FinMin Seeks Industry Suggestions on Tax Changes Expected in FY27 Budget

FinMin Seeks Industry Suggestions on Tax Changes Expected in FY27 Budget

Issue: The Ministry of Finance (FinMin) has commenced the preparatory process for drafting the Union Budget for the Financial Year (FY) 2026-27 and has formally invited suggestions and proposals from industry associations and trade bodies regarding anticipated changes to the nation’s direct and indirect tax structures.

Facts:

• The Finance Ministry traditionally begins the pre-Budget consultation process months in advance of the final presentation.
• This consultative phase is critical for gathering feedback, identifying pain points in existing tax laws (GST, Income Tax, Customs), and incorporating industry-specific proposals.
• The focus is on both tax policy refinement (e.g., rate rationalization, compliance simplification) and procedural improvements (e.g., faceless assessment efficiency).

Decision:

The Finance Ministry has formally initiated the pre-Budget consultation process by inviting proposals from industry bodies regarding tax structure amendments and legislative changes for the upcoming FY27 Union Budget.

Key TakeDowns:

• Pre-Budget Consultation: The formal invitation signals the start of the process that culminates in the presentation of the annual budget, gathering ground-level insights from industries on their fiscal needs.
• Focus on Tax Rationalization: For indirect taxes (GST), the industry is expected to propose further rate rationalization (continuing the GST 2.0 reforms), addressing issues like the Inverted Duty Structure (IDS), and seeking simplification of complex compliance requirements.
• Direct Tax Reforms: For direct taxes (Income Tax), proposals typically focus on increasing deduction limits (like Section 80C), improving the efficiency of the faceless assessment system, and addressing anomalies in TDS/TCS provisions.
• Goal: Ease of Doing Business: The consultation aims to identify necessary legislative and administrative changes that will enhance the ease of doing business, boost investment, and sustain the economic growth momentum initiated by recent GST cuts.