Bazaar & Beyond: Union Budget 2026, Capital Flows & Market Trends – Interview with Naveen Wadhwa Vice President Research and Advisory at Taxmann

Vivek Ananth: Hello everyone and welcome to another episode of Bazaar & Beyond. Today, we have with us Naveen Wadhwa, Vice President Research and Advisory at Taxmann. Naveen has a deep understanding of complex tax structures and regulatory changes. In this episode, we will discuss the important income tax proposals announced in the Union Budget 2026. Naveen, thank you for joining us.

Union Budget 2026: What’s Changed and What to Watch

Vivek Ananth:  I would like to start with your view on the Union Budget. While there haven’t been many changes in tax slabs, it still seems like people might experience some friction, especially with the STT increase. What are the areas that people might feel the impact of in the next few years, particularly in this new financial year?

Naveen Wadhwa: Yes, Vivek. The first big change we should be aware of is that from 1st April 2026, a significant change is coming into play. This is also the reason the government has held off announcing new reforms this year. We have already seen several reforms in the previous Budget, especially the Union Budget 2025. The government introduced tax rate cuts, including up to ₹12 lakh in tax-free income. Additionally, GST rates were also reduced.

The government cannot make such changes every year. These reforms need time to settle and for their results to be evaluated. That’s the background. But if we talk about the upcoming changes, the Income Tax Act 2025, introduced in July 2025, was passed in September and will be applicable from 1st April 2026. There is a perception that there aren’t any major changes in income tax, but that’s not entirely true. 113 proposals have been made, some from the Income Tax Act of 1961 and others from the Income Tax Act of 2025. The focus of the government is to simplify people’s lives and encourage compliance. The government is giving people a chance to comply honestly and assures that there will be no harassment.

Key Amendments and Proposals in the Income Tax Act 

Vivek Ananth: You mentioned the STT increase, but if we look at the proposals in the Income Tax Act, could you highlight some of the key amendments?

Naveen Wadhwa:The government has focused on simplifying and reducing compliance friction. While there haven’t been drastic changes, the government has focused on small but impactful changes that reduce harassment and ease compliance burdens.

For example, they have reduced the TCS (Tax Collected at Source) rate for medical and education-related remittances. Previously set at 5%, the TCS rate has now been reduced to 2% for these purposes. Essentially, they have standardised the rates across different sectors. In cases like tour and travel packages, the TCS rate has been reduced, but the ₹10 lakh limit has been removed. The major change that hasn't been discussed much, but which I personally believe will make an impact, is regarding Liberalised Remittance Scheme (LRS). The rate under this scheme remains 20% for amounts exceeding ₹10 lakh. However, there has been no change in this area for the time being.

Understanding the Liberalised Remittance Scheme (LRS)

Vivek Ananth: Can you briefly explain LRS for our viewers?

Naveen Wadhwa: Sure, Vivek. The Liberalised Remittance Scheme (LRS) is an initiative by the RBI that allows Indian residents to remit money abroad for a variety of legitimate purposes such as investments, gifts, and education, without requiring prior approval from the government.

Under this scheme, Indian citizens can remit up to ₹50 lakh annually without RBI approval. While most transactions are exempt from TDS (Tax Deducted at Source), LRS remittances above ₹10 lakh still attract 20% TCS.

The government has recognised that this process needed to be simplified, which is why they have standardised the procedures and reduced complexity around TCS in various areas.

The Trust-Based Tax System: What Does It Mean for Taxpayers?

Vivek Ananth: Let’s shift gears and talk about the trust-based taxation system that the finance minister mentioned. Could you elaborate on what this means and how it will impact taxpayers?

Capital Gains Tax and Sovereign Gold Bonds: Key Updates

Naveen Wadhwa:The government wants to treat taxpayers as customers and foster trust between the taxpayer and the department. Essentially, they want to create a relationship where taxpayers can file their returns honestly, and the government will not harass them unnecessarily. For instance, when you file your Income Tax Return (ITR), the government has access to all your financial transactions, and they know where your money is coming from. This is not hidden information. The government uses technology to track all financial transactions and cross-check your ITR for any discrepancies. This is why compliance will become easier for honest taxpayers.

Vivek Ananth: Are there any other key changes that investors should be aware of, especially regarding capital gains tax and sovereign gold bonds (SGBs)?

Naveen Wadhwa: Yes, the government has made some important clarifications regarding SGBs. Many people were confused about the taxation of SGBs, especially the secondary market transactions. Previously, investors were benefiting from tax-free capital gains if they held SGBs until maturity. Now, the government has clarified that capital gains from SGBs will only be tax-free if the bonds are held until maturity. For secondary market transactions, investors will no longer receive the tax exemption at maturity. This change was brought into curb tax arbitrage, as some investors were using the secondary market to avoid taxes, taking advantage of volatile gold prices.

Changes to Tax Regime for Companies and MAT

Vivek Ananth: I believe there have been changes in the tax regime for companies as well. Can you explain the new provisions related to companies and MAT (Minimum Alternate Tax)?

Naveen Wadhwa: Yes, the government has introduced a new tax regime for companies. Under this, companies can opt for the new tax regime, which offers lower tax rates but removes exemptions and deductions. The government is pushing companies to adopt this system, as it simplifies compliance. Additionally, MAT (Minimum Alternate Tax) has been revised to 14%, down from 15%. Companies now have the option to move to the new tax regime, where they don’t need to worry about MAT credits. This is a significant step to reduce complexity for businesses and improve compliance.

Conclusion

Vivek Ananth: Thank you for these insights, Naveen. It’s been a really informative conversation.

Naveen Wadhwa: Thank you, Vivek. It was a pleasure to be here.

Vivek Ananth: And to our listeners, stay informed, stay curious, and keep investing wisely. Until next time, goodbye.

Disclaimer: Investments in securities markets are subject to market risks. Please read all related documents carefully before investing.