Union Budget 2026 must prioritise tax base expansion and investment incentives, says report

The report, titled "Shaping India's New Taxation Ideology: Simplification, Moderation, and Growth," highlights that recent reforms under GST 2.0 have proven that a balance between simplification and revenue growth is achievable, challenging the long-held assumption that higher tax rates are needed to boost collections.

The report argues that the government should extend these principles of GST reform to direct taxes, enforcement, and investment policies.

At the heart of the advisory is the call for policy certainty, which can be achieved by freezing peak direct tax rates in line with the ancient Indian principle of moderation, offering long-term stability.

The report also emphasises the urgent need to address India’s investment paradox, where corporate profits are rising, but investment-to-GDP ratios remain low. It recommends targeted tax incentives to channel these profits into manufacturing, R&D, and job-creating sectors, instead of financial investments.

Additionally, the report calls for stronger enforcement against tax evasion, illicit trade, and smuggling to ensure that non-compliance becomes costlier than compliance.

A distinct Indian taxation ideology, it concludes, should blend modern economic principles with traditional wisdom, prioritising fairness, compliance, and long-term growth over short-term revenue extraction.