Budget 2026: Finance Ministry outlines progress on tax reforms, investment incentives ahead of Union Budget

Ahead of the presentation of the Union Budget 2026–27, the Finance Ministry has highlighted the implementation status of key tax and policy reforms announced in previous budgets, aimed at improving investment certainty and easing compliance for taxpayers.

In a series of posts on X, the ministry said the government has completed several direct tax reforms, spanning startup incentives, capital gains rationalisation and infrastructure-related tax measures, as part of efforts to streamline India’s tax framework and support economic growth.

Among the major steps, the government extended the Tonnage Tax Scheme to inland vessels by amending Section 115VD of the Income Tax Act. From April 1, 2026, inland vessels registered under the Indian Vessels Act, 2021, will qualify for the scheme, a move aimed at promoting inland water transport and improving logistics efficiency.

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The Finance Ministry also said tax concessions for entities operating in the International Financial Services Centre (IFSC) have been extended by five years until March 31, 2030. The extension covers ship-leasing units, insurance offices, and treasury centres of global companies, strengthening India’s ambition to emerge as a global financial hub.

For individual taxpayers, the ministry highlighted relief measures under the National Savings Scheme (NSS) and NPS Vatsalya. Withdrawals from NSS accounts made on or after August 29, 2024, are now fully tax-exempt. In addition, parents or guardians investing in NPS Vatsalya are eligible for an additional deduction of up to ₹50,000 under Section 80CCD(1B), over and above the Section 80C limit.

Property taxation was also simplified, with taxpayers now allowed to claim nil annual value for two self-occupied properties without conditions, removing the earlier requirement to justify non-occupancy due to employment.

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To reduce disputes and litigation, the Finance Act also introduced a three-year block period for transfer pricing assessments and expanded safe harbour rules, the ministry said.

The update comes as policymakers prepare the final contours of Budget 2026–27, with expectations of further reforms to boost investment, simplify taxation, and support economic growth.