Wealth or flight? Can India afford a comeback for the wealth tax in Budget 2026 |

Updated: January 09, 2026 04:50

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As Budget 2026 nears, experts argue reintroducing a wealth tax is unlikely now, warning it could accelerate high-net-worth migration. Alternatives like gift or estate taxes may be considered with high exemptions. The broader tax agenda points to simplification and growth-friendly reforms over punitive measures on capital.

With Budget 2026 around the corner, a revived wealth tax is back in debate—but most tax experts see low odds this year, citing administrative complexity, valuation challenges, and the risk of capital flight. They suggest simpler ways to tax ultra-wealthy individuals, such as gift or estate taxes with high thresholds to protect genuine wealth creation.

Context matters: India lost about 3,500 millionaires in 2025 amid friendlier regimes abroad, and policy must weigh short-term revenue against long-term brain-and-wealth drain. Meanwhile, the tax base is expanding—personal income tax filers grew 5.91% to 80.9 million in FY2024–25; non-corporate tax collections rose 8.72% to ₹7.19 lakh crore by November—suggesting gains from compliance and growth-focused reforms.

Pre-budget outlooks emphasize modernizing tax administration and rationalizing rules to foster entrepreneurship and long-term investment, aligning with the Viksit Bharat theme. That points toward simplification of the Income Tax Act and targeted incentives, rather than reintroducing complex net wealth levies.

Notable updates and major takeaways

Likelihood now: Wealth tax seen as unlikely in Budget 2026; enforcement costs and valuation hurdles persist.

Alternatives: Gift/estate taxes with high exemptions may be more feasible than net wealth levies.

Migration risk: 3,500 millionaires left India in 2025; policy must balance revenue with retention.

Broadening base: More filers and stronger collections reflect compliance-led gains.

Policy direction: Focus on simplification, growth, and investment-friendly tax reforms.

Conclusion

A wealth tax would add complexity without clear net benefits right now. The budget is more likely to prioritize simpler, growth-oriented reforms and targeted measures that raise revenue while keeping capital—and talent—anchored in India.

Sources: New Indian Express; Economic TimesThe Economic Times; Outlook Business

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