New Delhi, Jan 27 (NationPress) Business leaders within India have expressed a compelling need for targeted tax incentives and a reduced tax rate specifically for manufacturing units, as they gear up for the Union Budget 2026 and the rollout of the New Income Tax Act, according to a report released on Tuesday.

The report from KPMG India indicated that 34 percent of participants advocated for the reinstatement of the manufacturing-linked lower tax rate regime, noting that numerous income tax incentives have either expired or are nearing their expiration.

Previously, a tax rate of 15 percent was accessible under section 115BAB for manufacturing units.

Additionally, 50 percent of respondents urged the government to prioritize sector-specific incentives, as highlighted in the report.

While most respondents acknowledged that the launch of the New Income Tax Act signifies progress toward streamlined tax regulations, they identified the need for rationalization, particularly in TDS and TCS compliance, assessment and litigation processes, and capital gains tax regulations as critical areas of focus.

The business consultancy firm revealed that among over 100 industry professionals surveyed, 51 percent expressed a desire for safe harbor provisions for International Financial Services Centre (IFSC) structures. Approximately 73 percent of participants called for a substantial increase in the standard deduction for salaried individuals.

Nearly 50 percent of respondents noted that the Dispute Resolution Panel mechanism has not effectively lessened unnecessary litigation, according to the report.

“The adjustments in individual slab rates from the last Budget, combined with GST rate reductions, have improved disposable income and spurred consumption. Nevertheless, stakeholders continue to anticipate further reforms and tax incentives,” remarked Sunil Badala, Partner and National Head of Tax at KPMG in India.

A significant expectation surrounds the reform of the dispute resolution process under direct tax laws, including the establishment of obligatory timelines for appeal resolutions, Badala noted.

About 71 percent of participants believe that transfer pricing safe harbor rules require updates, especially concerning margins and thresholds across various business sectors.

Nearly 82 percent of respondents advocated for a review of the GST Invoice Management System to enhance reconciliation capabilities, thereby minimizing discrepancies and the risk of increased GST tax liabilities.

The survey included feedback from 100 respondents, such as C-Suite executives and senior leaders from various sectors, including financial services, technology, life sciences, pharmaceuticals, healthcare, and consumer markets, the report noted.