Budget FY26 reflects government’s commitment to reforms and ease of doing business, say experts
All India Association of Industries (AIAI) and World Trade Center Mumbai organised an interactive discussion on ‘Implications of Union Budget 2025-26’ to create awareness about the various tax and non-tax measures announced in the budget and their impact on trade and industry. During the event, tax experts and lawyers highlighted various budget measures to streamline tax structures and improve ease of doing business.
Mr. Firoze B. Andhyarujina, Senior Counsel, shared his insights on the direct tax-related provisions in the Budget. Mr. Andhyarujina clarified that while taxpayers earning income upto Rs 12 lakhs may be exempt from tax burden, the taxable income for individuals earning above Rs. 12 lakhs will be calculated from Rs 4 lakhs along with the applicable surcharge and cess.
Discussing simplification and rationalization as key themes of the budget, he further added, “There were a total of 84 amendments, including three omissions, one insertion, and one deletion in the Income Tax Act. Several tax provisions have been decriminalized. Clarifications have been provided on the concurrence of TDS and TCS. Additionally, TDS on education loans has been exempted; however, this exemption applies only to loans taken from financial institutions, which may pose challenges for students availing credit from non-financial sources such as charitable trusts. In total, 13 provisions related to TDS and TCS have been streamlined.”
Mr. Andhyarujina also highlighted an important relief for taxpayers—the unconditional exemption from taxation on two housing units. Further, he pointed out the continuity in transfer pricing method used by the transfer pricing officer, which requires maintaining the arm’s length calculation used by the assessing officer for three years.
However, pointing out that not all announcements were industry-friendly, Mr. Andhyarujina raised concerns regarding the amendment to the merger and acquisition clause. He noted that while an eight-year period has been provided to carry forward the losses of the merging company, the revised provision now states that the calculation of this eight-year period will begin from the year when the loss was incurred rather than the year of merger.
Highlighting the maritime industry, agriculture, health, and education as key focus sectors of the budget, Mr. Andhyarujina added, “Several incentives have been introduced to boost the shipbuilding and maritime industry in India. The tonnage tax exemption, which was previously applicable only to foreign outgoing sea vessel, has now been extended to vessels in inland waterways. Similarly, the shipbreaking and shipbuilding industries have received significant promotion.”
Agriculture was another major focus area, with the launch of several National Missions. In the health sector, numerous import duty exemptions have been granted, particularly for medicines used in cancer treatment. In the education sector, the government announced the establishment of an institute for Artificial Intelligence, the addition of 75,000 medical seats, and a commitment to induct over one lakh doctors in the next five years.”
Mr. Andhyarujina concluded by expressing his optimism about the proposed new Income Tax Bill, which is expected to be presented in the ongoing budget session of the Parliament. He noted that this bill could further streamline the taxation and compliance processes in the country.
In his remarks, Mr M.S. Mani, Partner -Indirect Tax, Deloitte India highlighted the various initiatives announced in the budget to simplify customs duty structure and improve ease of trading across borders.
Specifically, Mr Mani mentioned that the government reduced number of slabs in the customs duty structure by removing seven rates. In future, the government may further reduce the number of slabs to three to simplify and rationalise rate structure, he said.
Mr Mani informed that the government reduced customs duty on many products and with this, the number of dutiable products taxed above 70% has fallen substantially.
The government’s move to fix the timeline for finalisation of provisional bill of entry has shifted the responsibility of timely clearance of these documents to the tax officers rather than to the assesses.
Mr Mani said the various tax measures announced in this budget indicate a positive outlook for future reforms to improve income tax and GST compliance by tracing supply and purchase data of the assesses.
At the same time, Mr Mani suggested that the government could have announced a timeline for phased inclusion of petroleum products under the GST net to allow input tax credit for industries using fuel as raw materials.
Speaking on the government’s efforts to support economic growth, Mr. Siddhartha Rastogi, Managing Director, Ambit Asset Management stated, “The Union Budget 2025-26 places a strong emphasis on increased government spending and tax reductions as key drivers of economic growth. Over the past decade, infrastructure spending has risen more than 3.5 times. However, despite this, signs of economic slowdown were evident due to weak private consumption, prompting the government to introduce tax cuts to boost disposable incomes. Under the new tax regime, out of 7.5 crore taxpayers in the country, 6.5 crore individuals earning up to Rs.12 lakh per annum are now exempt from paying taxes. This move enhances savings, increases liquidity, and stimulates consumer demand, ultimately driving economic activity.”
Mr. Rastogi also highlighted the government’s efforts to support domestic businesses, particularly through enhanced credit availability for MSMEs. “The credit guarantee cover for MSMEs has been doubled from Rs.5 crore to Rs.10 crore, along with an expanded definition of MSMEs. With nearly 1 crore registered MSME units contributing approximately 45% of exports and 37% to manufacturing, strengthening this sector is crucial for economic resilience and job creation,” he remarked.
Emphasizing the budget’s focus on logistics and infrastructure development, he added, “This year’s budget prioritizes the shipping and maritime industry, including the use of inland waterways and coastal transportation to improve supply chain efficiency. The government’s capital expenditure, including state government loans for capital expenditure and capex of public sector undertakings, has surged to Rs. 19 lakh crore from Rs. 17 lakh crore. Over the past decade, India’s turnaround times in infrastructure projects have also improved, reflecting a more efficient economic framework.”
In conclusion, Mr. Rastogi underscored the importance of evaluating the budget from a long-term economic perspective rather than short-term market fluctuations. “Stock market movements are influenced by multiple factors, and they should not be the sole indicator of budget effectiveness. The true focus of this budget is on stabilizing and propelling growth in the economy,” he stated.
Earlier in his welcome remarks, Dr. Vijay Kalantri, President – All India Association of Industries and Chairman – WTC Mumbai welcomed the Union Budget and expressed hope that the various measures announced in the budget will support MSMEs, Startups, financial sector, maritime, agriculture, infrastructure and logistics.
Dr. Kalantri said, “This is one of the rare budgets where the government reduced taxes without imposing additional tax burden or cost on industry or individual taxpayers. The government could reduce tax rate because of strong buoyancy in tax collection. Indirect tax collection has grown 11% more than the budget estimate this year (FY25), while direct tax has grown 19% more than the estimate and corporate tax revenue has grown 14% more than the estimate.”
Dr. Kalantri pointed out that the tax cuts in the budget will support private consumption and revive sales of automobiles and consumer goods, which are facing slowdown in recent times.
Dr. Kalantri mentioned that recent volatility in the stock market is due to uncertain global environment amidst lingering fear of trade war, protectionist policies of foreign countries and so on. He raised optimism that the volatility will stabilise and Indian stock market will perform well in the medium term because of strong economic fundamentals.
Capt. Somesh Batra, Vice Chairman, WTC Mumbai proposed vote of thanks for the event. In his remarks, Capt. Batra welcomed the various budgetary announcements to support shipbuilding sector. Capt. Batra pointed out that India should upgrade capacity for manufacturing commercial cargo vessels as currently majority of the ships made in India are naval ships. Capt. Batra concluded his remarks by emphasising that a lot more can be done to promote manufacturing and foreign investment in India’s shipbuilding sector. Capt. Batra also suggested the government to improve ease of doing business to attract foreign investment.
The event was attended by members of trade and industry, financial institutions and academia.
Dr. Vijay Kalantri, President – All India Association of Industries and Chairman – WTC Mumbai felicitating Mr. M. S. Mani, Partner – Indirect Taxes, Deloitte India at the interactive discussion on ‘Implications of the Union Budget 2025-26’.