By Sunil Badala, National Head of Tax, KPMG in India
Union Budget 2026 delivers a strong, forward‑looking push for the BFSI sector, indicating the government’s commitment to financial stability, deeper capital markets, and simplified tax administration.
The proposal to set up a High‑Level Committee on Banking for Viksit Bharat marks a major structural reform, aimed at strengthening governance, enhancing financial resilience, and better aligning credit delivery and inclusion with India’s next phase of economic growth. The NBFC roadmap further builds on this momentum, outlining clear targets for credit expansion and technology adoption, supported by the proposed restructuring of key public‑sector NBFCs to improve scale and efficiency.
On the capital‑markets front, the introduction of a market‑making framework providing access to fund and derivatives on corporate bond indices, total return swaps, and permission to Persons Resident Outside India for making direct investment in listed equities are expected to significantly deepen market participation and improve liquidity-although the increase in STT on derivatives may dampen the sentiment in the trading community.
The Budget also reflects strong responsiveness to key industry demands, many of them were highlighted in the KPMG CFO Survey, including safe harbour provisions, TDS–TCS rationalization and revisions to penalty and assessment rules (including black money law). Another prominent demand in the survey was to provide tax certainty and clarity for IFSC units which has been met through an enhanced tax holiday regime, extended from 10 to 20 years with a 15 percent post‑holiday tax rate thereby reinforcing India’s position as a global financial hub.
Overall, Budget 2026 strengthens governance, deepens markets, and reduces compliance burden-positioning India’s BFSI sector for a more competitive, globally aligned future.
