Budget 2026 seeks to make tax regime less adversarial, more predictable: official

Subscribe to enjoy similar stories. NEW DELHI : The fiscal year 2027 (FY27) Union budget signals a broader reset in India’s tax policy, combining efforts to reduce disputes and ease compliance for domestic taxpayers with targeted measures to offer greater certainty to global investors in strategic sectors.

Through changes to assessment and penalty procedures, alongside selective exemptions and relaxed safe harbour norms, the government is seeking to make the tax system less adversarial and more predictable—both for individuals and for multinational companies operating in India, a senior government official said on Monday. The official, who spoke on condition of anonymity, said the budget has proposed several steps to ease compliance for taxpayers.

These include giving an additional three months—until the end of March—to revise tax returns for the previous financial year, allowing taxpayers to update past returns even after reassessment proceedings have begun, and simplifying assessment and penalty procedures—changes that fundamentally alter how taxpayers interact with the tax department. Under the proposed framework, a taxpayer facing reassessment can choose to file an updated return, pay the applicable tax and interest on any under-reported income, and close the case.

Alternatively, the taxpayer may file an updated return with, say, lower additional tax due than the department’s claim, with the revised return forming the basis for further assessment and potentially reducing the disputed amount. “The idea is to ensure that tax assessment proceedings are not adversarial, but collaborative for the purpose of paying your due legitimate tax," the official said.