As the Union Budget for FY 2026-27 approaches, expectations are building around targeted tax reforms aimed at strengthening consumption rather than headline-grabbing giveaways. According to industry experts, the government is likely to prioritise tax simplification, effective execution of GST 2.0, and measures that support household spending and economic stability.
Rather than sweeping rate cuts, Budget 2026-27 is expected to focus on refining existing frameworks to improve clarity, compliance, and predictability.
Simpler Direct Taxes to Support Consumption
Experts believe that direct tax reforms will play a key role in boosting disposable income and encouraging consumption.
Targeted measures, such as modest increases in the standard deduction or limited allowances for housing, insurance, and retirement savings, could meaningfully improve household cash flows without complicating the tax structure.
Industry observers note that predictable and stable tax policies are equally important, as they enable households to plan spending, borrowing, and long-term investments with greater confidence.
GST 2.0: Execution More Important Than Announcements
On the indirect tax front, GST 2.0 is expected to remain a central theme in Budget 2026-27. While rate rationalisation and structural changes have already been announced, experts stress that the real impact will depend on effective implementation. Tax professionals highlight the need for:
- Clear circulars and operational guidelines
- Streamlined GST registration processes
- Faster and more predictable GST refunds
Without strong on-ground execution, experts warn that the intended benefits of GST 2.0 may not fully reach businesses, particularly MSMEs.
Strong GST Collections Signal Compliance Gains
India’s GST collections remain robust, crossing ₹1.70 lakh crore in December 2025, a 6.1% year-on-year increase. This trend reflects improving compliance and continued formalisation of the economy.
However, experts caution that high collections must be accompanied by clarity and dispute resolution to sustain momentum.
Addressing Persistent GST Challenges
Despite progress, several GST-related issues continue to concern industry participants. Experts point to unresolved challenges such as:
- Valuation disputes
- Place-of-supply complexities
- Blocked input tax credits
- Working capital pressures due to delayed refunds
As India advances toward the goals of Atmanirbhar Bharat and becoming a developed economy by 2047, experts argue that the indirect tax framework must ensure neutrality, seamless credit flow, and reduced litigation.
Outlook for Budget 2026-27
Overall, experts expect Budget 2026-27 to reinforce a pragmatic and execution-focused approach. By combining modest direct tax refinements with efficient GST 2.0 implementation, the government could strengthen consumption, reduce compliance friction, and support sustainable economic growth.
Rather than dramatic announcements, the Budget is likely to emphasise stability, simplicity, and follow-through.
Source: Outlook Money