Economic Survey 2025–26 Signals Next Phase of Tax Reforms

The Economic Survey 2025–26, tabled by Union Finance Minister Nirmala Sitharaman on Thursday, sets out the government's next set of tax priorities, with the emphasis on simplification, greater consistency, and cleaning up remaining issues across the tax system.

On the direct tax side, the Survey notes that the Income Tax Act, 2025, will come into force on April 1, 2026, and apply from the tax year 2026–27.

Alongside this, the Survey points to efforts to rationalise the tax treatment of debt instruments. It notes that inconsistencies across different categories of instruments are being addressed to bring greater uniformity in taxation.

On the GST front, the Survey states that residual inverted duty structure issues that remain after rate rationalisation are being addressed through faster and fully automated refunds of unutilised input tax credit.

It adds that further policy options may be examined to preserve tax neutrality without significant revenue impact. These include permitting inverted duty structure refunds on capital goods and input services.

The Survey presents these measures as part of ongoing efforts to simplify tax laws, improve consistency in tax treatment, and address residual issues in tax administration across direct and indirect taxes.