Union Budget 2025-26: A Step Towards Economic Growth and Tax Reforms

The Union Budget 2025-26 will focus on stimulating demand through tax reforms, encouraging private investment, and simplifying income tax laws. EY India emphasizes the need for strategic reforms, fiscal consolidation, and relief for lower-income groups. Major reforms are anticipated to bolster economic development.

The Union Budget 2025-26, set to be unveiled on February 1, is expected to bring significant changes aimed at spurring economic growth. Emphasizing strategic reforms, the Budget plan is likely to prioritize tax simplification, reduction of personal income tax for lower-income groups, and escalation of private capital expenditure, as noted by EY India.

With a staggering Rs 31 lakh crore entangled in tax disputes, there is an urgent need for clearing backlogs in the Commissioner of Income Tax (Appeals) and strengthening mechanisms like advance pricing agreements, according to an EY India report. The report also highlights the need for fiscal consolidation and investment-led growth to lay a robust economic foundation.

Experts suggest prioritizing enhancements in public spending, deficit reduction, and rationalizing capital gains tax structures. The Budget may introduce innovative tax reforms fostering business innovation and simplification of compliance for SMEs. These initiatives are anticipated to lower the fiscal deficit to 4.5% of GDP and boost investment rates to sustain long-term economic momentum.

(With inputs from agencies.)