Budget 2026-27: buyback taxed as capital gains, MAT becomes a final tax at 14%, STT raised

The Union Budget 2026-27, presented on 1 February 2026, proposed taxing share buybacks as capital gains for all classes of shareholders, with an additional buyback tax on promoters taking the effective rate to 22% for corporate promoters and 30% for non-corporate promoters. Minimum Alternate Tax is proposed to become a final tax with no further accumulation from 1 April 2026, with the rate cut from 15% to 14%; brought-forward MAT credit accumulated to 31 March 2026 remains available for set-off only in the new regime and only up to one-fourth of the tax liability. Securities transaction tax on futures rises from 0.02% to 0.05%, and STT on options premium and on exercise of options both rise to 0.15%. TCS on alcoholic liquor, scrap and minerals is rationalised to 2% and on tendu leaves cut from 5% to 2%; TCS on LRS remittances above Rs 10 lakh is 2% for education or medical treatment and 20% otherwise.

These are Budget proposals as announced; they were enacted through the Finance Act, 2026. The release also states that the separate ICDS-based accounting requirement will be done away with from tax year 2027-28 and that the definition of 'accountant' for safe harbour rules will be rationalised.

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