Ahead of the Union Budget 2026 and the rollout of the New Income Tax Act, KPMG in India conducted a pre-budget survey in January 2026 to understand industry expectations on key tax and policy issues. The survey gathered perspectives from over 100 senior professionals across sectors such as financial services, technology, life sciences, pharmaceuticals and healthcare, and consumer markets. A large share of responses came from C-suite executives and senior leadership, reflecting views that influence strategic and investment decisions.
One of the key themes emerging from the survey is the need for renewed tax incentives. With several income-tax benefits already phased out or nearing expiry, 34 per cent of respondents believe the government may reintroduce a lower tax regime linked to manufacturing. At the same time, half of the respondents feel that future incentives should be more focused and targeted at specific sectors rather than being broad-based.
Participants also highlighted the need for continued simplification of income-tax laws, even after the introduction of the New Income Tax Act. When asked about priority areas for further rationalisation, respondents identified three major concerns: compliance related to TDS and TCS, the assessment and litigation framework, and the capital gains tax structure.
Another important expectation relates to International Financial Services Centres (IFSCs). About 51 per cent of respondents suggested that introducing a safe harbour framework for IFSC structures would help provide long-term certainty and improve the attractiveness of such entities.
On the personal taxation front, there is strong support for increasing the standard deduction available to salaried individuals. Nearly 73 per cent of respondents favoured a substantial hike in the deduction limit, indicating expectations of further relief for individual taxpayers.
Feedback on the existing Dispute Resolution Panel (DRP) mechanism was mixed. Close to half of the respondents felt that the current DRP process has not been effective in achieving its objective of reducing unnecessary litigation quickly, pointing to the need for reforms in dispute resolution under direct tax laws.
Transfer pricing regulations were another focus area. Following announcements in the previous budget regarding safe harbour rules, 71 per cent of respondents believe that the framework requires a comprehensive review, particularly with respect to margins and thresholds for different business models and industries.
Under the GST regime, respondents expressed concerns about the Invoice Management System (IMS). With increasing mismatches and rejections of credit notes leading to higher tax liabilities, 82 per cent supported a review of the current IMS framework. They also called for better reconciliation mechanisms to minimise errors and disputes.
Commenting on the survey findings, Sunil Badala, Partner and National Head of Tax, KPMG in India said, “The increase in slab rates for individuals in the last Budget, along with the recent reduction in GST rates, has enhanced disposable incomes and consequently driven consumption and spending. However, our pre Budget survey indicates that stakeholders continue to look forward to further reforms and tax incentives. A major expectation is the overhaul of the dispute resolution mechanism under direct tax laws, including the introduction of mandatory timelines for the disposal of appeals. Additionally, revisions to the Safe Harbour Rules under the Income tax framework and enhancements to the GST Invoice Management System are among the key items that stakeholders expect from Budget 2026. With the new Income tax Act set to come into effect from 1 April 2026, some of these expectations may need to be calibrated accordingly.”
