The upcoming Union Budget is anticipated to focus on enhancing investment in manufacturing, improving infrastructure, boosting employment opportunities, aiding the agricultural sector, providing a stable, dispute-free tax ecosystem and fostering innovation and entrepreneurship.
The government is expected to build upon the tax reforms announced in the previous budget. The prior budget included various amendments to rationalise provisions related to capital gains tax and Tax Deducted at Source (TDS). It is anticipated that this budget is likely to continue the trend of rationalisation, targeting greater simplification and clarity in tax laws.
What we foresee is a pressing need for measures to enhance the efficiency of existing tax dispute resolution mechanism. In the last budget, the Direct Tax Vivad se Vishwas Scheme, 2024, was introduced for resolving tax disputes and reducing litigation. More initiatives in this direction can be expected to further enhance the reduction in Income tax pending litigations.
To promote the ‘Aatmanirbhar Bharat’ campaign, one can expect introduction of certain targeted incentives aimed at boosting investments in Research and Development (R&D), as well as the manufacturing sector. Such measures are crucial in enhancing India’s competitiveness and fostering innovation.
The finance minister announced a comprehensive review of the Income-tax Act, 1961, in the previous budget. Recommendations from various stakeholders have since been submitted to the government. It will be interesting to observe whether some of these most pressing and actionable suggestions are incorporated into this budget to initiate meaningful reforms.
The Union Budget 2025-26 is expected to focus on introducing GST law amendments, as recommended by the GST council, specifically about providing a legal framework to invoice management system.
On the trade and customs front, a one-time custom amnesty scheme is widely anticipated, in line with similar amnesty on the GST and direct tax side earlier. The government is expected to maintain its strategy of increasing basic custom duties on various imported goods but reduce it on components of such goods, to further promote domestic manufacturing in India. Additionally, the government is expected to introduce more phase-wise manufacturing programmes to enhance local manufacturing capabilities.
This micro-site is your repository for all budget-related information. Through this channel, KPMG in India’s partners and various sector leaders will engage and share insights on the Union Budget 2025-26.
KPMG in India leaders on Pre-Budget 2025-26
- Yezdi Nagporewalla
