Towards inclusive growth: Budget tax reforms to unlock potential

TAX REFORM is no longer just a political buzzword—it's a high-stakes game-changer that could reshape the financial landscape for years to come.

- Rohinton Sidhwa & Tejasvi Anand

TAX REFORM is no longer just a political buzzword—it's a high-stakes game-changer that could reshape the financial landscape for years to come. This rings even truer for the growth trajectory that India sees for itself as a $10 trillion economy by 2034. Budget 2025 presents a pivotal opportunity to leverage tax reforms that can fuel growth in critical sectors such as Global Capability Centers (GCCs) and start-ups, driving innovation and economic expansion.

While GCCs and start-ups have made significant contributions to the economy, a booster dose is needed to take them up a notch. Where the erstwhile tax holiday under the special economic zone scheme had contributed to make India the GCC capital of the world, lack of further incentives has impeded growth. Targeted tax incentives like concessional 15% tax rate for eligible start-ups and growth-oriented GCCs can act as the necessary tailwind. Similarly, GCCs and start-ups have transformed into innovation-focused strategic hubs, contributing to technological advancement.

The government should support technological innovation through increased incentives and tax concessions. One key measure could be the introduction of weighted deduction for research and development (R&D) expenses where a GCC is a major contributor to global R&D efforts, with further deductions/exemptions available to industry players who are willing to create IP in India.