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As the Union Budget 2026 draws closer, industry experts are seeking the return of targeted tax incentives, further simplification of income-tax laws and reforms in dispute resolution mechanisms, according to KPMG in India’s Pre-Budget Survey 2026.
The survey, conducted by KPMG in India in January 2026, captures industry sentiment ahead of the budget and the rollout of the New Income Tax Act, scheduled to come into effect from April 1, 2026.
It is based on responses from more than 100 senior executives and C-suite leaders across sectors such as financial services, technology, pharmaceuticals, healthcare and consumer markets.
According to the survey, 34% of respondents expect the government to revive a lower tax rate regime linked to manufacturing as several income-tax incentives approach their sunset. At the same time, 50% believe the focus should shift towards targeted, sector-specific incentives rather than broad-based tax benefits.
On tax administration, respondents acknowledged the New Income Tax Act as a step towards simplification but flagged areas that still require rationalisation. The survey identifies TDS and TCS compliance, the assessment and litigation process, and the capital gains tax regime as the top three areas needing further streamlining.
KPMG’s survey also highlights demands for greater clarity for International Financial Services Centre (IFSC) structures. About 51% of respondents called for the introduction of safe harbour provisions to provide long-term certainty for IFSC-related arrangements.
Personal taxation emerged as a key focus area, with 73% of respondents supporting a significant increase in the standard deduction for salaried individuals.
On dispute resolution, nearly half of the respondents said the existing Dispute Resolution Panel (DRP) mechanism has not been effective in reducing unwarranted litigation. In addition, 71% of respondents believe the transfer pricing safe harbour regime requires a revamp, particularly with respect to margins and thresholds across different business categories.
The survey also points to challenges under the GST Invoice Management System (IMS). Around 82% of respondents supported a review of the current framework and the introduction of stronger reconciliation capabilities to reduce mismatches and credit note rejections that add to GST liabilities.
Commenting on the findings, Sunil Badala, Partner and National Head of Tax, KPMG in India, said that recent changes in income-tax slabs and GST rates have supported consumption by improving disposable incomes, but stakeholders continue to expect further reforms.
He added that strengthening dispute resolution mechanisms, revising safe harbour rules and improving the GST invoice system remain key expectations from Budget 2026, even as the new Income Tax Act is set to be implemented.
ALSO READ | India's FY26 tax collections may miss target by ₹3 lakh crore; revenue may recover in FY27: CareEdge
The survey, conducted by KPMG in India in January 2026, captures industry sentiment ahead of the budget and the rollout of the New Income Tax Act, scheduled to come into effect from April 1, 2026.
It is based on responses from more than 100 senior executives and C-suite leaders across sectors such as financial services, technology, pharmaceuticals, healthcare and consumer markets.
According to the survey, 34% of respondents expect the government to revive a lower tax rate regime linked to manufacturing as several income-tax incentives approach their sunset. At the same time, 50% believe the focus should shift towards targeted, sector-specific incentives rather than broad-based tax benefits.
On tax administration, respondents acknowledged the New Income Tax Act as a step towards simplification but flagged areas that still require rationalisation. The survey identifies TDS and TCS compliance, the assessment and litigation process, and the capital gains tax regime as the top three areas needing further streamlining.
KPMG’s survey also highlights demands for greater clarity for International Financial Services Centre (IFSC) structures. About 51% of respondents called for the introduction of safe harbour provisions to provide long-term certainty for IFSC-related arrangements.
Personal taxation emerged as a key focus area, with 73% of respondents supporting a significant increase in the standard deduction for salaried individuals.
On dispute resolution, nearly half of the respondents said the existing Dispute Resolution Panel (DRP) mechanism has not been effective in reducing unwarranted litigation. In addition, 71% of respondents believe the transfer pricing safe harbour regime requires a revamp, particularly with respect to margins and thresholds across different business categories.
The survey also points to challenges under the GST Invoice Management System (IMS). Around 82% of respondents supported a review of the current framework and the introduction of stronger reconciliation capabilities to reduce mismatches and credit note rejections that add to GST liabilities.
Commenting on the findings, Sunil Badala, Partner and National Head of Tax, KPMG in India, said that recent changes in income-tax slabs and GST rates have supported consumption by improving disposable incomes, but stakeholders continue to expect further reforms.
He added that strengthening dispute resolution mechanisms, revising safe harbour rules and improving the GST invoice system remain key expectations from Budget 2026, even as the new Income Tax Act is set to be implemented.
ALSO READ | India's FY26 tax collections may miss target by ₹3 lakh crore; revenue may recover in FY27: CareEdge
