The prescient expectation from the Budget gyrates around the ease of doing business, fostering a trust-based economy, and decriminalising income-tax provisions to curate a forward-looking economy. The Income-Tax Act, 2025, which sought to reorchestrate the decades-old Income-Tax Act, 1961, with no actionable policy changes as were anticipated by stakeholders, has been subject to public scrutiny and scepticism. The common feedback was that it was a rehash of the old law. The 2026-27 Budget, seeking to harmonise the government’s imperative to grant certainty while ensuring a rational tax policy, had several notable announcements to usher in halcyon days.

A key theme that emerged from the finance minister’s speech was the decisive shift towards reducing litigation. Her speech identified the issue of rationalising penalties and prosecution. The Budget sought to integrate assessment and penalty proceedings through a common order. There would be no interest liability that would be applicable to the taxpayer on the penalty for the period of appeal before the first appellate authority, irrespective of the outcome of the appeal process. Integrating assessment and penalty proceedings, reducing the appeal pre-deposit to 10 per cent (from 20 per cent), decriminalising minor defaults, and expanding the scope of updated returns signal a shift towards predictable resolution.