Major Tax Reforms That Are Fueling Investment & Economic Growth; GST to the New Income Tax Act

India's economic rise in the Amrit Kaal era is being powered not just by infrastructure and innovation, but by recent tax reforms that have changed the country's financial foundation. The government of India has focused on simplifying and modernising the tax system, one of which was recently seen as the GST restructuring, which was implemented on September 4.

"Over the past decade, a set of strategic tax policy overhauls have been carried out that have progressively laid the foundation for a sustainable high economic growth trajectory (6.5 to 7 per cent) on the back of a virtuous investment cycle prompted by domestic as well as foreign investment attractiveness spanning sectors from infrastructure to services, and now in recent years, with a sharp focus on the manufacturing sector. Prime Minister Modi's Amrit Kaal vision is of making 'Atmanirbhar Bharat' by 2047. The underlying action plan is focused on India becoming a $32 trillion economy, delivering nearly 7 to 8 times growth in per capita income, and growing exports at an unprecedented pace to account for 10 per cent of global exports ($6 trillion by 2047)," said Sumit Singhania, Partner at Deloitte India.

Here are the tax reforms which are making a difference

• GST Rationalisation

The Goods & Services Tax, which was introduced in 2017, is one of the biggest tax reforms of the past decade.

"Whilst the revenue collections have reached record levels in September 2025 (in excess of $21 billion), the impact is far-reaching, as a simplified GST regime has facilitated a unified national market for businesses to organise their operations. In September, the GST rate structure was overhauled into 3-rate slabs, from the previous 6-rate slab framework, with a significant reduction in the number of products which would be liable to tax in higher slabs (except for the sin goods category taxable at 40 per cent, the highest slab is 18 per cent). This rate reform has spurred a consumption and investment cycle and is quite expected to prop the growth of sectors from retail to industrials in the medium to long term." Sumit Added

• New Income Tax Law

Earlier this year, the Parliament approved the replacement of the 1961 Act by the Income Tax Act, 2025, with effect from April 2026, which is expected to simplify the reading of legislative provisions and enhance transparency and trust in administration.

"The existing income tax legislation, as we know, has been modified over 60 times since its enactment and has evidently become a monolithic document to comprehend, despite several meaningful simplification attempts carried out in the past to reorganise its flow and underscore legislative intents. The new income tax law could well be the most influential legislative tax reform for the future and should set the bar high in simplification of tax regimes for a fast-growing economy. It is natural that this new legislation is to serve the next several decades of India's growth journey, through the Amrit Kaal and even beyond." said Sumit.

• Tax Rates and Incentives

Over the past few years, India has made some major changes in its tax system to attract new investments across industries like manufacturing, infrastructure, and services. One of the biggest reforms was the reduction in corporate tax rates; they now stand at 22% for regular companies and just 15% for new manufacturing units that started production before April 2024. This means businesses today pay almost 10% less tax than they did five or six years ago, making India one of the most attractive destinations for global investors.

Beyond corporate tax cuts, special tax benefits for startups, sovereign wealth funds investing in infrastructure, and businesses set up in IFSC/GIFT City were also introduced.

"Arguably speaking, many of these reforms are in continuum, and the impact of tax policy is to be expected in the medium to long term in the form of ease of doing business, a continuing virtuous cycle of capital allocations across sectors, and a reduced number of tax controversies. Taxpayers will continue to expect a higher degree of transparency and trust in tax administration." Sumit Singhania explained

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