The Bombay Chartered Accountants' Society (BCAS), in a detailed post-Budget representation to the Finance Ministry, has raised serious concerns over certain tax proposals in the Finance Bill 2026, warning that some amendments could disrupt investors and increase compliance burdens for businesses if implemented without suitable safeguards.
Concerns Over Sovereign Gold Bonds (SGBs)
One of the key issues flagged by BCAS relates to the proposed change in tax treatment of Sovereign Gold Bonds (SGBs) purchased in the secondary market.
Under the existing framework, redemption of SGBs by individuals has largely been viewed as tax-efficient, especially when held until maturity. However, the proposed withdrawal of capital gains exemption on bonds acquired from the secondary market has sparked concerns.
According to BCAS, the move could adversely impact investors who had purchased these bonds with the legitimate expectation of tax-free redemption. The body has recommended that any such change should apply prospectively, specifically to bonds issued after 1st February 2026 to safeguard the interests of existing investors and maintain policy stability.
Dividend Taxation and Interest Deduction Issue
The society has also expressed reservations over the proposal to disallow interest deductions against dividend income. It warned that this amendment could significantly affect sectors such as infrastructure, real estate and financial services, where investments are often routed through holding companies or special purpose vehicles (SPVs).
BCAS noted that many companies rely on borrowed funds for making strategic investments. Disallowing interest deductions in such cases could increase borrowing costs and potentially render certain long-term projects commercially unviable.
"The amendment will lead to loss of interest payment in case of borrowed funds utilised for investment purposes," the representation stated, highlighting the possible ripple effect on capital-intensive industries.
TDS Rationalisation and Compliance Relief
Beyond SGB and dividend taxation issues, BCAS has urged the government to rationalise TDS rates, particularly between professional and technical services. According to the body, differing rates often lead to classification disputes, litigation and increased compliance burdens for taxpayers.
The society also recommended easing certain prosecution provisions for procedural tax lapses and addressing drafting anomalies in immunity-related clauses to enhance clarity and reduce unnecessary litigation.
Industry Feedback Ahead of Finance Bill Finalisation
The memorandum is part of broader industry feedback submitted after the presentation of the Union Budget. Stakeholders across sectors are seeking calibrated adjustments before the Finance Bill is taken up for discussion and final approval in Parliament.
With investor confidence and ease of doing business at stake, BCAS has emphasised the need for a balanced and predictable tax regime that protects existing investments while ensuring revenue objectives are met.
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