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The union budget 2026 should continue with growth-focused policies, greater tax certainty and targeted sector-led investments, amid an uncertain global economic environment, calls EY India.
The firm noted that the upcoming Budget will play a critical role in sustaining India's growth momentum while balancing fiscal discipline with long-term competitiveness. In its budget expectations note, EY India said the government should adopt a forward-looking fiscal strategy that strengthens investor confidence and encourages higher private sector participation. According to the firm, sustained public investment, predictable tax policies and focused reforms across key sectors could help India remain resilient in a volatile global economy. Commenting on investment priorities, Sameer Gupta, National Tax Leader, EY India, said the Production-Linked Incentive (PLI) scheme could be expanded to cover emerging technology sectors such as artificial intelligence, space and robotics. "To stimulate private investments, the existing Production-Linked Incentive (PLI) scheme may be extended to cover new technology sectors such as AI, space, and robotics," noted Gupta He added that enhanced public investment in futuristic areas like AI, generative AI, robotics and space technology could act as a catalyst for private investment, helping India build capabilities in next-generation industries. "Targeted incentives for the emerging industries will be crucial in driving innovation and attracting both domestic and foreign investors," noted Gupta. On the indirect tax front, EY India suggested a series of reforms to improve ease of doing business. It proposed the introduction of a one-time dispute resolution scheme under Customs law to settle long-pending cases, similar to the Sabka Vishwas scheme. The firm also recommended extending the validity of customs advance rulings from three to five years to enhance tax certainty and reduce litigation. Simplification and rationalisation of the customs tariff structure was also flagged as a key priority to align India's tariffs with global standards and improve trade competitiveness. In the area of direct taxes, EY India emphasised the need for smooth implementation of the New Income Tax Act, 2025. It said detailed guidelines and FAQs would be critical to avoid confusion and litigation during the transition from the existing Income Tax Act, 1961. The firm also called for a stable and predictable tax regime, with fewer frequent changes in tax rates. EY India also highlighted the need for rationalisation of the TDS framework, noting that multiple rates and categories often lead to disputes and cash flow challenges for businesses. It suggested a simplified rate structure with fewer slabs and possible exemption of B2B payments subject to GST from TDS. To boost manufacturing and capital investment, the firm recommended reintroducing accelerated depreciation within the existing concessional corporate tax regime. It also proposed increasing the employee cost threshold for employment-linked incentives to encourage job creation. On international taxation, the firm stressed the importance of clearer rules on permanent establishment and profit attribution to reduce disputes and improve certainty for foreign investors. It also suggested rationalisation of transfer pricing compliance and further steps towards decriminalisation of income tax laws. EY India also outlined sector-specific expectations, including measures for retail, aerospace and defence, chemicals, technology, financial services and life sciences. These include tax incentives for R&D, reforms in GST input tax credit rules, extended tax holidays for IFSC units and enhanced benefits for patent-related income. Overall, EY India said Union Budget 2026 should reinforce India's growth narrative through a predictable policy roadmap anchored in tax certainty, targeted reforms and sustained public investment, enabling long-term and inclusive economic growth. (ANI)
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