Union Budget 2026-27: MAT Exemption for Non-Residents, Higher Safe Harbour Limits Announced

MAT Relief Proposed for Non-Resident Taxpayers​

Finance Minister Nirmala Sitharaman on Sunday proposed exempting Minimum Alternate Tax for non-residents who pay tax on a presumptive basis, offering relief to eligible overseas taxpayers under the proposed tax framework for 2026-27.

Safe Harbour Threshold for IT Services Raised​

In her Budget speech, the Finance Minister announced a significant increase in the threshold for availing safe harbour provisions for IT services. The limit has been proposed to be raised from Rs 300 crore to Rs 2,000 crore, a move aimed at expanding the scope of simplified tax compliance for eligible service providers.

TCS Rate Rationalised on Select Goods​

The Budget also proposed rationalisation of the tax collected at source rate on liquor, scrap, and minerals. Under the proposal, the applicable TCS rate on these items has been streamlined to 2 percent.

Push for Home-Grown Accounting Firms​

As part of efforts to strengthen domestic professional services, the government proposed rationalising the definition of accountants under the safe harbour rules. The change is intended to promote and support Indian accounting firms within the tax compliance ecosystem.

Dividend Deduction for Cooperative Societies​

The Finance Minister further announced that inter-cooperative societies dividend income will be allowed as a deduction under the new tax regime, providing targeted relief to cooperative institutions.

These tax-related proposals form part of the broader reform measures outlined in the Union Budget 2026-27, with a focus on simplification, rationalisation, and improved compliance.