Union Budget 2026 Tax Reforms: Key Takeaways for Indian Businesses & Startups

Executive Summary

The Union Budget 2026 introduces pivotal amendments to direct and indirect tax frameworks in India. For entrepreneurs, CFOs, and individual investors, staying compliant while maximizing tax efficiency requires immediate action. The new budget focuses on streamlining compliance and fostering innovation.

Capital Gains Tax Restructuring

The budget simplifies holding periods for listed vs unlisted assets:

• Listed Equity: Short-Term Capital Gains (STCG) taxed at 20%, Long-Term Capital Gains (LTCG) at 12.5% above ₹1.25 Lakh exemption limit.


• Unlisted Securities & Real Estate: Rationalized holding period of 24 months for LTCG qualification.

Startup Tax Relief under Section 80-IAC

Eligibility for 100% profit tax deduction under Section 80-IAC has been extended for DPIIT-recognized startups incorporated prior to March 31, 2028. Additionally, angel tax provisions remain completely abolished, boosting investor sentiment.

Presumptive Taxation Threshold Enhancements

Small business owners opting for Section 44AD can now report presumptive profits up to ₹3 Crores (provided digital receipts constitute 95%+ of revenue).

Action Plan for Taxpayers

• Re-evaluate Capital Allocations: Assess stock and property portfolios before end of financial year.
• Upgrade Accounting ERP: Ensure software handles revised TDS rates under Section 194J and 194C.
• Consult CA Firm: Schedule an advance tax planning session to align corporate structures.