Budget 2026: Finance Ministry seeks suggestions on tax rate changes

The Finance Ministry has sought inputs from trade and industry associations on possible changes to tax rates and steps to simplify compliance procedures for the Union Budget 2026–27, which Finance Minister Nirmala Sitharaman is scheduled to present on February 1.

In its customary pre-Budget exercise, the Revenue Department’s Tax Research Unit (TRU) has written to various industry bodies, asking them to submit their recommendations by November 10, according to a PTI report.

The ministry has asked for suggestions covering both direct and indirect taxes, including proposals for adjustments in duty structures, rationalisation of rates, and measures to expand the tax base. Each suggestion, the TRU said, should be supported by economic reasoning and statistical data such as production levels, pricing, and revenue implications.

“Your suggestions and views may be supplemented and justified by relevant statistical information about production, prices, revenue implications of the changes suggested and any other information to support your proposal,” the Finance Ministry said, as quoted by PTI.

The ministry has also clarified that any request to address inverted duty structures must include details on value addition at every stage of manufacturing for the relevant goods.

Citing the communication, PTI reported that the Finance Ministry reiterated its medium-term policy focus on gradually phasing out tax incentives, deductions, and exemptions, while at the same time rationalising tax rates.

The government has further requested that industry bodies identify and quantify the “positive externalities” of their proposed changes to direct tax policy to help assess their wider economic impact, PTI added.

Union Budget 2026–27

The Union Budget for 2026–27 is likely to be tabled by Finance Minister Nirmala Sitharaman on February 1, 2026, during the opening phase of Parliament’s Budget Session.