The Union Budget 2026 has laid out a forward-looking roadmap focused on resilience, investment and ease of doing business, according to professional services firm KPMG. The firm said the Budget signals a clear shift towards a simpler and more predictable tax regime as India prepares for the new Income Tax Act to come into force from April 1, 2026.

In its assessment, KPMG said, “The Union Budget 2026 unveils a forwarding looking agenda towards the Kartavya path of resilience, empowering and inclusive growth.” It added that the Finance Minister has sent a strong signal of a “simpler, more predictable, and far more citizen-centric tax system.”

Boosting investments

A key focus of the Budget is boosting investment and positioning India as a global hub for high-value industries. One of the major announcements is a tax holiday until March 31, 2047, for foreign companies providing cloud services through Indian data centres. KPMG noted that this long-term certainty is expected to strengthen India’s data centre ecosystem.

The Budget has also given a push to toll manufacturing, with foreign companies supplying capital goods or tooling to toll manufacturers in bonded zones set to enjoy a five-year tax exemption from April 1, 2026. To attract global talent, the government has proposed exempting non-Indian sourced global income of foreign experts staying in India for up to five years under notified schemes.

Another major reform highlighted by KPMG is the strengthening of incentives for the International Financial Services Centre (IFSC). The tax holiday for IFSC units has been extended significantly. As KPMG pointed out, the deduction period has been increased from “10 out of any 15 years” to “20 consecutive years out of a 25-year window.” This move is expected to attract global treasury centres, funds, aircraft leasing companies and fintech firms to GIFT City.

Ease of doing business

On ease of doing business, the Budget has rationalised tax frameworks for knowledge-driven sectors. IT services such as software development, ITES, KPO and R&D will now fall under a single category of ‘Information Technology Services’, with a uniform safe harbour margin of 15.5 per cent. The eligibility threshold for safe harbour has also been raised sharply from Rs 300 crore to Rs 2,000 crore.

The Budget also focuses on administrative reforms aimed at building trust between taxpayers and authorities. KPMG highlighted the proposal to integrate assessment and penalty proceedings into a single order, reducing parallel processes. It also welcomed the move to decriminalise minor technical defaults, noting that these changes “remove unnecessary fear for small businesses and individuals.”