As I glanced at the Budget 2026 proposals, they looked fairly positive until I noticed the provision taxing capital gains on Sovereign Gold Bonds bought from the market rather than at issuance. Till now, RBI encashment after the required holding period was exempt regardless of how the bonds were acquired; the exemption will now apply only to original subscribers, not secondary-market buyers—effectively a retrospective amendment. A quick calculation (https://bit.ly/4bwbUNx) suggests that if gold prices remain unchanged, the capital gains tax involved would be about ₹8,000 crore (at ~13%), assuming roughly 50% of the bonds were bought from the secondary market.
This single amendment unfortunately overshadows much of the Budget’s promise.
On investments, allowing banks to sell down corporate bond exposure via Total Return Swaps—giving investors bond exposure without holding the bonds on their books—may finally provide a fillip to a corporate bond market that has struggled despite repeated efforts over the past decade. Second, permitting “foreigners” (non-Indian origin individuals) living abroad to invest in Indian equities much like NRIs or OCIs (though with lower limits) should widen participation. Hopefully, overseas online KYC will be implemented quickly, the rules will mirror the NRI route, and the facility will extend to mutual funds as well.
On the taxation front, while details are awaited, the proposal to exempt global (non-India sourced) income of a non-resident expert for five years in India, if implemented well, could help India attract global talent, including the highly skilled diaspora, who can return without worrying about Indian tax on overseas incomes. Likewise, allowing online issuance of certificates for lower or nil deduction of tax at source is an excellent step for startups, most of whom make losses in their early years: tax deducted by customers becomes a refund that is typically stuck for at least two years, worsening cash-flow stress. Having been in that position myself, I can emphasise how important this reform can be (if implemented well) in easing the cash crunch many startups face. Finally, the move for common filing of Form 15G/15H is also welcome, though it would have been even better if implemented through the tax department rather than depositories, so that the same single filing could have extended to banks and other deductors as well.
Among areas where more could have been done, TCS on overseas tours booked through Indian operators has been reduced to 2% (from 5%), a good move but one that should ideally have gone further. TCS is often mistaken for a tax rather than advance tax, and many travellers simply buy tours from operators abroad, where no TCS applies up to ₹10 lakh, causing Indian operators to lose business in today’s online world. A consistent rule—nil up to ₹10 lakh and 20% above, with the foreign portion routed through LRS to prevent double use of the exemption—would be preferable. The move to allow payment of TDS on property purchases from non-residents without requiring a TAN is also excellent, though it should have been extended to rent paid to non-resident landlords, since the TAN requirement deters tenants. Finally, the increase in STT on futures and options could have been better calibrated: options perhaps deserve higher rates, but it would have gone down better with a simultaneous reduction in STT for cash equity markets.
A rollback of the retrospective amendment on Sovereign Gold Bonds is essential: a potential tax gain of ₹8,000 crore cannot justify reviving the shadow of retrospective taxation and risking India’s hard-earned credibility after the UPA-era Hutchison episode. It would also allow attention to return to the Budget’s many constructive measures.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
(A slightly different version of this column first appeared in the Business Standard on 02 February, 2026)