NEW DELHI: The Lok Sabha on Wednesday passed the Finance Bill 2026, with Finance Minister Nirmala Sitharaman emphasising a policy framework centred on trust-driven taxation, improved ease of living, and a more business-friendly environment.
“India is actually moving forward with reform not out of compulsion, which is what has happened earlier. Reform is not happening out of compulsion, but out of conviction, with clarity, confidence and commitment,” said Sitharaman during her address in Parliament.
Replying to the debate in the House, Sitharaman said the proposals are guided by the idea of building a tax system that relies on taxpayer trust rather than excessive scrutiny.
She noted that the government’s reform agenda is rooted in a long-term vision for economic growth, rather than short-term responses to challenges.
According to Sitharaman, simplifying the tax framework and introducing targeted steps to support small businesses and individual taxpayers have remained key priorities.
A trust-based system, she said, encourages voluntary compliance, lowers litigation, and promotes transparency in the tax ecosystem.
Addressing concerns around revenue allocation for states, Sitharaman also affirmed that government spending on state-linked schemes exceeds the collections generated through cesses and surcharges, highlighting the Centre’s commitment to fiscal transfers.
She highlighted that MSMEs have been at the core of policy reforms to ensure these small businesses receive a business-friendly environment.
“There are two principles which I would want to put up front for dealing with MSMEs. We take this approach, penalise first, don't take them to criminal courts or whatever, just whatever you penalise them, relieve them of what they are. Actually, we are moving away from penalising first approach. And then later, one more thing I would like to say is we are facilitating first, enforcing later, if necessary,” said the Finance Minister.
She added that for MSMEs, penalties for technical defaults, such as failing to get accounts audited, have been converted into predictable fixed fees.