Assam State Budget 2026-27: FINER suggests higher devolution share and tax net widening

Guwahati: As Assam prepares its State Budget for 2026-27, which will be presented in the state Assembly on August 8, local industry body the Federation of Industry and Commerce of Northeast Region (FINER) has suggested seeking a higher devolution share from the 16th Finance Commission and widening the tax net through rationalisation and formalisation.

FINER commended the Assam government for the amendment notified on April 1, 2025, which raised the Professional Tax exemption threshold to Rs 15,000 per month. It said the move was a forward-looking, pro-worker step. Salaried individuals earning up to Rs 15,000 per month are now completely exempt, with the slab structure set at nil up to Rs 15,000, Rs 180 per month for incomes between Rs 15,001 and Rs 25,000, and Rs 208 per month for incomes above Rs 25,000, subject to the constitutional ceiling of Rs 2,500 per annum under Article 276.

“The reform is, however, only half-complete. After the Union Budget 2025, individual income up to Rs 12,00,000 per annum is effectively tax-free under the new income tax regime. It is no longer coherent for a person earning Rs 1 lakh per month — i.e. Rs 12 lakh per annum, completely outside income tax — to nevertheless be liable to State Professional Tax at the highest slab. The State has already accepted, by the April 2025 amendment, that low-income workers should not be taxed; the same logic now applies, with even greater force, to the entire below-Rs 12 lakh band. Equally telling is the fiscal arithmetic. Professional tax revenue in Assam is, by any standard, a small head when compared with GST, State Excise and Motor Vehicle taxes, which form the State’s core own-tax pillars. The administrative cost of payroll deductions, monthly returns, employer registration, enrolment certificates, late-payment penalties and assessment work imposed on hundreds of thousands of small employers and professionals across the State is wholly disproportionate to the modest net yield. Every additional rupee of compliance the State imposes on a small employer is a rupee not invested in hiring, training or new equipment,” FINER stated.


FINER recommended two clear options: the full abolition of Assam Professional Tax or its calibration to mirror the income tax exemption. “Under Section 3 of the Assam Electricity Duty Act, 1964, electricity generated for own consumption is liable to duty. The actual revenue collected from this head is small — the Taxes and Duties on Electricity head was budgeted at only Rs 234 crore in 2025-26, against total revenue receipts of Rs 1,17,226 crore (approximately 0.2% of revenue receipts).”

Industrial land remains the single biggest pre-production constraint for both new and expanding units in Assam. FINER recommended creating a standing State Land Bank for Industry with a published, geo-tagged inventory of available industrial plots across districts, with clear lease terms, conversion status and connectivity profiles, accessible through a state-run portal. It also suggested time-bound conversion of agricultural land for industrial use where the land is in a notified industrial zone or contiguous to one, with deemed approval at the end of the prescribed period. The body further called for reclamation of unused and encroached industrial plots in existing industrial estates (with due notice and opportunity to be heard) for reallocation to new units. Several industrial estates in Assam have plots that were allotted decades ago but have remained unused or have been informally occupied; these are the lowest-friction additions to industrial land supply.

The BJP-led government was voted back to power in the Assembly elections held in April this year. The Budget session of the Assembly will begin on July 6.