The Government has introduced the Finance Bill, 2026 in the Lok Sabha to give effect to the financial proposals of the Union Budget 2026-27 , presented by Finance Minister Nirmala Sitharaman. The Bill proposes wide-ranging amendments across direct taxes, indirect taxes, GST, customs, securities transaction tax (STT) and introduces a Foreign Assets Disclosure Scheme for small taxpayers .
The provisions of the Finance Bill will largely come into force from 1 April 2026 , subject to specific clauses.
Major Direct Tax Proposals
The Finance Bill operationalises the transition to the Income-tax Act, 2025, while also amending the Income-tax Act, 1961 for legacy matters. Key changes include:
- Simplified assessment validity : Returns, notices, and assessments will not be invalid merely due to defects in quoting computer-generated DINs
- Reduced criminal exposure : Several prosecution provisions under the Income-tax Act, 1961 have been softened, replacing rigorous imprisonment with simpler penalties
- Transfer Pricing timelines clarified with revised computation of limitation periods
- Dividend taxation rationalised by excluding buyback consideration from the definition of dividend under the new tax law
- Expanded deductions for co-operative societies , including cotton seeds and cattle feed activities
- Extended tax holidays for IFSC units, offshore banking units, aircraft and ship leasing entities
- Relief for small foreign asset holders under the Black Money Act, with prosecution threshold increased to ₹20 lakh
Foreign Assets Disclosure Scheme, 2026
A new Foreign Assets of Small Taxpayers Disclosure Scheme has been introduced, allowing eligible taxpayers to declare undisclosed foreign income or assets (other than immovable property) with immunity from penalty and prosecution, subject to prescribed conditions.
GST & Indirect Tax Amendments
The Finance Bill proposes several business-friendly GST reforms:
- Post-sale discounts simplified, removing the requirement to link them invoice-wise
- Provisional refunds extended to inverted duty structure cases
- Refund threshold removed for exports made with payment of tax
- Temporary appellate mechanism introduced until GST Appellate Tribunal is constituted
Under IGST, the place of supply for intermediary services will now be the location of the recipient, a long-awaited relief for service exporters.
Customs and Excise Changes
- Duty exemptions and rationalisation across key raw materials, capital goods and exports
- NCCD on tobacco products raised to 60%, with effective duty maintained through notification
- New provisions allowing duty-free import of fish caught by Indian vessels beyond territorial waters
Increase in Securities Transaction Tax (STT)
The Finance Bill proposes an increase in STT rates:
- Options premium STT raised to 0.15%
- Futures STT increased to 0.05%
These changes will apply from FY 2026-27 onwards.
Conclusion
The Finance Bill, 2026 marks a decisive shift towards simplification, decriminalisation, and compliance-friendly taxation, while aligning India’s tax framework with the newly enacted Income tax Act, 2025. With targeted relief for MSMEs, exporters, service providers and small taxpayers, the Bill complements the government’s long-term fiscal and economic reform agenda.
Click here to download the complete Finance Bill 2026
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