Industry leaders across finance, fintech, and digital assets sectors are presenting their expectations for Budget 2026, focusing on tax reforms, improved compliance mechanisms, and measures to support innovation-led sectors. The recommendations span from streamlining existing tax collection systems to providing clearer regulatory frameworks for emerging asset classes.

TDS and TCS Streamlining Takes Priority

Experts have reached broad consensus on the need to rationalise Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions to reduce compliance friction while enhancing transparency. Sarvjeet Virk, Co-founder and MD of Finvasia, emphasised that rationalising these thresholds could boost ease of doing business and investor confidence.

Karthik Narayan, Vice President (Tax & Transition) at Stellar Innovations, highlighted that regular updates to TDS and TCS rules would prevent taxpayers from being pushed into higher tax brackets due to nominal income growth, while promoting compliance and savings. The proposed measures focus on simplified reporting and aligning rates with realistic income and transaction levels.

Cryptocurrency Sector Seeks Regulatory Clarity

The virtual digital assets sector is advocating for clearer regulations and a calibrated approach to taxation. Multiple industry leaders have presented specific proposals to improve the current framework:

Nischal Shetty, Founder of WazirX, highlighted the need for clear compliance standards and reporting obligations to strengthen investor confidence. Edul Patel noted that Indian crypto investors have matured from hype-driven trading to a disciplined, long-term approach, suggesting that reduced TDS could lower friction and encourage responsible participation.

Raj Karkara stressed that consistent regulatory clarity would help build investor trust and enable businesses to operate responsibly, creating a balanced and predictable investment environment.

Middle-Class Tax Relief Proposals

Experts anticipate Budget 2026 will address equity in personal taxation through targeted relief measures. The key proposal involves introducing a new tax structure to provide proportionate relief:

Nehal Mota, Co-founder and CEO of Finnovate, recommended raising standard deductions for salaried employees to ₹1.00 lakh and enhancing long-term capital gains exemptions to support middle-class taxpayers.

Additional proposals include:

• Allowing housing loan interest deductions under the new tax regime
• Increasing relief on interest income for senior citizens
• Enhanced health insurance benefits for senior citizens
• Improved long-term capital gains exemptions

Industry Expectations for Compliance and Growth

The collective recommendations aim to create a fairer and more growth-friendly taxation environment. Industry leaders emphasise that these reforms would discourage offshore migration, improve domestic compliance, and support responsible investment practices across traditional and emerging asset classes.

The proposed changes reflect the industry's focus on balancing revenue generation with ease of doing business, particularly as India continues to develop its regulatory framework for digital assets while maintaining support for traditional investment channels.

As global markets face trade wars and geopolitical uncertainties, India enters Budget season from a position of relative strength. A Balasubramanian, MD & CEO of Aditya Birla Sun Life AMC, outlines key priorities for Budget 2026, emphasizing policy continuity, bond market development, and domestic funding mechanisms as essential elements for sustained growth.

India's Strategic Position Amid Global Challenges

Balasubramanian highlights India's historical resilience during global crises, noting that the country has consistently emerged stronger when faced with sanctions, trade wars, or geopolitical risks. He emphasizes India's current "sweet spot" position, particularly on the fiscal front where the country stands out among global economies facing fiscal challenges.

The Make in India initiative, launched in 2017, has evolved significantly from the initial debate of "make in India for India" versus "make in India for the world." Today, India produces a large number of goods domestically for both local consumption and exports, demonstrating the success of this strategic approach.

Real Asset Creation and Capital Allocation

India's focus on creating tangible hard assets distinguishes it from other economies. Over recent years, nearly ₹11.00 lakh crore has been allocated towards building India's manufacturing capability, incentivizing manufacturing companies while improving self-sufficiency across multiple sectors.

The government's capital expenditure has targeted several key areas:

• Defence manufacturing and self-sufficiency
• Renewable energy infrastructure
• Roads, ports, and airports development
• Rural infrastructure investment
• Inland water transport and logistics

Balasubramanian notes that these sectors can absorb significantly more capital to become not only self-sustainable but also strong suppliers to global markets. The focus on real asset creation contrasts with other economies where capital expenditure largely revolves around areas like AI.

Market Valuations and Investment Outlook

Regarding market valuations, Balasubramanian observes that Indian equity markets have undergone a necessary correction over the past two years. The Nifty and Sensex have generated single-digit returns, while small and midcap segments have experienced significant underperformance, effectively correcting excess valuations from earlier periods.

The market has undergone what he describes as a "time-value correction," positioning it for potential momentum return driven by earnings recovery and government-led reforms. Various economic measures, including interest rate cuts and GST reductions, are expected to reflect in corporate earnings over the coming years.

Budget 2026 Expectations

Balasubramanian outlines three key expectations for Budget 2026:

Policy Continuity: The budget should demonstrate continuity in tax provisions that have contributed to India's growth story. Current tax incentives should be maintained to support ongoing economic momentum.

Bond Market Development: Fixed income as an asset class requires attention to create a vibrant bond market comparable to India's equity market. Both capital market asset classes must work together to fund future growth, making India more self-sufficient in meeting its funding needs.

Domestic Funding Mechanisms: Strengthening domestic funding capabilities will reduce dependence on external capital flows and support sustained economic growth.

Foreign Investment and Currency Dynamics

Despite some foreign institutional investor outflows, Balasubramanian remains optimistic about future inflows. He notes that many private equity investors who invested in India have exited with substantial profits, creating strong potential for their return. With the rupee-dollar rate around 93.00 and expected interest rate reductions, India is likely to become more attractive among emerging markets.

The country's alignment with the Viksit Bharat vision, maintaining growth visibility of 7.50% to 8.00%, strong corporate earnings visibility, and a robust investment environment should naturally attract foreign institutional investors without requiring additional taxation-led initiatives.

Balasubramanian concludes that India's quiet achievements in fiscal consolidation, real asset creation, and capital market maturity have established a strong foundation for sustained growth, positioning the country advantageously amid global economic challenges.

Source: https://economictimes.indiatimes.com/markets/expert-view/etbudget-boardroom-budget-2026-should-focus-on-continuity-bond-market-development-and-funding-indias-growth-internally-a-balasubramanian/articleshow/127126609.cms