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India Union Budget 2025-26: Key Tax Changes Impacting Foreign Businesses

The Union Budget 2025-26 introduced significant changes including a reduced corporate tax rate of 22% for domestic companies, revised TDS rates on royalties and technical service fees paid to non-residents, and expanded scope of equalisation levy.

Published: April 15, 2026Effective: April 1, 2026

The Union Budget 2025-26 introduced significant changes that impact foreign businesses operating in India.


Key Changes:


1. Corporate Tax Rate: Reduced to 22% for domestic companies (plus surcharge and cess).

2. TDS on Royalties: Revised rates on royalties and technical service fees paid to non-residents.

3. Equalisation Levy: Expanded scope covering additional digital services.

Action Items for Businesses:


  • Reassess tax structures in light of new rates
  • Review royalty and technical service fee arrangements
  • Update transfer pricing documentation
  • Consult with tax advisors for restructuring opportunities

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