CA Dr Suresh Surana says that under the existing provisions of the Income Tax Act, there is a double taxation of income in case of companies: firstly the companies are required to pay corporate tax, and then the shareholders pay tax on the dividends.

In case of resident individual shareholders, the tax on dividends can be as high as 35.88%. On the other hand, non-residents are liable to tax on dividends @ 20% (plus surcharge and cess) which may further be lowered by Double Tax Avoidance Agreements to 5%-15%.

"In order to reduce the cascading effect of double taxation, it is expected that the maximum tax on dividends distributed by domestic companies in case of resident shareholders is limited to 20% (plus surcharge and cess)," says Dr Surana.

"The finance ministry's demonstrated long-term vision for all of India's leading industries is beyond dispute. The Indian retail sector now looks to Union Budget 2026 to give serious retailers a more predictable and even playing field on which good assets and good operators can steadily pull ahead," says Anuj Kejriwal, CEO, Retail Leasing and Industrial & Logistics, ANAROCK Group.

Kejriwal suggests the following for Budget 2026:

• Extend reasonable incentives to labour-intensive sectors: Production-linked or similar schemes for apparel, footwear, leather goods, and lifestyle products can boost jobs and exports, while also giving malls a stronger local brand base.

• Hike credit access for MSME suppliers: Many small manufacturers selling to big chains face long payment cycles. Targeted credit-guarantee and interest-support schemes for those with proven links to organised retail can ease working-capital pain without distorting lending.

• Streamline export from retail hubs: Simple, digital, single-window systems and export-oriented facilities in major retail clusters would help Indian brands use malls and high streets as showrooms for global buyers, especially under the new trade deals.

• Offer more benefits to efficiency rather than to size: Support will most benefit projects and retailers that can convert better tax treatment, clearer rules, and marginally increased consumption into higher sales per square foot. It is already clear that weaker assets will need to upgrade, reposition, or exit.

• Make more investments into transport, digital networks, and logistics: Along with focused benefits for MSMEs, these will help organised retail grow in Tier-2 and Tier-3 cities – not speculatively, but on the foundation of real catchments and mobility corridors.

"As today's workers approach retirement, it is essential that they be covered by a stable and secure pension scheme. In this context, the PFRDA has laid the groundwork for a vibrant pension system, offering a range of options for its users and covering a broad population bracket," the Economic Survey 2026 says.

"India's pension landscape features a multi-tiered system dominated by the market-linked National Pension System (NPS), the government-backed Unified Pension Scheme (UPS) launched in 2025, and other schemes like the Employees' Provident Fund (EPF) and Atal Pension Yojana (APY) for broader coverage," it adds.

Economic Survey 2026 says the share of direct taxes in total taxes has increased in the past years, from 51.9 per cent in the pre-pandemic period to 55.5 per cent in the post-pandemic years, reaching 58.8 per cent in FY25(PA). Among these, the non-corporate tax collections have recorded a strong performance, with collections increasing from an average of about 2.4 per cent of GDP in the pre-pandemic period to around 3.3 per cent of GDP in the post-pandemic period.

CA Dr Suresh Surana suggests reducing tax rate for partnership firms and LLPs.

At present, artnership firms and LLPs are taxed at a flat rate of 30% (plus surcharge and cess), which may effectively result in a rate as high as 34.944%. At the same time, there is no tax on the distribution of profits in case of partnership firms and LLPs, whereas in the case of companies, dividends are taxed in the hands of the shareholders. "There is a need to reduce the disparity with the corporates and to incentivize the small and medium sized businesses. Thus, it is expected that the tax rate for firms and LLPs would be reduced to 25% (plus surcharge and cess)," says Dr Surana.

If not the above, Dr Surana suggests introducing an option tax regime under which firms and LLPs may choose to be taxed at a concessional rate of 22% (plus applicable surcharge at 10% and health and education cess at 4%).

Ahead of Budget 2026, you may be wondering about which regime is better for you. As no major change is expected in slabs and rates in this year, the existing slabs are likely to remain relevant for the new financial year starting April 1, 2025.

In Budget 2025, the Finance Minister had introduced enhanced income tax slab rates under the new tax regime, raising the basic exemption limit to ₹4 lakh. In the old tax regime, the basic exemption is ₹2.5 lakh for people aged below 60.

You can also calculate your taxes below

Income Tax Calculator

1

Basic details

2

Income details

3

HR & other allowances

4

Deductions

5

Summary

Basic details

Financial year

FY 2025 - 2026

New

Age group

0 - 59 yrs

My city is a

Metro

Continue

While the new tax regime offers lower tax slabs, the absence of certain exemptions and deductions leaves many with higher taxable incomes. Ahead of Budget 2026, experts have suggested following changes under the new tax regime:

1. Higher surcharge threshold
2. Increase standard deduction
3. Section 80D deduction
4. Home loan deduction
5. HRA benefits

Ahead of Budget 2026, tax experts are expecting a relaxation in capital gains taxation. While their common demand is to reduce the LTCG tax to 10% and roll-back of STT, industry bodies like AMFI and BCCI have suggested allowing Section 87A rebate on LTCG and STCG from equity mutual funds and shares when the total income is not more than Rs 12 lakh.

Tax experts believe this Budget could be a turning point if it addresses everyday concerns like high taxes, expensive housing, retirement planning, and fair treatment of investments.

1. Relief on Long-Term Capital Gains (LTCG)

2. Push for insurance penetration

3. Separate income tax deduction for home loan principal repayments

4. Higher home loan interest deduction

5. Stronger NPS benefits

Calculate your taxes for FY 2025-26 here

Income Tax Calculator

1

Basic details

2

Income details

3

HR & other allowances

4

Deductions

5

Summary

Basic details

Financial year

FY 2025 - 2026

New

Age group

0 - 59 yrs

My city is a

Metro

Continue

The Association of Mutual Funds in India has recommended amending Section 45 of the Income Tax Act 1961 (Section 67 of the Income Tax Act 2025) to tax capital gains from involuntary winding up of mutual fund schemes on a receipt basis.

"A specific clause should be added to tax distributions made without unit extinguishment upon receipt, similar to Section 45(5) of the Act (Section 67(12) of the Bill), which covers compulsory acquisition with government-approved consideration and subsequent enhancements. Additionally, an explanation should be inserted in Section 2(42A) of the Act (Section 2(101) of the Bill) to include the holding period from the last unit extinguishment to the receipt of additional consideration, allowing unitholders to benefit from this period since winding up is involuntary, unlike voluntary redemption," AMFI said.

"The proposal will obviate undue hardships to tax payers, and ensure equitable and just treatment of proceeds for taxation while ensuring that there is no tax loss to the exchequer," it added.