Finance Bill clears Lok Sabha with 32 amendments, sharpens tax clarity for promoters, startups
New Delhi: The Lok Sabha on Wednesday passed the Finance Bill, 2026, with 32 amendments moved by Finance Minister Nirmala Sitharaman, marking a significant step in refining the government’s tax framework for investors, startups, and individual taxpayers.
Among the most notable changes is greater clarity on the taxation of share buybacks. The Bill had proposed shifting the tax burden from the company to the shareholder by replacing the dividend tax applicable to buybacks and reintroducing capital gains tax. With the latest amendment, income arising from buybacks in the hands of promoters will attract a 12% surcharge, addressing a major area of uncertainty for high-income taxpayers and market participants.
Tax experts said the move brings better definition to the new regime and could reduce the effective tax burden in such cases. The amendment is expected to make the buyback taxation framework more predictable, especially for promoters and large shareholders who were seeking clarity on how the surcharge would apply.
The Finance Bill also delivers a meaningful boost to the startup ecosystem. The turnover ceiling for claiming the tax holiday has been raised from Rs 100 crore to Rs 300 crore, making a wider pool of emerging businesses eligible from the financial year 2026–27. This change is likely to offer relief to scaling startups that previously risked losing benefits as they grew.
Another important amendment strengthens taxpayer safeguards in reassessment cases. The revised provisions now specify that a taxpayer must be given a minimum of 30 days to file an income tax return in response to a notice for reopening or reassessment, introducing a clearer procedural cushion than before.
Replying to the debate in the House, Sitharaman said the Budget contains several facilitative measures for the middle class and small businesses. She also said the government is working to build a more trust-based tax administration by reducing unnecessary hardship for honest taxpayers. Describing India as moving on a “reform express,” she said the reform agenda is being driven by conviction, clarity, confidence, and commitment rather than compulsion.
Overall, the passage of the Finance Bill with these amendments signals the government’s effort to align tax policy more closely with implementation realities. By reducing ambiguity, expanding startup support, and improving procedural fairness, the revised Bill seeks to balance revenue objectives with a more investor- and taxpayer-friendly approach.