Union Budget 2026 should reinforce India’s growth momentum through predictable tax policies, sustained public investment and targeted sector-led incentives, even as global economic uncertainty persists, consulting firm EY India stated in its Budget wishlist.
In its pre-Budget expectations note, EY said the upcoming Budget will be critical in balancing fiscal discipline with long-term competitiveness, while strengthening investor confidence and encouraging higher private sector participation. The firm argued that a forward-looking fiscal strategy, anchored in stable taxation and focused reforms, would help India remain resilient in a volatile global environment.
#1 EY Budget wishlist: Expand PLI to new-age sectors
On investment priorities, EY said the government should consider expanding the Production-Linked Incentive (PLI) scheme to emerging technology sectors such as artificial intelligence, space and robotics.
“Extending the PLI framework to new technology areas like AI, space and robotics could help catalyse private investment and build capabilities in next-generation industries,” Sameer Gupta, national tax leader, EY India, said. He added that enhanced public investment in futuristic technologies, including generative AI, could crowd in both domestic and foreign capital.
Targeted incentives for these sectors would be critical to driving innovation and accelerating India’s positioning in advanced manufacturing and technology-led growth areas, the firm said.
#2 EY Budget wishlist: Customs and GST reforms to ease business friction
On indirect taxes, EY proposed a one-time dispute resolution scheme under customs law to settle long-pending cases, on the lines of the Sabka Vishwas programme. Furthermore, EY recommended extending the validity of customs advance rulings from three years to five years. This will improve tax certainty and reduce litigation, the company added.
Another priority that the firm highlighted was the simplification and rationalisation of the customs tariff structure.
#3 EY Budget wishlist: Focus on smooth transition to new income tax law
The firm emphasised the smooth implementation of the New Income Tax Act, 2025, saying clear guidelines and FAQs can prevent disputes during the shift from the 1961 Act. It also called for a stable tax system, simpler TDS rules, fewer slabs, and suggested exempting B2B payments already taxed under GST to reduce business disputes and cash-flow issues.
#4 EY Budget wishlist: Manufacturing, jobs and global tax clarity
EY recommended reintroducing accelerated depreciation within the concessional corporate tax regime and raising the employee cost threshold for employment-linked incentives to spur job creation, to support manufacturing and capital investment.
The firm also sought clearer rules on permanent establishment and profit attribution on international taxation. It also called for simplified transfer pricing compliance and further steps towards decriminalising income tax laws.
Sector-specific demand
EY outlined sector-specific expectations for retail, aerospace and defence, chemicals, technology, financial services and life sciences. These include enhanced tax incentives for R&D, reforms in GST input tax credit rules, extended tax holidays for International Financial Services Centre (IFSC) units, and stronger incentives for patent-linked income.