Budget 2026–27: FM Announces Accounting, Buyback & MAT Reforms

New Delhi, Feb 1 (KNN) While presenting the Union Budget 2026–27 on Sunday, Finance Minister Nirmala Sitharaman proposed the constitution of a joint committee comprising the Ministry of Corporate Affairs and the Central Board of Direct Taxes (CBDT) to incorporate the requirements of Income Computation and Disclosure Standards (ICDS) into Indian Accounting Standards (Ind AS).

With this move, the separate accounting framework under ICDS will be discontinued from the tax year 2027–28, reducing duplication and compliance burden.

To support the government’s objective of developing Indian accounting and advisory firms as global players, Sitharaman also proposed rationalising the definition of ‘accountant’ under the Safe Harbour Rules.

Addressing concerns over the misuse of the buyback route by promoters, she proposed taxing share buybacks as capital gains for all categories of shareholders, in the interest of minority investors.

To curb tax arbitrage, promoters will be subject to an additional buyback tax, resulting in an effective tax rate of 22 per cent for corporate promoters and 30 per cent for non-corporate promoters.

The Tax Collected at Source (TCS) rate for sellers of alcoholic liquor, scrap and minerals has been rationalised to 2 per cent, while the TCS rate on tendu leaves will be reduced from 5 per cent to 2 per cent.

In the securities market, the Securities Transaction Tax (STT) on futures has been increased to 0.05 per cent from 0.02 per cent. STT on options premium and on the exercise of options will be raised to 0.15 per cent, from the existing 0.1 per cent and 0.125 per cent, respectively.

Reiterating the government’s intent to encourage companies to adopt the lower-tax new corporate tax regime introduced in 2019, Sitharaman proposed allowing the set-off of brought-forward Minimum Alternate Tax (MAT) credit only under the new regime. Such set-off will be permitted up to one-fourth of the tax liability in the new regime.

The Finance Minister also announced that MAT will be made a final tax, with no further credit accumulation permitted from April 1, 2026. Correspondingly, the MAT rate will be reduced to 14 per cent from 15 per cent. MAT credit accumulated up to March 31, 2026, will continue to be available for set-off as per the revised framework.

(KNN Bureau)