How to benefit from Budget 2026-27
The Union Budget 2026–27, along with the Labour Code implementation, signals a positive and reform-driven approach by the Government.
For businesses, the budget is all about smart calculation and cost optimisation.
👷 Labour Code Impact: The Real Challenge for Employers
What Changed?
-
- Basic salary must be minimum 50% of CTC
-
- Any excess allowance will be added back to Basic
-
- This directly increases:
-
- PF contribution
-
- Gratuity provision
-
- Leave encashment liability
-
- This directly increases:
📌 Many companies will see 15% to 25% increase in employee-related expenses if payrolls are not properly planned.
💡 Smart Use of Payroll Outsourcing
The Budget 2026 has clearly classified manpower supply as “Work Contract”, making third-party manpower engagement safer and cheaper.
New TDS Benefit
-
- Only 2% TDS instead of 10%
-
- Lower overall manpower cost
💰Example: 30-Employee Company
Scenario A – Direct Payroll (Post Labour Code)
Company A
-
- 30 employees
-
- Average CTC: Rs 4.8Lac
-
- Annual payroll: Rs 1.44 crore
Additional statutory impact due to labour code:
-
- PF, gratuity & leave provisions increase
-
- Extra cost: ~Rs.18 Lakh to 22 Lakh per year
Scenario B – 3rd Party Manpower / Payroll Model
Same Company A
-
- Core team retained on rolls
-
- 20 staff shifted to manpower agency
-
- Only service charges + GST paid
-
- No gratuity / leave encashment provisioning on books
💡 Net Result
✔ Reduction in year-end provisions
✔ Lower balance sheet liability
✔ Overall manpower cost saving: ~18 to 20%
✔ Savings of Rs.20 Lakh to 25 Lakh per year
👉 This is legal, budget-aligned, and labour-compliant when structured correctly.
🧾 Budget 2026 + Tax Planning Advantage
Lower / Nil TDS Certificates (From 1 April 2026)
-
- Fully online, automated
-
- No officer dependency
Example:
-
- Business receipts: Rs.50 lakh
-
- Earlier TDS blocked: Rs.5 lakh
-
- After certificate: TDS Rs.1 lakh
-
- Cash released: Rs.4 lakh
✔ Immediate working capital
✔ Less borrowing and ✔ Better growth planning
🌍 Foreign ESOPs – Clean Exit Opportunity
The Government has introduced a one-time Foreign Asset Disclosure Scheme.
Who Should Use This?
-
- Startup employees with ESOPs
-
- Foreign equity holders
-
- NRIs / returning professionals
Benefit
✔ Declare past non-disclosure
✔ Avoid penalty & prosecution
✔ Clean tax record going forward
📌 This reflects the Government’s trust-based compliance approach.
🏢 Startups – How to Actually Use the Schemes
Budget announcements help only when eligibility is planned properly.
How New Businesses Can Benefit
✔ Register as MSME (Udyam)
✔ Maintain proper GST turnover reporting
✔ Use TReDS for receivables
✔ Apply for invoice discounting & credit guarantee
Result
-
- Faster payments
-
- Easier loans
-
- Lower interest cost
-
- Better survival rate in first 3 years
👉 Compliance + planning = real benefits.
📅 ITR Discipline = Long-Term Savings
Budget 2026 gives:
-
- Clear ITR timelines
-
- Revision opportunities till 31 March 2027
Businesses that:
✔ Respond to notices early
✔ Revise returns properly
✔ Keep current compliances clean
👉 This is the right time to restructure manpower, payroll, and tax planning.
Done correctly, businesses can:
✔ Save 15 to 20% on manpower cost
✔ Improve cash flow by lakhs per year
✔ Stay fully compliant with new laws
📞 How Team Prakasha & Co. Helps
We help businesses:
-
- ✔ Design labour-code-compliant payroll structures
-
- ✔ Shift to manpower models legally
-
- ✔ Reduce gratuity & leave encashment burden
-
- ✔ Optimise TDS & cash flow
-
- ✔ Handle ESOP, ITR & MSME compliance end-to-end
For further assistance, you may reach out to us:
Team Prakasha & Co.
Sahakarnagar, Bangalore 560092
Company Secretaries | CA | IP | GST | Income-tax | Advocates
📧 team@teamindia.co.in
📞 7019827351 | 7892256853 | 8792858436
💡 Smart compliance is no longer a cost — it is a competitive advantage.
FAQ Budget 2026
❓ I missed declaring foreign ESOP / foreign shares earlier. What now?
✅ No panic. Budget 2026 allows a one-time foreign asset disclosure window (6 months from April 2026).
✔ Declare ESOPs / foreign shares
✔ Get immunity from prosecution
✔ Ideal for tech employees & startup ESOP holders
❓ I received an SMS: “ITR processing pending due to discrepancy”
👉 This is not a demand notice from the Income Tax Department.
✔ Login → check pending actions
✔ Submit clarification or revise return
⚠ Ignoring it may convert into a demand
❓ My earlier ITR has demand and appeal is already filed. Any waiver now?
❌ No blanket waiver announced yet.
✔ If appeal is filed, recovery is usually kept on hold
✔ no Penalty and interest on on First appeal filed
✔ Lower Pre-deposit (reduced from 20 to 10%
📌 Strong appeal today = benefit in any future amnesty
❓ We haven’t filed old ROC returns (MGT-7 / AOC-4). Any amnesty?
🟡 Amnesty is proposed, but not notified yet by Ministry of Corporate Affairs.
Smart approach:
✔ File latest year immediately
✔ Keep company active & bank-friendly
✔ Older years can wait if cash flow is tight
❓ I sold / plan to sell NRI property. Any new relief?
✅ From 1 Oct 2026, TAN not required for buyers
✔ PAN-based challan allowed
✔ Faster & simpler property transactions
❓ Any tax change for salaried employees?
➡ No change in tax slabs
✔ Salary tax planning remains same
✔ Stability for employees & employers
❓ Futures & Options traders – anything new?
⚠ STT increased
✔ Slightly higher trading cost
✔ No change in capital gains rules
📌 High-frequency traders should reassess strategies
❓ New labour code – why should businesses care?
📌 Basic salary must be minimum 50% of CTC
✔ Higher PF, gratuity & leave payouts
✔ Proper payroll structuring reduces future cost shocks
👉 Professional payroll management now matters more
❓ I missed filing ITR / need correction. Is there time?
✔ Revised return allowed till 31 March 2027
✔ Best time to fix errors, disclosures & mismatches
❓ I’m starting an MSME. What’s the real benefit?
✔ SME Growth Fund
✔ Faster payments via TReDS
✔ Credit guarantee support
✔ Easier access to working capital
✅ Simple Takeaway for Business Owners
Don’t panic.
✔ Keep current compliance clean
✔ Respond to notices early
✔ Plan old issues smartly
✔ Use upcoming schemes wisely
📞 Need Help Implementing This?
Team Prakasha & Co.
Company Secretaries | CA | IP | GST | Income-tax | Advocates
📧 team@teamindia.co.in
📞 7019827351 | 7892256853 | 8792858436
We help businesses stay compliant, save cash flow, and avoid future trouble ✅
