Union Budget 2026: India's Direct Tax Regime Set for Major Overhaul

• Union Budget 2026 aligns with "VIKSIT BHARAT" vision, focusing on growth, ease of doing business, and tax simplification.
• The six-decade-old Income Tax Act, 1961, will be replaced by the Income Tax Act, 2025, effective April 1, 2026.
• Key changes include replacing 'Assessment Year' and 'Previous Year' with a unified 'Tax Year' and explicit recognition of virtual digital assets.
• Expectations for rationalization of withholding tax provisions, clearer SEP definitions, and uniformity in stock-compensation deductions.
• Focus on strengthening dispute resolution, reintroducing weighted R&D deductions, and clarifying capital gains taxation.

Why It Matters: Budget 2026 aims to simplify India's direct tax regime, fostering growth and reducing litigation with a new Income Tax Act.