The UK India Business Council (UKIBC) has urged for a simplified tax regime in the upcoming Union Budget 2026-27. They emphasized the need for exemptions on capital tax gains for foreign portfolio investors (FPIs) and other investor-friendly reforms. Additionally, the council highlighted the importance of strengthening the GIFT City as a competitive financial services hub and simplifying GST compliance.
The UKIBC also recommended providing increased access to global investors by expanding the framework and allowing Indian companies to list equity shares on foreign stock exchanges. They emphasized the significance of measures that enhance India’s competitiveness in global trade and investment, focusing on innovation, infrastructure development, and sustainable economic growth.
In anticipation of the Union Budget 2026 and the implementation of the New Income Tax Act, business leaders in India have expressed strong demand for targeted tax incentives and a manufacturing-linked lower tax rate regime. Around 34% of respondents called for the return of the manufacturing-linked lower tax rate regime, which previously offered a 15% tax rate for manufacturing units. Another key expectation is the overhaul of the dispute resolution mechanism under direct tax laws, including the introduction of mandatory timelines for the disposal of appeals.
The Budget presents an opportunity to build on recent reforms by enhancing policy certainty, easing business regulatory processes, and supporting growth across various sectors such as financial services, manufacturing, clean energy, technology, and Global Capability Centres. UKIBC hopes for a level-playing field that allows international companies to fully benefit from FDI liberalization and emphasizes the importance of streamlined tax administration and policies that promote clean energy adoption nationwide.
