Union Budget 2026 | FAQs: What is tax abatement?

With Finance Minister Nirmala Sitharaman is set to present her ninth Union Budget presentation on February 1, DH is releasing a series of explainers for key terms that will be used in the Budget speech and what they imply for your wallet and the country's economy.

In this article, we discuss about tax abatement.

What is tax abatement?

Reduction in taxes for some corporates and businesses for a certain period is called tax abatement. The government cuts the taxes for select business establishments for a set period of time in order to push economic development.

There are multiple kinds of tax abatements, and property tax abatement is one of the most commons types of cut in taxes offered to businesses. Tax abatements are generally offered for a fixed number of years, and the tax returns to the usual rate after the period ends.

Although tax abatement is given to various industries, real estate often sees such reduction in taxes.