Union Budget 2026 Cheaper Costlier List: Several items will become cheaper due to duty cuts. These include overseas tourism packages and energy transition equipment. However, penalties for income tax misreporting have increased. Securities Transaction Tax on stock options also saw a rise. This budget aims to boost growth and household sentiment.
As Union Finance Minister Nirmala Sitharaman presented the Union Budget 2026–27, attention is once again on what gets cheaper or costlier for consumers and businesses.
The Budget announced a series of duty cuts and tax rationalisations aimed at easing costs for consumers, exporters and strategic sectors.
Overseas tourism packages: Tax collected at source (TCS) cut to 2% from 5–20%
Foreign education: Lower TDS under the Liberalised Remittance Scheme (LRS) for education-related expenses
Alcoholic liquor scrap and certain minerals: Customs duty reduced to 2% from 5%
Shoe upper exports: Duty-free imports allowed for export production
Energy transition equipment: Basic customs duty (BCD) exempt
Solar glass ingredients: BCD exempt
Capital goods for critical minerals: BCD exempt
Components and parts for civilian aircraft manufacturing: BCD exempt
Microwave ovens: BCD exempt
Personal-use imports: BCD cut to 10% from 20%
Drugs for rare and cancer diseases: BCD exempt
Fish catch by Indian fishermen in Indian waters: BCD exempt
Goods imported for nuclear power projects: BCD exempt
Here is everything that got costlier in this year's Budget
Income tax misreporting: Penalty raised to 100% of the tax amount
Non-disclosure of movable assets: Now attracts a penalty
Stock options and futures trading: Securities Transaction Tax (STT) raised to 0.05% from 0.02%
This year’s Budget comes amid concerns over slowing growth. India’s GDP growth for FY27 is projected at 6.8% to 7.2%.
The IndiaAI Mission signals a clear shift from isolated AI adoption to a nationally anchored approach for building AI capabilities at scale. As we head into Union Budget 2026-27, a strong signal from the Government would be a stronger push for ‘AI infrastructure and talent’ – incentivising compute, high- quality data access, and industry-led skilling so India can move from AI consumption to AI creation at scale, while keeping compliance simple and future- ready.
The good part is that India’s tax ecosystem, equipped with a mature digital backbone, is uniquely positioned to accelerate this momentum.
For tax leaders, that translates into a simple equation: use AI to orchestrate workflows end‑to‑end, pair it with skilled teams, and enforce governance that stands up to regulators and auditors. For tax functions, long burdened by documents and routine workflows, this is transformational. Structured compliance has become faster and cleaner, while narrative-heavy processes - submissions, notices, researchand audit preparation are being reimagined with AI’s ability to synthesise, summarise and articulate complex tax concepts. The result is a new operating rhythm - faster, cleaner and increasingly predictable, benefiting both tax administrators and businesses.
India’s Digital Tax Foundation: Ready for the GenAI Leap
Over the last decade, India has built one of the world’s most advanced digital tax ecosystems - GSTN, e-invoicing, AIS/TIS, PAN–Aadhaar linkages and faceless assessments - expanding the tax net, improving data quality and accelerating processing. This digital backbone is now enabling organizations to standardize data, automate reconciliations, and embed governance into operations. Tax functions are shifting from periodic, year-end compliance exercises to continuous discipline.
AI is making Tax Smarter, faster, and more efficient.
AI now performs tasks once handled only by tax professionals - reviewing documents, drafting responses, identifying risks, and producing high-quality summaries. The 2025 EY Tax & Finance Operate Survey underscores this shift, with 86% of leaders prioritizing data and AI, and 81% planning significant operational changes. Indian tax functions are already seeing the impact: greater agility, accuracy and stronger compliance readiness.
AI is also elevating audit preparedness through first-cut responses, judgment summaries and sector-focused analysis. As accuracy rises and costs fall, AI is moving from task automation to full workflow orchestration, creating faster, more predictable outcomes. But meaningful transformation requires disciplined prioritization, strong data foundations and a clear digital break. A disciplined framework that prioritizes ROI, scalability and measurable impact ensures AI is applied to the right problems. With thoughtful prioritization, adoption shifts from experimentation to meaningful, reliable outcomes.
Guardrails: ‘Human in the loop’
With AI’s ability to interpret, generate, and structure tax content, governance is not optional - it is foundational. Therefore, three principles must anchor adoption : source-verified datasets, verifiable and traceable reasoning and a ‘Human-in-the-loop’ where GenAI drafts, professionals interpret, validate and refine. The objective is responsible augmentation with speed and efficiency but without compromising legal accuracy or judgment.
EY India has leapfrogged AI in Tax
At EY, we are building an ecosystem where AI augments human judgment, enhances quality and accelerates how teams plan, comply and defend in an AI-first era.
EY’s global US$1.4B investment in AI has enabled EY India Tax professionals to embed AI deeply into our delivery model. Our flagship AI solutions, EY India AI Tax Hub bring together a suite of AI tax agents built specifically for India’s regulatory landscape and trained on authenticated statutory content. These agents now support the full tax lifecycle - research, compliance, data validation, assessments, litigation workflows and high-quality drafting - delivering consistent, verifiable outputs at scale.
By upskilling more than 5,000 tax professionals through structured AI literacy initiatives and hands-on adoption frameworks, EY India’s Tax teams can today confidently integrate AI into day-to-day operations and provide sharper insights to clients.
As we deepen our AI-led transformation, the next phase of our journey is about translating capability into domain-level impact. AI is already redefining tax research and litigation by rapidly synthesizing statutes and case laws, generating high-quality drafts, and enabling faster, more defensible responses. It is also reshaping tax compliances through automated reconciliations, real-time validations, and embedded governance across GST, TDS and corporate tax workflows. The EY India AI Tax Hub, with purpose-built agents trained on authenticated statutory content, is already enabling this shift at scale.
The Road Ahead: Intentional, Responsible, Scalable
AI is reshaping the future of tax - not by replacing expertise, but by amplifying it. With the right governance, clarity of purpose, and disciplined prioritization, tax functions can:
Improve accuracy
Reduce cycle times
Strengthen compliance readiness
Enhance predictability
Operate with greater strategic confidence
The next chapter will be written by leaders who approach this technology shift with discipline, vision and accountability, and treat AI not as a shortcut but as a strategic partner.
The opinions and views in the article are of Sameer Gupta, Partner and National Tax Leader, EY India and Abhishek Kumar, Director – Tax Technology & Transformation, EY India only, and provided for general information purposes. The news and editorial staff of ET had no role in the creation of this article nor vouch for or endorse this content.