New Delhi, Jan 27 : Business leaders in India voiced strong demand for targeted tax incentives and manufacturing linked lower tax rate regime in anticipation of the Union Budget 2026 and the implementation of the New Income Tax Act, a report said on Tuesday.

The report from KPMG India said 34 per cent of respondents called for the return of the manufacturingâ??linked lower tax rate regime, as many income-tax incentives already expired or approached sunset.

Earlier a lower tax rate of 15 per cent was available u/s 115BAB to manufacturing units.

Meanwhile, 50 per cent respondents wanted the government to focus on targeted sectorâ??specific incentives, the report said.

"The launch of the New Income Tax Act has certainly been a big step towards a simplified income-tax law," most respondents said, however, when asked where rationalisation is needed most, respondents ranked TDS and TCS compliances followed by the assessment and litigation process, and the capital gains tax regime among top priorities.

The business consultancy firm said that the survey of over 100 industry respondents showed that 51 per cent of them wanted "some form of safe harbour provisions" for International Financial Services Centre (IFSC) structures. Roughly 73 per cent respondents wanted a significant hike in the standard deduction for salaried individuals.

Nearly 50 per cent of respondents shared their view of the Dispute Resolution Panel route not effectively reducing unwarranted litigation, the report said.

â??The increase in slab rates for individuals in the last Budget coupled with GST rate cuts have enhanced disposable incomes and raised consumption. However, stakeholders continue to look forward to furthering reforms and tax incentives," Sunil Badala, Partner and National Head of Tax, KPMG in India.

A major expectation is the overhaul of the dispute resolution mechanism under direct tax laws, including the introduction of mandatory timelines for the disposal of appeals, Badala noted.

Around 71 per cent of respondents said they believed transfer pricing safe harbour rules need a revamp, particularly in terms of margins and thresholds across different business categories.

Almost 82 per cent of respondents supported a review of the GST Invoice Management System and provide enhanced reconciliation capabilities to reduce the mismatches and increase in GST tax liabilities.

The survey took responses from 100 respondents including C-Suite leaders and senior management of diverse sectors including financial services, technology, life sciences, pharmaceuticals and healthcare, and consumer markets, the report noted.

/IANS