As the Union Budget for FY 2026-27 approaches, expectations are building around tax reforms aimed at boosting consumption rather than offering headline-grabbing giveaways. Industry experts believe the upcoming budget is likely to focus on simplifying the tax regime, improving predictability and ensuring smoother implementation of GST 2.0 to support economic growth.
Rather than populist measures, the government is expected to emphasise structural tax reforms that enhance disposable income and strengthen compliance.
Direct Tax Simplification Seen as Key to Higher Household Spending
Experts suggest that direct tax measures will play a crucial role in stimulating household consumption by improving disposable incomes.
According to an industry expert, the FY27 Budget presents an opportunity to introduce targeted refinements in the tax structure.
"Modest increases in standard deductions or allowances related to housing, insurance and retirement savings can enhance disposable income, allowing households to borrow responsibly and invest in long-term financial goals," the expert said.
He also stressed that predictable and stable tax policies would be equally important to build confidence among taxpayers and investors.
GST 2.0 Implementation to Determine Success of Reforms
On the indirect tax front, GST 2.0 has emerged as a central theme ahead of the budget. While rate rationalisation and structural changes have already been announced, experts point out that effective execution will be critical to achieving the desired outcomes.
A tax expert noted that GST reforms will only succeed if backed by strong operational support.
"GST 2.0 will achieve its intended impact only if supported by effective on-ground measures, including issuance of detailed circulars, clear instructions, a streamlined GST registration process and timely refunds," the expert said.
Strong GST Collections Reflect Higher Compliance
India’s GST collections continue to show resilience , with revenue crossing ₹1.70 lakh crore in December 2025 , reflecting a 6.10% year-on-year growth . The strong numbers indicate improved compliance and increasing formalisation of the economy.
However, experts caution that revenue buoyancy must be matched with policy clarity and faster dispute resolution .
Addressing Long-Standing GST Pain Points
Another tax expert highlighted that as India progresses towards Atmanirbhar Bharat and the goal of becoming a developed nation by 2047 , the indirect tax framework must deliver greater clarity, neutrality, and seamless credit flow .
He pointed out that several challenges continue to trouble businesses, including:
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Valuation disputes
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Place of supply issues
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Blocked input tax credits
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Working capital pressures due to delayed refunds
Budget Expectations: Reform Over Populism
Overall, Budget FY 2026-27 is expected to focus on tax certainty, simplification, and execution efficiency , rather than short-term incentives. If implemented effectively, these measures could support consumption, improve ease of doing business, and sustain long-term economic growth .
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