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The government is unlikely to unveil any major "big ticket" direct tax reforms in the Union Budget for 2026, as the Centre has already implemented the most significant changes through the new Income Tax Act, Deloitte India Partner Sumeet Hemkar said on Wednesday.
"I feel the big ticket direct tax reform has already happened, which is in the form of the new Income Tax Act that we have now," Hemkar told ANI in an exclusive interview. "That was the big ticket item which the government has already put into effect." "While some tweaks could be announced in the upcoming budget, they are unlikely to be substantial. We are expecting a few changes to that to happen in the budget of 2026, but not something really material or big," he said, adding that the government is expected to continue pushing the new tax regime. "The new tax regime is likely to continue to receive the impetus from the government," Hemkar said, describing tax certainty and stability as a long-standing policy focus. "Tax certainty and stability are clearly an agenda item that the government has focused on for several years now." He said the government should continue efforts to reduce litigation and improve dispute resolution. "The tax litigation reduction and providing a better dispute resolution mechanism for resolving disputes at a much faster stage... is an important step. The thresholds for initiating litigation should be rigorously administered to avoid frivolous litigation," he added. On the new and old tax regime comparison, Hemkar said the old regime would remain relevant. "The old regime continues to stay relevant, I feel. There are a section of taxpayers who continue to have interest in the old tax regime," he said, even though "the numbers seem to suggest that the new tax regime is the more beneficial one". On revenue concerns, Hemkar said direct tax collections appeared stable. "The January 11, 2026, direct tax collection numbers that the government has put out, those seem to suggest that there is stability in the tax collections," he said, noting that securities transaction tax receipts had softened due to lower trading volumes. Further, the Deloitte India Partner called for greater incentives for Micro, Small and Medium Enterprises (MSMEs) and startups, saying they "continue to drive the India story". "If the government has a bundle to give out, I think they should be the first ones in queue, besides the individuals. The current tax incentives were limited to very select niche start-ups," he said. He also downplayed expectations of major capital gains tax reforms. "I am not particularly expecting something big ticket on capital gains tax, especially because now we have the new law which is going to come into effect," he said. Asked who stands to gain the most, Hemkar said individuals could still benefit if the government relaxes provisions under the new regime, though raising the Rs 12-lakh exemption threshold would be "a little bit of a tough one for the government to allow". (ANI)
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