Union Budget 2026: Process reforms in taxation aim to put greater trust on taxpayers

Union Budget 2026: Process reforms in both indirect and direct taxes announced in the Union Budget 2026-27 aim to put greater trust in taxpayers, underlined a senior government official.

“The focus of the tax changes in the Union Budget has been on how to ensure that the taxpayer is able to handle affairs on their own without having to seek departmental approval,” noted the official.

The provision of revised returns is one such move, the official said, adding that even in cases re-opened for assessment, the taxpayer would have the option to file the revised return with a 10% additional penalty.

“The assessing officer would use the revised return as the point of reference and the department will no longer continue the proceeding,” the official noted. 

Using the provision of updated returns, over 1.22 crore taxpayers filed such returns and the government garnered over Rs 13,500 crore in additional taxes.

While tax changes are often seen as more important, process reforms are equally more important, the official noted. Both the Central Board of Direct Taxes and the Central Board of Excise and Customs are gearing up and ensuring their IT systems and officials are reading to move ahead with these reforms.

The Union Budget has also provided for several measures on the indirect taxes also such as the customs duty reforms.

A trust-based regime for authorised economic operators has been proposed with government agencies being encouraged to leverage AEO accreditation for preferential treatment in clearing their cargo.

Similarly, the Budget has also provided for eligible manufacturer-importers to get duty deferral facility which should encourage them to get themselves accredited as a full-fledged Tier 3- AEO in due course. 

The entity with AEO certification is already verified and trusted, hence the same trust can be extended by other government agencies, the official noted.

With this in mind, the Budget has also proposed a single and interconnected portal for cargo clearance. Processes involved in clearance of food, drugs, plant, animal & wildlife products, accounting for around 70% of interdicted cargo, will be operationalised on this system by April 2026 itself. The remaining processes will be brought on board by the end of FY27, the official said.