and Tier 3 Authorised Economic Operators, known as AEOs, 
from 15 days to 30 days.  
164. I propose to provide eligible manufacturer -importers the 
same duty deferral facility. This should encourage them to get 
themselves accredited as a full-fledged Tier 3- AEO in due course.  
165. To provide greater certainty and for better business planning, 
I propose to extend validity period of advance ruling, binding on 
Customs, from the present 3 years to 5 years. 
166. In the spirit of whole -of-the-government approach, 
Government agencies will be encouraged to leverage AEO 
accreditation for preferent
nment approach, 
Government agencies will be encouraged to leverage AEO 
accreditation for preferential treatment in clearing their cargo. 
167. Regular importers with trusted longstanding supply chains 
will be recognized in the risk system, so that the need for verification 
of their cargo every time can be minimized. Export cargo using 
electronic sealing will be provided through clearance from the factory 
premises to the ship. 
168. For import of goods not needing any compliance, filing of bill 
of entry by a trusted importer, and arrival of goods will automatically 
notify Customs for completing their clearance formalities. This will 
enable goods to be released immediately on arrival.  
169. The Customs warehousing framework will be transformed 
into a warehouse operator -centric sy
169. The Customs warehousing framework will be transformed 
into a warehouse operator -centric system with self -declarations, 
electronic tracking and risk -based audit. These reforms will move 
away from the current system of officer -dependent approvals, and  
reduce transaction delays and compliance costs.  
 
 30  
 
Ease of Doing Business 
170. Approvals required for cargo clearance from various 
Government agencies will be seamlessly processed through a single 
and interconnected digital window by the end of the financial year. 
Processes involved in clearance of food, drugs, plant, animal & wild 
life products, accounting for around 70 percent of interdicted cargo, 
will be operationalised on this system by April 2026 itself. 
171. For goods not having any compliance requirement
ionalised on this system by April 2026 itself. 
171. For goods not having any compliance requirement, clearance 
will be done by Customs  immediately after online registration is 
completed by the importer, subject to the payment of duty.  
172. Customs Integrated System (CIS) will be rolled out  
in 2 years as a single, integrated and scalable platform for all the 
customs processes.  
173. Utilization of non -intrusive scanning with advanced imaging 
and AI technology for risk assessment will be expanded in a phased 
manner with  the objective to scan every container across all the 
major ports. 
New export opportunities 
174. To support Indian fishermen to fully harness the economic value 
of marine resources beyond our territorial waters, the following measures 
will be taken.  
a. Fis
of marine resources beyond our territorial waters, the following measures 
will be taken.  
a. Fish catch by an Indian fishing vessel in Exclusive Economic Zone 
(EEZ) or on the High Seas will be made free of duty. 
b. Landing of such fish on foreign port will be treated as export of 
goods. 
Safeguards will be put in place to prevent misuse during fish catch, transit 
and transshipment. 
 31  
 
175. To support aspirations of India’s small businesses, artisans and 
start-ups to access global markets through e-commerce, I am pleased to 
announce complete removal of the current value cap of ₹10 lakh per 
consignment on courier exports. In addition, handling of rejected and 
returned consignments will be improved with effective use of technology 
for identifying such consignments. 
Ease of
ments will be improved with effective use of technology 
for identifying such consignments. 
Ease of Living 
176. I propose to revise provisions governing baggage clearance during 
international travel to address genuine concerns of passengers. The 
revised rules will enhance duty -free allowances in line with the present -
day travel realities and provide clarity in temporary carriage of goods 
brought in or taken out. 
177. There are honest taxpayers who are willing to settle disputes by 
paying all their dues. But they get deterred due to negative connotation 
associated with penalty. They will now be able close cases by paying an 
additional amount in lieu of penalty. 
Honourable Speaker Sir, with this, I commend the Budget to this august 
House.  
Jai Hind!  
 
 32  
 
Annexure to Par
Sir, with this, I commend the Budget to this august 
House.  
Jai Hind!  
 
 32  
 
Annexure to Part A 
 
Indicative Terms of Reference of the High -Level Education-to-Employment 
and Enterprise Standing Committee 
i. identify services sub-sectors with potential for growth, 
employment and exports , identify sector -specific gaps and 
measures to unlock employment potential;  
ii. identify c ross-sectoral policy and regulatory issues, including 
standards-setting and accreditation;  
iii. examine areas for services export; 
iv. assess the impact of emerging technologies, including AI, on  jobs 
and skill requirements;  
v. propose specific measures for embedding AI in the  education 
curriculum from school level onwards and upgrading State 
Councils of Educational Research and Training in
ulum from school level onwards and upgrading State 
Councils of Educational Research and Training institutes  for 
teacher training;  
vi. propose measures for upskilling and re -skilling of technology 
professionals/engineers in AI and emerging technologies; and  
vii. Propose measures for AI enabled matching of worders, jobs and 
training opportunities; and 
viii. propose measures to make the informal workflow visible, 
verifiable and future -ready, to enhance upward mobility 
prospects; and 
ix. propose steps to be taken to attract skilled diaspora and foreign 
talent into the country. 
 
 
 
 
 33  
 
Annexure to Part B 
Amendments relating to Direct Taxes 
1. EASE OF LIVING 
(i) Exemption of interest on compensation amount awarded by Motor 
Accident Claims Tribunal (MACT)  
 In order
on of interest on compensation amount awarded by Motor 
Accident Claims Tribunal (MACT)  
 In order to alleviate the sufferings of victims of motor vehicle 
accident and their family, it is proposed that any interest awarded 
on compensation amount in the case of individual awarded by 
MACT shall be exempt. 
 It is also proposed that in case of an individual, no tax shall be 
deducted at source for such interest, irrespective of the amount 
of interest awarded by MACT.  
(ii) Removal of ambiguity on the application of rate of TDS on account 
of supply of manpower  
 It is proposed to include supply of manpower within the definition 
of “work” under section 402(47) of the Income-tax Act, 2025 so as 
to provide that tax on such supply of manpower shall be deducted 
at source as “payment t
025 so as 
to provide that tax on such supply of manpower shall be deducted 
at source as “payment to contractors” under the provisions  of 
section 393(1) [Table: Sl. No. 6(i) and (ii)] and not under the 
provisions of “fee for professional services” under section 393(1) 
[Table: Sl. No. (iii)]. 
(iii) Enabling electronic verification and issuance of certificate for 
deduction of income-tax at lower rate or no deduction of income-tax 
 It is proposed to ease the compliance burden of small taxpayers 
by providing an online option to the payee, to apply for issuance 
of certificate for lower or nil deduction of income -tax which is 
proposed to be issued online after electronic verification. 
(iv) Enabling filing of declaration for no deduction of tax at source under 
section 393(6) of the
(iv) Enabling filing of declaration for no deduction of tax at source under 
section 393(6) of the Income-tax Act, 2025 to the depository  
 It is proposed to allow filing of the declaration by a taxpayer for 
no deduction of tax at source, to a depository, where income is of 
 34  
 
the nature: (i) income from units of a mutual fund (ii) interest 
income from securities and (iii) dividends . This will address the 
present requirements of an investor to file separate declaration 
to different payers. The depositories shall in turn report such 
declarations to the person responsible for payment of such 
income 
 It is also proposed that the person responsible for paying such 
income shall furnish the declaration received by it from the 
taxpayer to the Department on quarterly basis rat
l furnish the declaration received by it from the 
taxpayer to the Department on quarterly basis rather on monthly 
basis as at present. 
(v) Extending time to file revised return or belated return.  
 Presently revised return can be filed upto 31st December following 
the tax year. Return filing period extends upto October 31st  for 
persons engaged in international transactions under section 92E. 
In this regard, it is proposed to allow extending the time of filing 
revised return upto 31st March following the tax year. This revised 
return can be of original return or belated return. A nominal fee 
of Rs. 1000 or 5000 is also proposed where the revision of original 
or belated return is made after 31 st December depending upon 
whether the income is upto or more than Rs. 5 lakh.   
(vi
made after 31 st December depending upon 
whether the income is upto or more than Rs. 5 lakh.   
(vi) Change in due date of filing Income -tax Return for non -auditable 
business and trusts 
 It is proposed to provide staggered time line for filing of tax 
returns due on the 31 st of July. Individuals filing ITR 1 and ITR 2 
shall continue to file tax returns by the 31st July and for non-audit 
business cases or trusts, 31st August shall be the due date. 
(vii) Reduction of compliance on sale of immovable property by non -
resident to resident individual or HUF 
 It is proposed to provide that resident individual or HUF, shall not 
be required to obtain tax deduction and collection account 
number (TAN) to deduct tax at source in respect of any 
 35  
 
consideration on transfer of any i
number (TAN) to deduct tax at source in respect of any 
 35  
 
consideration on transfer of any immovable property by non -
resident under section 393(2) [Table Sl. No. 17]. Instead, the 
deduction shall be reported by quoting the PAN in same manner 
as transaction of similar nature between two residents. 
(viii) Rationalising the due date to deposit employee contribution by the 
employer to claim such contribution as deduction 
 It is proposed that deduction of any amount of contribution 
received by the assessee being an employer, from an employee, 
shall be allowed as deduction in the hands of the assessee if such 
amount is credited by the assessee to the account of the 
employee, in any provident fun d or superannuation fund or any 
fund set up under the provisions of the Employee
any provident fun d or superannuation fund or any 
fund set up under the provisions of the Employees’ State 
Insurance Act, on or before the due date of filing of his return of 
income under section 263(1) of the Act.  
(ix) Rationalising the provision related to computation of profits and 
gains of an insurance business other than life insurance business 
 It is proposed that any amount which had earlier been added to 
the income of non -life insurance business, as tax was not 
deducted or paid as per the provisions of section 35(b)(i) or (ii) of 
the Act, shall be allowed as deduction in the tax year in which tax 
is deducted or paid as per the provisions of section 35(b)(i) or (ii) 
of the Act. 
(x) Introduction of Foreign Assets of Small Taxpayers – Disclosure 
Scheme (FAST – DS), 20
the Act. 
(x) Introduction of Foreign Assets of Small Taxpayers – Disclosure 
Scheme (FAST – DS), 2026 
 It is proposed to introduce a time -bound scheme for declaration 
of foreign assets and foreign sourced income for taxpayers 
involving amounts below certain threshold. 
2. RATIONALISING PENALTY AND PROSECUTION 
(i) Reduction in multiplicity of proceedings 
 Presently, penalty proceedings are initiated after completion of 
the assessment proceedings. This takes a long time for finalising 
issues emerging out of any assessment. Multiplicity of 
proceedings increases number of pending appeals, cost of 
litigation an d compliance. With a view to provide fast -track 
 36  
 
settlement of disputes, it is proposed to integrate assessment & 
penalty proceedings by way of a common order afte
isputes, it is proposed to integrate assessment & 
penalty proceedings by way of a common order after providing 
reasonable opportunity to the taxpayer to explain the issue. 
 To provide relief to taxpayers on account of increase in quantum 
of demand which may arise as a result, it is proposed that the 
interest on penalty would be kept in abeyance during the 
pendency of appeal before first appellate authority.  
(ii) Immunity from penalty from underreporting in consequence of 
misreporting of income and prosecution in such cases 
 There are broadly two kind of penalties –  
(i) underreporting of income due to mistakes or oversight 
where penalty is 50% on tax amount and framework to 
underreporting of income in consequence of misreporting 
of income    
(ii) underreporting in conseque
derreporting of income in consequence of misreporting 
of income    
(ii) underreporting in consequence of misreporting of income 
on account of giving wrong or faulty information or 
misrepresenting the type of income where the penalty is 
200% on tax amount.  
There is already a framework for immunity from penalty and 
prosecution, under section 478 and 479 of the Act, if the penalty is 
initiated for underreporting of income. In this regard, it is proposed 
to extend the same on payment of 100% of tax amount as 
additional income -tax. However, the misreporting of income in 
respect of unexplained cash credit, etc. is proposed to be settled 
with a payment of 120% of the tax. In such cases immunity shall not 
be granted where prosecution is initiated as per provision of  
chapter-XXII o
s immunity shall not 
be granted where prosecution is initiated as per provision of  
chapter-XXII of the Act.  
(iii) Conversion of penalty to fee 
 It is proposed to convert  
(i) penalty for failure to get accounts audited,  
(ii) penalty for non-furnishing of TP report and  
 37  
 
(iii) penalty for default in furnishing statement for financial 
transactions or reportable accounts into fee to be charged per 
day of the default subject to a maximum ceiling. 
(iv) Rationalization of the prosecution framework 
 It is proposed that production of books of account and 
documents, and requirement of ensuring payment of TDS from 
the deductee where payment is made in kind, be completely 
decriminalised.  
 It is further proposed that all prosecutions shall be rationalised to 
simple impris
iminalised.  
 It is further proposed that all prosecutions shall be rationalised to 
simple imprisonment instead of rigorous imprisonment.  
 Maximum punishment for any offence (except for repeated 
offence) is proposed to be reduced to 2 years instead of 7 years.  
 In cases where presently the maximum punishment is two years, 
the punishment has been reduced to 6 months with or without 
fine and with no minimum imprisonment.  
 It is further proposed that prosecution for the offences under 
Income-tax Act, 2025 shall be based on the amount of tax evaded 
and the punishment shall be proportionate to the gravity of crime. 
In such cases, the requirement of maximum punishment of 
imprisonment has been done away with apart from relaxing the 
requirement of mandatory fine to optional.
nment has been done away with apart from relaxing the 
requirement of mandatory fine to optional.  
 It is further proposed, for minor offence, only fine shall be 
provided as a punishment.  
(v) Rationalising the tax rate for special income charged under section 
195 of the Act 
 Presently there is special tax rate on certain incomes like income 
in the nature of cash credits, unexplained investments, etc. The 
tax rate is 60% and penalty is 10% of tax. It is proposed to 
rationalise the tax rate to 30% on these incomes. Penalty on such 
amount would be merged with penalty for underreporting of 
income in consequence of misreporting of income that is 200% of 
tax amount. 
 38  
 
(vi) Relaxation of search assessment in case of person other than the 
searched person in certain situation
axation of search assessment in case of person other than the 
searched person in certain situation 
 Provisions for assessment in search cases was introduced by 
Finance (No. 2) Act, 2024.  In the new scheme, where 
incriminating material pertaining to other person, relates only to 
a single tax year, the other person is also required to undergo the 
full blo ck assessment procedure, resulting in an increased 
compliance burden on such person against whom no search or 
requisition was initiated. 
 It is proposed to limit the period of block in case of other person, 
where the undisclosed income of the other person pertains only 
to one tax year. The definition of block period is accordingly 
proposed to be amended in such cases. 
(vii) Time limit to complete search assessment 
 It is a
ly 
proposed to be amended in such cases. 
(vii) Time limit to complete search assessment 
 It is also proposed to amend section 296 of the Income-tax Act, 
2025 so as to take the date of initiation of search as the reference 
point to decide the date of limitation for block assessment and 
consequently, the period of twelve months is proposed to be 
extended to eighteen months in the case of specified person. 
(viii) Extending the scope of filing of updated return 
 There is facility for updating tax returns where the taxpayer wants 
to show any additional income. This facility is available for a 
period of 4 years for an additional tax liability of 25%, 50%, 60%, 
70% from the first to the fourth year after the relevant  tax year 
when the return of income required to be filed for the
he fourth year after the relevant  tax year 
when the return of income required to be filed for the first time. 
To provide additional measure for reducing litigation, it is 
proposed to allow the taxpayer to update the return even after 
reassessment proceedings have been initiated. The updat ion is 
proposed to be enabled at an additional 10% tax rate over and 
above the rate applicable for relevant year. 
 39  
 
 It is further proposed to allow filing of updated return in cases 
where tax payer reduces the amount of loss filed in original return 
under section 263(1). 
 It is further proposed that where the taxpayer files updated return 
and reports additional income then penalty shall not be leviable 
on such additional income.  
(ix) Immunity from prosecution under the Black Money
not be leviable 
on such additional income.  
(ix) Immunity from prosecution under the Black Money Act 
 Under the Black Money (Undisclosed Foreign Income and Assets) 
and Imposition of Tax Act, 2015, there is no penalty for non -
disclosure of non -immovable assets with aggregate value less 
than twenty lakh rupees. It is proposed to extend this immunity 
for pros ecution in such cases with retrospective effect from 
1.10.2024. 
(x) Penalty provision for non -furnishing of statement or furnishing 
inaccurate information in a statement on transaction of crypto-assets 
 To ensure compliance to the provisions of section 509 of the 
Income-tax Act, 2025 and create a deterrence for non -furnishing 
of statement or for furnishing inaccurate information in respect of 
crypto assets in such st
shing 
of statement or for furnishing inaccurate information in respect of 
crypto assets in such statement, it is proposed to introduce 
penalty provision. Penalty of Rs. 200 per day for non-furnishing of 
statement and Rs. 50,000 for furnishing inaccurate particulars and 
failure to correct such inaccuracy is proposed to be levied.  
3. COOPERATIVES 
(i) Deduction of profit and gains to a primary co -operative where they 
supply cattle feed and cotton seed to a federal co-operative. 
 Deduction of profit and gains is presently allowed to a primary 
cooperative society engaged in supplying milk, oilseeds, fruits or 
vegetables raised or grown by its members to a federal 
cooperative society and others engaged in the same activities. It 
is p roposed to extend this deduction to a primary
y and others engaged in the same activities. It 
is p roposed to extend this deduction to a primary co -operative 
engaged in supplying of cattle feed and cotton seed to, inter alia, 
a federal co-operative or government organizations. 
 40  
 
(ii) Deduction of inter -cooperative society dividend income under the 
new tax regime. 
 The dividend received by a cooperative society from another 
cooperative society is allowed as a deduction in the old tax 
regime. Non-allowance of this deduction in the new tax regime 
may result in double taxation as it may be taxed in the hands of 
the members on further distribution by the cooperative societies. 
Therefore, it is proposed to allow the inter -cooperative society 
dividend income as deduction under the new tax regime to the 
extent it is fur
-cooperative society 
dividend income as deduction under the new tax regime to the 
extent it is further distributed to the members. 
(iii) Deduction of dividend income received by a notified national co -
operative federation in the new tax regime. 
 It is proposed to allow exemption to dividend income received by 
a notified national federal cooperative from a company for a 
period of three years. This deduction is limited to the dividend 
received on investments made till 31.1.2026.  
 Further, this exemption would be allowed only to the extent that 
the dividends are further distributed to the members of the co -
operatives. 
4. ATTRACTING GLOBAL BUSINESS AND INVESTMENT 
(i) Tax holiday up to 2047 to any foreign company who provides services 
by procuring data centre services in Indi
y up to 2047 to any foreign company who provides services 
by procuring data centre services in India 
 Recognising the need to enable criƟcal infrastructure and boost 
investment in data centres, it is proposed to provide a tax holiday 
up to 2047 to any foreign company who provides services to any 
part of the world outside India by procuring data centre serv ices 
in India. Sale of such services to Indian users shall be made 
through an Indian reseller enƟty and taxed appropriately.  
 It is also proposed to provide a safe harbour of 15% to the resident 
enƟty providing data centre services to a related foreign company 
(who is providing cloud services to any part of the world outside 
India).  
 41  
 
(ii) Fillip to toll manufacturing engaged in manufacturing of electronic 
goods 

India).  
 41  
 
(ii) Fillip to toll manufacturing engaged in manufacturing of electronic 
goods 
 To provide fillip to toll manufacturing in India, it is proposed to 
provide exemption to any foreign company who provides capital 
goods, equipment and tooling to any toll manufacturer in a 
bonded zone who is engaged in manufacturing of electronic 
goods. The exemption is proposed for a period of five tax years 
beginning on 1st April, 2026.  
(iii) Exemption to the global income (other than Indian sourced income) 
to an expert who visits India and stays for a longer period 
 To enable vast pool of global talent to come and work in India for 
a longer period of time, there is a need to provide tax certainty to 
them that only their Indian sourced income will be taxed in India 
despite th
vide tax certainty to 
them that only their Indian sourced income will be taxed in India 
despite their long period of stay.  
 Accordingly, it is proposed to provide exemption to the global 
income (other than Indian sourced income) to an expert who visits 
India and stays for a period of five years. The expert visiting India 
should have been a non-resident in the previous five years when 
he visits India and should be providing services under notified 
Government scheme. 
(iv) Exemption from MAT to non -residents availing presumptive 
taxation scheme 
 Non-residents who avail presumptive scheme of taxation are 
exempt from applicability of Minimum Alternate Tax (MAT) 
provisions. It is proposed to extend such exemption from MAT to 
all non-residents who pay tax on a presumptive basis.
proposed to extend such exemption from MAT to 
all non-residents who pay tax on a presumptive basis. 
(v) Incentivizing prospecting and exploration of critical minerals 
 In order to incentivise the prospecting and exploration of the 
critical minerals, it is proposed to include certain critical minerals 
in the list of minerals in Schedule XII of the Act, thereby making 
 42  
 
expenditure on prospecting and exploring of such critical minerals 
eligible for deduction as per the provision of section 51 of the Act. 
(vi)  Extension of period of deduction for units in IFSC and rationalization 
of tax rate 
 To increase the competitiveness of IFSC, it is proposed to increase 
the period of deduction under section 147 to 20 consecutive years 
out of 25 years for units in IFSC and 20 consecu
eduction under section 147 to 20 consecutive years 
out of 25 years for units in IFSC and 20 consecutive years for 
OBUs. It is also proposed that the business income of these  units 
from IFSC after the expiry of period of deduction will be taxed at 
rate of 15%.  
(vii) Rationalization of certain terms for treasury centres in IFSC  
 It is proposed to rationalize the provisions of deemed dividend 
applicable to treasury centre in IFSC by providing that provisions 
of deemed dividend shall not be applicable if  
(i) the parent entity or the principal of the group shall be listed 
in a country or territory outside India; and  
(ii) such parent or principal entity and other group entity to the 
transaction is located in a country or territory outside India 
as may specified by the Central
he 
transaction is located in a country or territory outside India 
as may specified by the Central Government, by notification 
in the Official Gazette.  
5. RATIONALISATION OF CORPORATE TAX REGIME 
(i) Reduction of rate of Minimum Alternate Tax (MAT) and allowance of 
set-off of brought forward MAT credit to companies shifting to the new 
tax regime 
 To enable companies to shift to the new regime, MAT is proposed 
to be made as a final tax and the corresponding rate is reduced 
from 15% to 14%. There shall be no allowance of credit in future 
tax years in respect of such payment. 
 43  
 
 Further, the set -off of any brought forward MAT credit available 
from prior to tax year 2026 -27 will only be allowed to domestic 
companies which shift henceforth to the new regime.  
 This set
will only be allowed to domestic 
companies which shift henceforth to the new regime.  
 This set -off of MAT credit brought forward as on 1/4/2026 is 
proposed to be allowed in the new tax regime to domestic 
companies to the extent of 25% of their tax liability. 
 The brought forward MAT credit shall be available only up to 
fifteenth year from the year when the corresponding credit was 
first available. 
 In the case of foreign companies, set off is proposed to be allowed 
to the extent of the difference between the tax on the total 
income and the minimum alternate tax, for the tax year in which 
normal tax is more than MAT.  
6. RATIONALISATION OF OTHER DIRECT TAX PROVISIONS    
(i) Rationalisation of share buyback 
 It is proposed to provide that consideration received by a 
sha
Rationalisation of share buyback 
 It is proposed to provide that consideration received by a 
shareholder on buy -back shall be chargeable to tax under the 
head “Capital Gains” instead of being treated as dividend income. 
It is also proposed to provide for a differential rate for promoters 
wherein the effective rate on gains in buyback will be 22% for 
promoters which are domestic companies and 30% for promoters 
other than domestic companies. 
(ii) Rationalisation of tax collection at source (TCS) rates 
 It is proposed to reduce multiplicity of TCS rates. Also, certain TCS 
rates are rationalised to address the cash flow issues on this 
account.  
Sl. 
No.  
Nature of receipt Current Rate   Proposed Rate 
1 Sale of alcoholic liquor 
for human consumption. 
1%.  2%. 
2 Sale of tend
t 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%. 
 44  
 
Sl. 
No.  
Nature of receipt Current Rate   Proposed Rate 
4 Sale of minerals, being 
coal or lignite or iron ore. 
1%.   2%. 
5 Remittance under the 
Liberalised Remittance 
Scheme of an amount or 
aggregate of the 
amounts exceeding ten 
lakh rupees— 
(a) 5% for 
purposes of 
education or 
medical 
treatment; 
(b) 20% for 
purposes other 
than education 
or medical 
treatment. 
(a) 2% for 
purposes of 
education or 
medical 
treatment; 
(b) 20% for 
purposes other 
than education 
or medical 
treatment. 
6 Sale of “overseas tour 
programme package” 
including expenses for 
travel or hotel stay or 
boarding or lodging or 
any such simila
e package” 
including expenses for 
travel or hotel stay or 
boarding or lodging or 
any such similar or 
related expenditure. 
(a) 5% of 
amount or 
aggregate of 
amounts up to 
ten lakh rupees; 
(b) 20% of 
amount or 
aggregate of 
amounts 
exceeding ten 
lakh rupees. 
2%  
 
 
(iii) STT rate increase 
 To provide reasonable course correction in F&O segment in the 
capital market and generate additional revenues for the 
Government, it is proposed to raise the STT on Futures to 0.05% 
from present 0.02%.  
 STT on options premium and exercise of options is proposed to be 
raised to 0.15% from the present rate of 0.1% and 0.125% 
respectively. 
 45  
 
(iv) Capital Gains Exemption for Sovereign Gold Bonds 
 It is proposed to provide that the exemption from capital gains tax 
in respect
ereign Gold Bonds 
 It is proposed to provide that the exemption from capital gains tax 
in respect of Sovereign Gold Bonds shall be available only where 
such bonds are subscribed to by an individual at the time of 
original issue and are held continuously until redemption on 
maturity,  
 It is also proposed to provide that this exemption applies 
uniformly to all issuances of Sovereign Gold Bonds by the Reserve 
Bank of India. 
(v) Rationalisation of Schedule XI relating to Recognised Provident 
Funds 
 It is proposed to amend Schedule XI to rationalise the provisions 
relating to recognised provident funds by deleting parity -based 
and percentage -based limits on employer contributions, 
removing salary -linked relaxations and shareholder -based 
distinctions, aligning eligibility
ns, 
removing salary -linked relaxations and shareholder -based 
distinctions, aligning eligibility for recognition with exemption 
under section 17 of the Employees’ Provident Funds and 
Miscellaneous Provisions Act, 1952, and modifying investment -
related provisions to remove rigid statutory caps inconsistent with 
prevailing EPFO norms.  
(vi) Removal of Interest Deduction against Dividend and Mutual Fund 
Income 
 It is proposed to provide that no deduction shall be allowed in 
respect of any interest expenditure incurred in relation to 
dividend income or income from units of mutual funds, and to 
omit the existing provision permitting such deduction subject to a 
specified ceiling. 
 46  
 
(vii) Enabling provision to provide clarity on situations where an amount 
which has been cl
46  
 
(vii) Enabling provision to provide clarity on situations where an amount 
which has been claimed as deduction or which has not been added in 
the total income will be deemed income 
 It is proposed that where any sum has been allowed as deduction 
or has not been included in the total income under the repealed 
Income-tax Act, 1961, such sum will be deemed to be income 
under Income-tax Act, 2025 , even without violations of any 
conditions, if it was to be included in the total income under the 
provisions of Income-tax Act, 1961 had it not been repealed.  
(viii) Rationalising the provisions related to tonnage tax scheme 
 It is proposed to rationalise the tonnage tax scheme provisions to 
align it with the Inland Vessels Act, 2021 and rules made 
thereunder. 
(ix) Disability
visions to 
align it with the Inland Vessels Act, 2021 and rules made 
thereunder. 
(ix) Disability Pension for Armed Forces 
 It is proposed to provide a specific exemption for disability 
pension granted to members of the Armed Forces including 
paramilitary personnel, covering both the service element and the 
disability element, where the individual has been invalided out of 
service on account of a bodily disability attributable to, or 
aggravated by, military, naval or air force service, and to exclude 
cases of retirement on superannuation or otherwise. 
(x) Exemption on income in respect of compulsory acquisition of any 
land under RFCTLARR Act 
 In order to specifically provide exemption for acquisition of land 
under the provisions of Right to Fair Compensation and 
Transparenc
emption for acquisition of land 
under the provisions of Right to Fair Compensation and 
Transparency in Land Acquisition, Rehabilitation and 
 47  
 
Resettlement Act, 2013, it is proposed to provide exemption to an 
individual or a Hindu undivided family on any income in respect of 
any award or agreement made on account of compulsory 
acquisition of any land under the said Act (other than the award 
or agreement made under section 46 of said Act). 
(xi) Facility to the associated entity of the person entering into Advance 
Pricing Agreement (APA) to file modified return 
 In Advance Pricing Agreement (APA), there is already a facility for 
the entity entering APA to file modified returns according to the 
agreement. It is proposed to extend the same facility to the 
associated entity o
according to the 
agreement. It is proposed to extend the same facility to the 
associated entity of the person entering into agreement where it’s 
income also changes on account of the agreement. 
(xii) Amendments in the nature of clarifications 
 There are certain legal issues in which there are differing 
judgement of courts. These relate to time -limit for assessment after 
Dispute Resolution Panel proceedings, time -limit for Transfer Pricing 
Officer order, Document Identification Number and issuance of notice for 
re-assessment by the Jurisdictional Assessing Officer. In this regard, it is 
proposed to clarify these issues in the Income-tax Act, 1961 and Income-
tax Act, 2025 to provide certainty to the provisions.  
(xiii) Other minor modification in the Income-tax Act, 2025 
 It
ide certainty to the provisions.  
(xiii) Other minor modification in the Income-tax Act, 2025 
 It is proposed to provide definition of “commodity derivative” in 
section 66 of the Act. 
 It is proposed to provide definition of “authorised person” in 
section 402 of the Act. 
 It is proposed to correct referencing error in Note 3 of section 
393(1) [Table: Sl. No. 3(i)] from [Table: Sl. No. 3(iii)] to [Table: Sl. 
No. 3(i)]. 
 48  
 
 It is proposed to correct referencing error in section 99(2) from 
99(1)(a)(i) to section 99(1)(a)(ii). 
 It is proposed to amend section 400(2) of the Income-tax Act, 
2025 to align it with the intent of the provisions of Income-tax Act, 
1961 and to provide that the guidelines issued by the Board under 
this section shall apply to income -tax authorit
vide that the guidelines issued by the Board under 
this section shall apply to income -tax authorities as well as the 
person liable to deduct or collect, as the case may be, income-tax. 
 It is proposed to amend sections 58, 162, 164, 165, 202 and 270 
of the Income-tax Act, 2025  to remove duplicate reference to 
both the section 144 and Chapter VIII, as chapter VIII already 
includes section 144.  
 It is proposed to amend schedule VI [Note 1(g)] to align the 
definition of the specified    fund as provided in Schedule VI [Note 
1(g)] of the Income-tax Act, 2025  with the provisions of section 
10(4D) of the Income-tax Act, 1961. 
 It is proposed to amend section 352(4) [Table: Sl. No. 8] to align 
the provisions relating to accreted income in the case of merger 
of registered NPOs
. 8] to align 
the provisions relating to accreted income in the case of merger 
of registered NPOs with any other entity other than a registered 
non-profit organisation (NPO) or with any other registered NPO 
having the same or similar objects but the said merger does not 
fulfil such conditions as may be prescribed or with a registered 
NPO that does not have same or similar objects. 
 It is proposed to insert a new section on the lines of section 12AC 
of the Income-tax Act, 1961 to allow the merger of the registered 
NPO with any other registered NPO having the same or similar 
objects if the said merger fulfils such conditions, as may be  
prescribed. 
 It is proposed to amend section 351 of the Income-tax Act, 2025 
to remove the reference of section 346 of the Income-tax Act, 
 4
n 351 of the Income-tax Act, 2025 
to remove the reference of section 346 of the Income-tax Act, 
 49  
 
2025 in said section to align the provision with the Income-tax Act, 
1961 
 It is proposed to amend section 332(1)(f) of the Income-tax Act, 
2025 to remove the reference of Schedule VII [Table: Sl. No. 10 to 
16] in said section so that such funds may not be required to 
register themselves as the registered NPO. 
 It is proposed to amend section 349 to enable the filing of belated 
return by the  registered NPO. 
 It is proposed to change the annual value of property or part 
thereof to be treated as nil from “for two years” to “upto two 
years”. 
 It is proposed to amend section 22(2) of the Income-tax Act, 2025 
so as to provide that aggregate amount of deduction for interest
22(2) of the Income-tax Act, 2025 
so as to provide that aggregate amount of deduction for interest 
on borrowed capital shall be inclusive of prior -period interest 
payable. 
 It is proposed to amend section 262(10)(c) to enable Central 
Board of Direct Taxes (CBDT) to make rules for quoting of 
Permanent Account Number in such documents which does not 
relate to business or profession. 
 
  
 50  
 
Annexure to Part B 
Amendments relating to Indirect Taxes 
A. LEGISLATIVE CHANGES IN CUSTOMS LAWS 
A.1       Amendments in the Customs Act, 1962 
(i) Sub-section (2) of section 1 of the Customs Act, 1962 is 
being amended to extend the jurisdiction of the said Act 
beyond the territorial waters of India, for the purpose of 
fishing and fishing related activities. 
(ii) In section 2, a new c
rs of India, for the purpose of 
fishing and fishing related activities. 
(ii) In section 2, a new clause is being inserted to define the 
expression ‘Indian-flagged fishing vessel’. 
(iii) Sub-section (6) of section 28 is being amended so as to 
provide that the penalty paid under sub -section (5) of 
section 28, on determination under sub -section (6) 
thereof, shall be deemed to be a charge for non-payment 
of duty. 
(iv) Sub-section (2) of section 28J is being amended so as to 
provide that advance ruling under sub-section (1) of that 
section shall remain valid for a period of five years or till 
there is a change in law or facts on the basis of which the 
advance ruling has been pronounced, whichever is 
earlier.  
(v) The proviso to the said sub -section is also being 
substituted s
nced, whichever is 
earlier.  
(v) The proviso to the said sub -section is also being 
substituted so as to provide that in respect of any 
advance ruling in force on the date on which the Finance 
Bill, 2026 receives the assent of the President, the 
Authority shall, upon a request by the appli cant, extend 
the validity of the ruling for five years from the date of 
the ruling. 
(vi) A new section 56A is being inserted to provide special 
provisions for fishing and fishing related activities by an 
Indian-flagged fishing vessel beyond territorial waters of 
India. It also provides that fish harvested beyond the 
territorial waters of India may be brought into India free 
of duty and to treat fish that has landed at foreign port 
as export of goods in such manner as may be provided by 
 5
at fish that has landed at foreign port 
as export of goods in such manner as may be provided by 
 51  
 
rules. It also provides to make regulations to provide for 
the form and manner of making an entry in respect of 
fish harvested by an Indian -flagged fishing vessel 
including its declaration, custody, examination, 
assessment of duty, clearance, transit or transhipment. 
(vii)  In the Customs Act, for section 67, the following section 
shall be substituted, namely: -  
“67. The owner of any warehoused goods may remove 
them from one warehouse to another, subject to such 
conditions as may be prescribed.”. 
The proposed section seeks to do away with the 
requirement of prior permission of the proper officer 
under the said section for removal of warehoused goods 
from one custom bonde
of the proper officer 
under the said section for removal of warehoused goods 
from one custom bonded warehouse to another. 
(viii)  In section 84 of the Customs Act, in clause (b), for the 
words “ the examination ”, the words “ the custody, 
examination” shall be substituted. The amendment 
seeks to enable the Board to make provisions for the 
custody of goods imported or to be exported under the 
regulations framed under this section. 
These changes shall come into effect from date of assent 
to the Finance Bill, 2026. 
A.2     Amendments in the Customs Tariff Act, 1975 
(i)  The First Schedule to the Customs Tariff Act, 1975 is 
being amended to, add 148 new tariff entries in chapter 
03, 08, 12, 13, 20, 21, 22, 25,26, 28, 29, 33, 39, 41, 47, 48, 
73, 81, 84, 85, 86, substitute/delete
, 08, 12, 13, 20, 21, 22, 25,26, 28, 29, 33, 39, 41, 47, 48, 
73, 81, 84, 85, 86, substitute/delete 54 tariff entries and 
amend 2 tariff entries in chapter 29 and 1 tariff entry in 
chapter 85.   
(ii) Further the tariff rate on certain tariff items is being 
modified with effect from 02.02.2026 and the rates on 
certain other tariff items are also being modified as part 
of rate rationalisation with effect 01.04.2026. 
(iii) In respect of various goods, to operationalize effective 
basic customs duty rates from First Schedule instead of 
exemption notifications, new tariff lines have been 
created and the rate of duty for certain existing tariff 
 52  
 
lines has been amended. This is a simplification exercise 
and there is no change in the applicable rate of duties on 
such goods. 
(iv
implification exercise 
and there is no change in the applicable rate of duties on 
such goods. 
(iv) New tariff lines are also being introduced to help in 
better identification of the coated pipes for exports, 
getting actual transaction data of precursor chemicals 
and help in their effective monitoring, facilitating, 
tracking exports and deciding   policy measures for Plant 
based extract products, and providing boost to eco -
friendly industries 
(v) For details of the above, the Explanatory Memorandum 
to the Finance Bill, 2026, may be referred. These changes 
will come into effect from 01.05.2026, unless otherwise 
specified. 
A.3     Amendment to Rules and Regulations under Customs Act, 1962 
(i) In addition to the above, new Baggage Rules are being 
issued for international passe
Act, 1962 
(i) In addition to the above, new Baggage Rules are being 
issued for international passengers.  
(ii) Deferred duty payment is being made monthly and a 
new class of eligible importers is being created by 
amending the existing Deferred Payment of Import Duty 
Rules, 2016. 
(iii) Cap on the value of goods exported through courier is 
being removed by amending Courier Regulations. 
(iv) Further, to ease e -commerce, the returns and rejects 
procedures in courier is being relaxed.  
(v) To decongest the courier terminals and to improve the 
overall efficiencies and ease of import and export, the 
Courier Regulations are being amended to allow for 
return to origin. 
B. LEGISLATIVE CHANGES IN GST LAWS 
[Save as otherwise provided, these changes will be brought into effect 
from a
CHANGES IN GST LAWS 
[Save as otherwise provided, these changes will be brought into effect 
from a date to be notified in coordination with States, as per 
recommendations of the GST council] 
B.1      Amendments in provisions related to post-sale discounts under 
section 15 of the CGST Act, 2017 
Sub-section (3) of section 15 of the Central Goods and Services 
Tax Act, 2017 is being amended to do away with the 
 53  
 
requirement of linking the post-sale discount with an agreement 
and to refer to issuance of credit note under section 34 where 
the input tax credit is to be reversed by the recipient. 
B.2      Amendments in Section 34 of the CGST Act, 2017 
Section 34 of the Central Goods and Services Tax Act, 2017 is 
being amended so as to include the reference of section 15 in 
the s
and Services Tax Act, 2017 is 
being amended so as to include the reference of section 15 in 
the said section. 
B.3   Amendments in Section 54 of the CGST  Act, 2017 to provide for 
provisional refunds on account of inverted duty structure 
Sub-section (6) of Section 54 of the Central Goods and Services 
Tax Act, 2017 is being amended to extend the provisions of 
provisional refund to refunds arising out of inverted duty 
structure. 
B.4     Amendments in Section 54 of the CGST Act, 2017 to provide for 
refund of tax below Rs. 1000/- 
Sub-section (14) of Section 54 of the Central Goods and Services 
Tax Act, 2017 is being amended to remove the threshold limit 
for sanction of refund claims in case of goods exported out of 
India with payment of tax. 
B.5      Amendments in Section 101A o
in case of goods exported out of 
India with payment of tax. 
B.5      Amendments in Section 101A of the CGST Act, 2017 
 Sub-section (1A) is being inserted in Section 101A of the Central 
Goods and Services Tax Act, 2017 to provide that the Central 
Government may, pending the constitution of the National 
Appellate Authority, by notification empower an existing 
Tribunal for hearing appeals under section 101B of the CGST Act, 
2017; and to provide that the provisions of sub -sections (2) to 
(13) shall not be applicable where a Tribunal has been so 
empowered under sub-section (1A). This change shall come into 
effect from the 1st day of April, 2026. 
B.6 Amendments in Section 13 of the IGST Act, 2017 to provide for 
place of supply for intermediary services 
Clause (b) of sub -section
GST Act, 2017 to provide for 
place of supply for intermediary services 
Clause (b) of sub -section (8) of section 13 of the Integrated 
Goods and Services Tax Act, 2017 is being omitted so as to 
provide that the place of supply for "intermediary services" will 
 54  
 
be determined as per the default provision under section 13(2) 
of the IGST Act. 
 
C. CUSTOMS DUTY RATE CHANGES 
C.1 To reduce input costs, boost domestic manufacturing and 
promote export competitiveness, customs duty on the following 
items are being reduced [with effect from 02.02.2026, unless 
otherwise specified] 
S. No. Commodity Rate of Basic Customs 
Duty 
From 
(per cent) 
To 
(per cent) 
I Critical Minerals 
1. Monazite 2.5% Nil 
II. Renewable Energy 
2. Sodium antimonate for use in 
manufacture of solar glass
nazite 2.5% Nil 
II. Renewable Energy 
2. Sodium antimonate for use in 
manufacture of solar glass  
7.5% Nil 
3. Specified capital goods for use 
in manufacture of lithium -ion 
cells for batteries of Battery 
Energy Storage System 
As 
applicable 
Nil 
III. Nuclear Energy 
4. All goods for generation of 
nuclear power falling under 
tariff item 8401 30 00 
7.5% Nil 
5. Control and Protector 
Absorber Rods, Burnable 
Absorber Rods for generation 
of nuclear power falling under 
tariff item 8401 40 00 
7.5% 
 
Nil 
6. Goods required for the setting 
up of specified Nuclear Power 
Projects, irrespective of their 
capacity, where the projects 
have been registered with the 
Customs Houses concerned on 
or before 30th September 2035 
As 
applicable 
Nil 
 55  
 
S. No. Commodity Rate of Basic
erned on 
or before 30th September 2035 
As 
applicable 
Nil 
 55  
 
S. No. Commodity Rate of Basic Customs 
Duty 
From 
(per cent) 
To 
(per cent) 
in compliance with the Project 
Import Regulations, 1986 
IV. Electronics 
7. Speciﬁed goods for use in the 
manufacture of Microwave 
Ovens falling under tariﬀ item 
8516 50 00  
As 
applicable 
Nil 
V. Civil Aviation 
8. Components or parts including 
engines, of aircraft, for 
manufacture of aircraft and 
parts of the aircraft 
As 
applicable 
Nil 
VI. Defence Sector 
9. Raw materials for manufacture 
of parts of aircraft for 
maintenance, repair, or 
overhauling of aircraft or 
components or parts of aircraft, 
including engines, when 
imported by Public Sector Units 
under the Ministry of Defence 
As 
applicable 
Nil 
VII. Drugs/ Medicin
rted by Public Sector Units 
under the Ministry of Defence 
As 
applicable 
Nil 
VII. Drugs/ Medicines 
10. 17 new drugs/medicines to be 
added in List 3 appended to 
TABLE I of notification No. 
45/2025-Customs dated 
24.10.2025 
5%/10% Nil 
11. 7 rare diseases that are part of 
National Policy for Rare Disease 
(NPRD), 2021 to be added in List 
22 appended to TABLE I of 
notification No. 45/2025 -
Customs dated 24.10.2025 for 
customs duty exemption on 
As 
applicable 
Nil 
 56  
 
 
Note: Description of entries is indicative. Notification/Tariff may be 
referred for complete description. 
 
C.2 Increase/Modification in Customs duty [with effect from 
02.02.2026] 
S. 
No. 
Commodity Rate of Basic Customs 
Duty 
From 
(per cent) 
To 
(per cent) 
I. Chemicals 
1. Potassium hydroxide Nil 7.
f Basic Customs 
Duty 
From 
(per cent) 
To 
(per cent) 
I. Chemicals 
1. Potassium hydroxide Nil 7.5% 
II. Umbrella and its parts 
2. Umbrellas (other than garden 
umbrellas) covered under tariff 
items 6601 9100 and 6601 9900 
20% 
 
20% or Rs. 
60 per piece, 
whichever is 
higher 
3. Parts, trimmings and accessories 
of articles of heading 6601 to 
6602 
10% 
 
10% or Rs. 
25 per kg., 
whichever is 
higher 
Note: Description of entries is indicative. Notification/Tariff may be 
referred for complete description. 
S. No. Commodity Rate of Basic Customs 
Duty 
From 
(per cent) 
To 
(per cent) 
drugs, medicines and food for 
special medical purposes, when 
imported for personal use 
VIII. Personal Imports (with effect from 01.04.2026) 
12. All dutiable goods, imported for 
personal use und
rsonal Imports (with effect from 01.04.2026) 
12. All dutiable goods, imported for 
personal use under Chapter 
heading 9804 
10%/20% 10%  
 
 57  
 
C.3 Review of exemptions 
A review of the existing customs notifications providing concessional BCD 
rates to various goods was undertaken. Consequently, upon review, the 
following exemptions are being lapsed.  
C.3.1 To lapse with effect from 02.02.2026 
S. No. 
S. No. of Table I 
in 45/2025-
Customs 
Description 
1.  1 Animals and birds imported by Zoo 
2.  113 Alpha pinene 
3.  123 Artificial plasma 
4.  128 Ammonium phosphate or ammonium 
nitro-phosphate, for use as manure or for 
the production of complex fertilisers 
5.  132 Potassium sulphate, containing not more 
than 52% by weight of potassium oxide* 
6.  137 Other diagnostic or lab
lphate, containing not more 
than 52% by weight of potassium oxide* 
6.  137 Other diagnostic or laboratory reagents 
falling under tariff heading 3822 90 90*  
7.  213 INVAR  
8.  258 Coffee roasting, brewing or vending 
machines for use in the manufacture or 
processing of coffee 
9.  285 Parts of radio trunking terminals 
10.  287 CD-ROMs containing books of an 
educational nature, journals, periodicals 
(magazines) or newspapers 
11.  310 Loco simulators 
Note: Description of entries is indicative. Notification may be referred for 
complete description. 
*no change in the effective rate of duty on the goods 
 58  
 
C.3.2 To lapse with effect from 01.04.2026 
S. No. 
S. No. of 
notification No. 
45/2025-
Customs 
Description 
In Table I of notification No. 45/2025-Customs 
1. 93 Naphth
ion No. 
45/2025-
Customs 
Description 
In Table I of notification No. 45/2025-Customs 
1. 93 Naphtha, for use in the manufacture of 
fertilisers 
 
2. 95 LPG, consumed in the manufacture of 
polyisobutylene by DTA unit received from 
SEZ unit and returned by DTA to SEZ from 
where such LPG were received.  
3. 107 Silicon for the manufacture of un -diffused 
silicon wafers, and un -diffused silicon 
wafers for the manufacture of solar cells or 
solar cell modules** 
4. 117 Maltol, for use in the manufacture of 
deferiprone 
5. 145 Specified goods in manufacture of Copper-
T contraceptives 
6. 154 Ethylene – Propylene – Non-Conjugated 
Diene Rubber (EPDM) for use in the 
manufacture of insulated wires and cables 
7. 172 Hydrophilic and hydrophobic non - woven 
fabrics, imported for use in t
ted wires and cables 
7. 172 Hydrophilic and hydrophobic non - woven 
fabrics, imported for use in the 
manufacture of adult diapers 
8. 201 Spent catalyst or ash containing precious 
metals 
9. 218 Metal parts for use in the manufacture of 
electrical insulators 
 59  
 
S. No. 
S. No. of 
notification No. 
45/2025-
Customs 
Description 
10. 219 Pipes and tubes for use in manufacture of 
boilers 
11. 231 Permanent magnets for manufacture of 
synchronous generators above 500KW for 
use in wind operated electricity generators 
12. 236 Zeolite for use in the manufacture of wash 
coat for catalytic converters 
13. 243 High speed cold-set or high speed heat set 
web offset printing machines along with 
mail room equipment  
14. 271 Cash dispenser or automatic banknote 
dispenser and its parts
g with 
mail room equipment  
14. 271 Cash dispenser or automatic banknote 
dispenser and its parts and components 
15. 275 Television equipment, cameras and other 
equipment for taking films, imported by a 
foreign film unit or television team 
16. 276 Photographic, filming, sound recording of 
foreign origin, if imported into India after 
having been exported there from 
17. 291 Parts and components of digital still image 
video cameras 
18. 309 Raw materials or parts for use in 
manufacture of e-Readers 
19. 370 X-Ray tubes used in manufacture of X -ray 
machines for medical, surgical or 
veterinary use 
 60  
 
S. No. 
S. No. of 
notification No. 
45/2025-
Customs 
Description 
20. 372 Flat panel detector for use in manufacture 
of X -Ray machine for medical, surgical or 
veterinary us
lat panel detector for use in manufacture 
of X -Ray machine for medical, surgical or 
veterinary use 
21. 397 Parts of video games for the manufacture 
of video games 
In Table IV of notification No. 45/2025-Customs 
22. 1 Motion pictures, music, gaming software 
for use on gaming consoles printed or 
recorded on media 
In notification No. 113/2003-Customs dated 22 July 2003 
23. Exemption to castor oil cake and castor de -oiled cake 
manufactured from indigenous castor oil seeds on indigenous 
plant and machinery by unit in SEZ and brought to DTA 
Note: Description of entries is indicative. Notification may be referred for 
complete description. 
** no change in the effective rate of duty on the goods 
D. Export Promotion Measures 
D.1 Increase in value limit of duty-free import of speci
on the goods 
D. Export Promotion Measures 
D.1 Increase in value limit of duty-free import of specified goods for 
use in processing of sea-food 
The value limit of duty -free imports of specified goods imported for 
use in processing of sea -food has been increased from 1% to 3% of 
the FOB value of seafood products exported during the preceding 
financial year. 
D.2 Increase in time period of export for exporters of specified 
goods manufactured from duty-free imported inputs  
The time period of export of textile/leather garments, 
leather/synthetic footwear or any other leather product by exporters 
is being extended from six months to twelve months. 
D.3 Extension of duty exemption on inputs for manufacture of 
specified goods for export 
The benefit of duty exemption on inputs for m
inputs for manufacture of 
specified goods for export 
The benefit of duty exemption on inputs for manufacture of 
leather/synthetic footwear for export is being extended to exporters 
of shoe-uppers also. 
 61  
 
 
E. Central Excise Duty Changes 
E.1  Exemption of Central Excise Duty on value of 
Biogas/Compressed Biogas (CBG) contained in Blended Compressed 
Natural Gas (CNG) 
The value of Biogas/Compressed Biogas (CBG) and the appropriate 
Central Tax, State Tax, Union Territory Tax or Integrated Tax, as the 
case may be, paid on such Biogas or CBG contained in blended CNG, is 
being excluded from the transaction value for the pur pose of 
computation of central excise duty on such blended CNG.  
  E.2  Amendment to Seventh Schedule to the Finance Act, 2001 to 
revise the National Cala
ed CNG.  
  E.2  Amendment to Seventh Schedule to the Finance Act, 2001 to 
revise the National Calamity Contingent Duty (NCCD) Rate with effect 
from 01.05.2026 with no change in the effective duty rate***  
S.No. Description NCCD Rate 
From 
(per cent) 
To 
(per cent) 
1. Chewing tobacco 25% 60% 
2. Jarda scented tobacco 25% 60% 
3. Other 25% 60% 
Note: Description of entries is indicative. Notification/Tariff may be 
referred for complete description. 
***effective duty rate will be maintained at 25% by notification 
F. Others 
There are a few other changes. For details of the budget proposals, the 
Explanatory Memorandum and other relevant budget documents may be 
referred to.