With the Union Budget for FY26-27 drawing closer, there is growing anticipation about tax reforms that could have a direct bearing on spending. Industry experts broadly expect that this year’s budget is unlikely to be headline-grabbing giveaways. Rather, the budget is expected to focus on making taxes simpler, and the Goods and Services Tax (GST) 2.0 more efficient.
Simpler Direct Taxes To Boost Household Spending
The direct tax measures are also expected to have a major role in encouraging consumption.
According to an industry expert, Budget 2026 will offer a chance to enhance disposable income. “Targeted refinements, such as modest increases in standard deductions or allowances for housing, insurance, and retirement savings can improve disposable income, enabling households to borrow responsibly and invest in long-term financial goals,” he says. He also added that predictable tax policies would be equally important.
GST 2.0 Execution Remains Crucial
Regarding indirect taxes, GST 2.0 is emerging as a central theme. Although the rationalisation of rates and changes have been announced, the key to success will be in the implementation phase.
An tax expert said that the success of the changes will only be possible if they are accompanied by operational support. “It will only achieve its intended impact if supported by effective on-ground measures…done by issuing circulars and clear instructions to operationalise implementation of GST 2.0 reforms including streamlined GST registration process and timely issuance of GST refunds,” he says.
The GST collections in India continue to be strong, crossing the Rs 1.70 lakh crore mark in December 2025, marking a 6.10 per cent year-on-year (y-o-y) increase indicating higher compliance and formalisation of the economy.
According to another tax expert, this trend needs to be accompanied by clarity and dispute resolution. “As the country advances toward Atmanirbhar Bharat and the vision of a developed nation by 2047, the indirect tax framework must deliver greater clarity, neutrality, and seamless credit flow,” he said.
He added that the issues that are still pending include valuation disputes, place of supply, blocked credits, and working capital pressures.
