India is advancing reforms not out of compulsion, as in the past, but out of conviction, marked by clarity, confidence, and commitment, Finance Minister Nirmala Sitharaman said on Wednesday.
“India is riding on the Reform Express under the leadership of PM (Narendra) Modi,” she said while replying to a debate on the Finance Bill 2026, which was later approved by the Lok Sabha.
She underlined that the Finance Bill is anchored in five guiding principles: strengthening trust-based tax administration to ease the burden on taxpayers; improving ease of living and doing business by reducing compliances; empowering MSMEs, farmers, and cooperatives through better liquidity and simpler regulations; positioning India as a stronger global business hub through clearer taxation and targeted sectoral support; and enhancing trade facilitation by simplifying customs processes and improving efficiency.
Responding to criticism that goods and services tax (GST) rate cuts announced in September 2025 have not yielded results, Sitharaman said she was “shocked” at such observation. She pointed to strong growth in the automobile sector, noting that retail passenger vehicle sales recorded a 26.1% increase — the highest for any February in 2026. Rural passenger vehicle sales rose by 34% while urban sales grew by 21%. This surge, she said, has particularly benefited Tamil Nadu, especially the Chennai-Sriperumbudur-Oragadam automobile corridor — often referred to as the “Detroit of Asia” — spread across Kanchipuram and Thiruvallur districts.
On the fiscal front, the finance minister said the Centre’s fiscal deficit is projected to decline to 4.3% of GDP in FY27 from 9.3% in FY21. She added that India’s debt-to-GDP ratio is on a downward trajectory and remains lower than that of many major economies.
Rejecting the Opposition’s claims that the middle class has been overlooked in the 2026-27 Budget, Sitharaman cited several relief measures. These include a reduction in TCS rates on payments made under the Liberalised Remittance Scheme (LRS) for foreign education and medical treatment, and a sharp cut in TCS on overseas tour packages to 2% from 20%.
She also noted that the Finance Bill provides for customs duty exemption on 17 critical drugs, along with duty-free import of medicines for personal use. To further ease compliance, taxpayers will now be allowed to file updated income tax returns even when reassessment proceedings have been initiated. A foreign asset disclosure scheme has also been introduced for small taxpayers.
To reduce friction at airports, the Bill proposes the rationalisation of tariffs on gifts and items brought into India. “The passengers will now have far less to worry about when they land in India,” she said, adding that these measures are aimed at benefiting middle-class citizens and ordinary travellers rather than high-networth individuals.
Reiterating the government’s approach, Sitharaman said a trust-based tax administration is being strengthened by reducing unnecessary hardship for honest taxpayers. She added that MSMEs, farmers, and cooperatives remain central to employment generation, production, and overall economic development, and are being supported through various policy measures.
Addressing concerns over the levy of cess, Sitharaman said the Constitution explicitly allows the Centre to impose cess and surcharge. “Constitution makers knew what they were doing, and we all pay respect to them,” she said. She further noted that “resources from many cesses are 100% transferred to states.”
Providing data to support her point, she said that between 2019-20 and 2024-25, Rs 15.14 lakh crore was collected through cesses, while Rs 15.97 lakh crore was transferred to states under various schemes. Similarly, an additional Rs 74,000 crore has been spent on health and education over and above the collections from related cesses. Between FY15 and FY27, total cess collections stood at Rs 7.03 lakh crore while utilisation reached Rs 7.77 lakh crore. “More than what is collected under cesses and surcharges is being spent,” she said. |
