The Finance Act, 2026 is an annual fiscal Act of the Indian Parliament, officially numbered No. 4 of 2026. It is enacted to give legal effect to the Central Government's financial proposals for the financial year 2026-27. The Act originated as the Finance Bill, 2026, which was presented by the Finance Minister on February 1, 2026. After being passed by the Lok Sabha on March 25, 2026, it received Presidential assent on March 30, 2026.
The Act functions as a Money Bill under Article 110(1)(a) of the Constitution, detailing the imposition, abolition, or regulation of taxes. It contains provisions relating to direct taxes like income tax and indirect taxes such as customs and GST. Key mechanisms include the First Schedule, which specifies the rates of Income Tax and Surcharge for the Assessment Year commencing April 1, 2026. Specific provisions include the taxation on buyback of shares as capital gains, effective April 1, 2026, and the extension of the tax holiday for offshore banking units from 10 to 20 years.
The Finance Act, 2026 is a crucial link in the tax structure, connecting to and amending several other laws. Most significantly, it incorporates amendments to the Income-tax Act, 1961 and the new Income-tax Act, 2025. The Act brought a major change by repealing the Income-tax Act, 1961, which was replaced by the Income-tax Act, 2025 from April 1, 2026. Amendments from the original Bill included clarifications in the Buy-back Taxation framework, introducing a 12% surcharge for promoters. Sections 2 to 129, clause (b) of section 152, and section 156 of the Act came into force on April 1, 2026.