Highlights

  • ICRA predicts tax relief for taxpayers
  • 12% growth in direct tax collections
  • Rs 11 trillion capex for FY2026

Latest news

North hemisphere to witness partial solar eclipse: March 29, 2025

North hemisphere to witness partial solar eclipse: March 29, 2025

Over 50 crore devotees attend Maha Kumbh dip

Over 50 crore devotees attend Maha Kumbh dip

Kapil Dev raises concerns over player injuries amid Cricket demands

Kapil Dev raises concerns over player injuries amid Cricket demands

BCCI sets new luggage rules after excessive baggage on Australia tour

BCCI sets new luggage rules after excessive baggage on Australia tour

PM Modi and Elon Musk discuss space and tech in Washington

PM Modi and Elon Musk discuss space and tech in Washington

Valentine's day clashes: fringe groups disrupt celebrations in India

Valentine's day clashes: fringe groups disrupt celebrations in India

Eric Schmidt warns of AI misuse by rogue states posing global threat

Eric Schmidt warns of AI misuse by rogue states posing global threat

Ludhiana to undergo major transformation with Rs. 930 Crore infrastructure boost under CM Bhagwant Mann’s

Ludhiana to undergo major transformation with Rs. 930 Crore infrastructure boost under CM Bhagwant Mann’s

ICRA report forecasts tax relief and economic outlook for FY2026

According to an ICRA report, the government may offer minor tax relief to personal income taxpayers in the upcoming FY2026 Union Budget, while maintaining stable revenue flows. 

ICRA report forecasts tax relief and economic outlook for FY2026

The government is anticipated to offer some relief to personal income taxpayers in the Union Budget for FY2026, according to an ICRA report.

While the report suggests the possibility of modest tax relief, it highlights that these measures are unlikely to significantly impact overall revenue collections.

The government's cautious stance is aimed at maintaining stable and predictable tax inflows.

The report stated, "While there may be some tax relief to personal income taxpayers in the Budget, ICRA believes that its impact on revenues is unlikely to be material, to ensure stable and predictable tax flows in the fiscal."

ICRA forecasts a 12% growth in direct tax collections for FY2026, primarily driven by higher income and corporate tax revenues. Indirect taxes are projected to increase by 9%, with GST collections expected to rise by 10.5%.

Customs duty inflows are forecast to grow at a slower rate of 5%, with potential uncertainties arising from changes in US tariff policies. The overall growth in gross tax revenue (GTR) for FY2026 is anticipated to slightly exceed the nominal GDP growth forecast of 10%, suggesting a tax buoyancy of 1.1.

While a reduction in the revenue deficit is likely, the fiscal deficit in absolute terms is expected to rise to Rs 16 trillion in FY2026, up from Rs 15.4 trillion in FY2025. However, as a percentage of GDP, the fiscal deficit is projected to decrease to 4.5% from 4.8% in FY2025, reflecting the government's fiscal consolidation efforts.

The report added, "ICRA awaits a forward-looking guidance on fiscal deficit targets or Central Government debt/GDP, even as the recommendations by the 16th Finance Commission will also be key, which may be released later in the fiscal."

Regarding capital expenditure, ICRA predicts a capex of approximately Rs 11 trillion for FY2026, aligning with the previous year's budget announcements but representing a 12-13% increase compared to the expected expenditure of Rs 9.7 trillion in FY2025.

This increased capex is consistent with the government's emphasis on stimulating manufacturing, generating employment, and boosting skill development in response to the slowdown in urban consumption and investment activity observed in FY2025.

The report also emphasizes the importance of non-tax revenues, particularly the Reserve Bank of India's (RBI) dividend, in managing the fiscal deficit and creating additional space for capital expenditure in FY2026.

The upcoming budget is expected to focus on promoting economic growth while maintaining fiscal discipline, ensuring the long-term sustainability of public finances.

ADVERTISEMENT

Up Next

ICRA report forecasts tax relief and economic outlook for FY2026

ICRA report forecasts tax relief and economic outlook for FY2026

Sensex, Nifty fall for 6th day dragged by FII outflows, trade war fears

Sensex, Nifty fall for 6th day dragged by FII outflows, trade war fears

Global stock market indices: How the world markets performed today - 12 February 2025

Global stock market indices: How the world markets performed today - 12 February 2025

Global stock market indices: How the world markets performed today - 11 February 2025

Global stock market indices: How the world markets performed today - 11 February 2025

Indian stock market sector-wise performance today - February 12, 2025

Indian stock market sector-wise performance today - February 12, 2025

Top 5 Nifty 50 gainers today – February 12, 2025: Biggest stock moves

Top 5 Nifty 50 gainers today – February 12, 2025: Biggest stock moves

ADVERTISEMENT

editorji-whatsApp

More videos

NSE Nifty 50: Top 5 stock losers of February 12, 2025

NSE Nifty 50: Top 5 stock losers of February 12, 2025

Sensex plunges 1,018 pts as US tariffs fan trade war fears; stocks down for 5th day

Sensex plunges 1,018 pts as US tariffs fan trade war fears; stocks down for 5th day

Indian stock market sector-wise performance today - February 11, 2025

Indian stock market sector-wise performance today - February 11, 2025

Top 5 Nifty 50 gainers today – February 11, 2025: Biggest stock moves

Top 5 Nifty 50 gainers today – February 11, 2025: Biggest stock moves

NSE Nifty 50: Top 5 stock losers of February 11, 2025

NSE Nifty 50: Top 5 stock losers of February 11, 2025

EU leaders vow 'firm' response to US tariffs

EU leaders vow 'firm' response to US tariffs

GST rates reduced over time, no increase on any item: Nirmala Sitharaman

GST rates reduced over time, no increase on any item: Nirmala Sitharaman

Gold surges Rs 2,430 to hit lifetime high of Rs 88,500 per 10g amid Trump's tariff threats

Gold surges Rs 2,430 to hit lifetime high of Rs 88,500 per 10g amid Trump's tariff threats

Global stock market indices: How the world markets performed today - 10 February 2025

Global stock market indices: How the world markets performed today - 10 February 2025

Indian stock market sector-wise performance today - February 10, 2025

Indian stock market sector-wise performance today - February 10, 2025

Editorji Technologies Pvt. Ltd. © 2022 All Rights Reserved.