Even as the government prepares to roll out the New Income Tax Act from April 1, 2026, industry leaders say further reforms are needed to make India’s tax regime simpler, clearer and less prone to litigation. 

According to KPMG in India’s pre-Budget Survey 2026, businesses have urged the government to prioritise reforms in key problem areas, including TDS, TCS, capital gains taxation, and the assessment and litigation framework. 

The report highlighted while the new law is a step forward, “The launch of the New Income Tax Act has certainly been a big step towards a simplified income-tax law.” However, respondents flagged key areas where further changes are needed to reduce complexity and disputes. 

TDS, TCS, and capital gains top concern list 

When asked about priority areas for rationalisation, respondents highlighted “TDS and TCS compliances,” “assessment and litigation process,” and “capital gains tax regime” as the top three issues that require attention. 

Complex compliance rules and frequent disputes around deductions and collections at source continue to be a major pain point for businesses, often leading to litigation and long delays in assessments. 

Capital gains taxation is another area where industry wants clarity and consistency, especially as businesses deal with restructuring, investments, and asset sales. 

Litigation delays worry businesses 

The survey also flagged serious concern over tax litigation, noting that a large number of appeals remain pending at various stages of the dispute resolution process. The report noted there is “a significant pendency of income-tax appeals at different levels”, with more than 90% of cases pending before the Commissioner of Income-tax (Appeals). 

Calling for urgent action, the report states that “There is an urgent need for the government to take some concrete steps to accelerate disposal of these pending cases.” 

More than half of the respondents believe timelines should be fixed to ensure faster resolution while others support alternative dispute resolution mechanisms to reduce the burden on courts and taxpayers. 

With the Budget 2026 around the corner, the survey signals that industry is not just looking for new tax incentives, but also for a simpler, clearer and faster tax system that reduces disputes and compliance stress.