Budget 2026: Experts Seek Tax Simplicity, Stability and Stronger Compliance

As the Union Budget 2026 approaches, expectations are mounting among taxpayers, businesses and policy experts for reforms that balance economic growth with simplicity, fairness and long-term stability. With global uncertainty and domestic structural shifts shaping India’s economy, experts believe the upcoming Budget presents a critical opportunity to strengthen confidence in the tax system while improving compliance.

A key area of focus is personal income tax reform. Specialists argue that rationalising tax slabs and rates could make the system more equitable and easier to understand, encouraging voluntary compliance. The current structure, they say, often creates confusion and incentives for tax arbitrage rather than honest reporting.

Tax expert Sneha Padhiar, Partner at Bhuta Shah and Co LLP, emphasised the importance of structural simplification as India prepares for Budget 2026. She noted that the tax system must evolve to meet the dual goals of simplification and growth while closing loopholes that allow misuse.

Padhiar also highlighted concerns around the old tax regime, pointing out that bogus refund claims and aggressive tax planning undermine trust in the system. According to her, tightening enforcement while simplifying rules would help improve compliance without increasing the burden on honest taxpayers.

Another major expectation is the smooth rollout of the New Income Tax Act, 2025. Experts warn that without a carefully planned transition, the implementation could lead to confusion, litigation and inconsistent interpretations. Padhiar stressed that extensive stakeholder consultation would be essential to ensure clarity and predictability during the shift to the new framework.

On the corporate side, industry leaders are looking for continued policy support, particularly for manufacturing. In a competitive global environment, extending or expanding the concessional 15 per cent corporate tax rate for new manufacturing units is seen as a key demand. Experts believe such a move would reinforce India’s position as a manufacturing hub and support the broader Make in India initiative.

Padhiar also suggested that enhanced deductions for research and development, as well as incentives for capital expenditure, could encourage innovation and long-term investment across sectors.

Attention is also turning to reforms within the dual tax regime. Karthik Narayan, Vice President at Stellar Innovations, said Budget 2026 offers a timely opportunity to simplify the coexistence of the old and new tax regimes. With a growing majority of taxpayers opting for the new regime, he suggested that linking tax slabs to inflation could make the system more realistic and responsive over time.

Narayan also proposed reviewing rebate thresholds under Section 87A and removing grey areas that disproportionately affect small taxpayers. At the same time, he cautioned against abruptly phasing out the old tax regime, arguing that India’s savings-oriented culture requires a gradual and calibrated approach to reform.

Capital gains and dividend taxation are another area under scrutiny. Experts believe a more unified and transparent framework, with appropriate indexation benefits and reasonable exemptions for small investors, could boost market participation without compromising revenue objectives.

Overall, experts agree that Budget 2026 is an opportunity to reinforce trust in India’s tax system. By prioritising clarity, simplicity and stability, policymakers can create an environment that supports growth, rewards compliance and sustains economic momentum in an increasingly complex global landscape.