With the Union Budget for FY27 scheduled to be presented on February 1, expectations from the tax ecosystem appear unusually restrained. Unlike past years marked by calls for slab rejigs or rate cuts, the dominant theme this time is policy patience. Tax experts across corporate, individual, and indirect tax domains argue that the government’s priority should be to allow the newly legislated Income tax Act 2025 to settle, instead of reopening it before implementation.

The Income tax Act 2025, passed only months ago and slated to come into force from April 1, 2026, was positioned as a structural rewrite of the six-decade-old 1961 law. However, practitioners note that the new statute is more evolutionary than transformational. Its primary contribution lies in reorganised sections, simplified language, and consolidation of provisions, rather than substantive changes in tax policy.

Against this backdrop, senior tax counsel Anil Harish has cautioned against tinkering with the law even before taxpayers experience it. In his assessment, pre-emptive amendments would signal legislative instability and undermine trust in long-term tax planning. Instead of rate changes, he argues, real relief would come from scrapping surcharges and cess, which distort headline tax rates, and from radically simplifying income tax return forms that have become increasingly difficult even for compliant taxpayers.

This call for stability is echoed by practitioners advising both individuals and businesses. According to Ankit Rajgarhia, tax professionals are urging the finance ministry to focus on administrative and procedural corrections rather than headline-grabbing tax cuts. Long-standing issues such as multiple TDS rates, complex withholding rules, and delays in dispute resolution continue to clog the system. The backlog of income tax appeals remains a concern, with professionals warning that unresolved litigation adds to compliance costs and uncertainty for both taxpayers and the exchequer.

For salaried individuals, expectations remain modest but specific. There is demand for higher standard deductions to offset inflationary pressures and for clearer, less ambiguous provisions within the new tax regime, which many taxpayers still find difficult to navigate. Experts stress that without simplification, the intended shift towards voluntary adoption of the new regime could stall.

On the corporate side, discussions are centred less on rate cuts and more on investment incentives. Manufacturing companies, in particular, are seeking the reintroduction of concessional tax regimes to support fresh capital expenditure and employment generation. There is also growing unease around the taxation of emerging asset classes. The current framework for crypto assets and certain derivative transactions taxes gains at a flat 30 percent while disallowing expense deductions and loss set-offs, a structure that professionals argue is misaligned with broader principles of income taxation.

Litigation and enforcement practices have emerged as another pressure point. Tax advisors point out that simplification on paper must translate into relief on the ground. Expectations include higher standard deductions, rationalised ESOP taxation, and faster refunds. Equally important, they say, is a clear policy signal against further surcharge increases or the introduction of wealth taxes, both of which could dampen investor sentiment.

Transition challenges from the old law to the new one are also high on the agenda. Professionals are seeking explicit grandfathering provisions to protect losses, credits, incentives, and pending proceedings accumulated under the 1961 Act. Without such clarity, taxpayers risk prolonged disputes and inconsistent interpretations during assessments. There is also a push to recalibrate penal provisions, especially in cases involving technical or procedural lapses rather than wilful evasion.

For non-resident Indians, compliance challenges are becoming increasingly operational rather than substantive. Aadhaar-linked OTP requirements, limited net banking access, and system-level verification failures have left many NRIs unable to complete filings or receive refunds despite meeting statutory deadlines. Unresolved issues such as double taxation of foreign retirement accounts, TDS complications on property transactions, and foreign tax credit mismatches continue to generate friction.

Indirect tax experts, meanwhile, are closely tracking the government’s stated intent of moving towards GST 2.0. While rate rationalisation remains a longer-term goal, compliance complexity is the immediate concern. Small and mid-sized businesses, in particular, are seeking stability in return formats, resolution of legacy input tax credit mismatches, clarity on real estate-related GST provisions, and faster operationalisation of the GST Appellate Tribunal.

Another segment drawing attention is senior citizens dependent primarily on interest income. With limited social security buffers, delays in refunds or ambiguity in taxation rules have a direct impact on household finances. Experts are advocating a separate lower tax bracket for such retirees, clearer taxation of systematic withdrawals from pension products, rationalisation of notional rent provisions, and time-bound refund processing.

The unifying thread across these diverse demands is restraint. Tax professionals are not pushing for sweeping overhauls or aggressive fiscal giveaways. Their ask is more fundamental: stable laws, simpler compliance, faster dispute resolution, and predictable enforcement. For a government that has consistently emphasised ease of doing business and trust-based taxation, Budget 2026 presents an opportunity to reinforce credibility by doing less, not more.