Budget 2026: Five key asks from ad agencies

New Delhi: Ahead of the Union Budget, ad agencies are lining up a focused set of expectations shaped by tight margins, evolving technology and growing compliance pressure. Rather than sweeping reforms or sector-specific sops, agencies are calling for predictability, smoother cash flows and policy alignment with how advertising actually functions today. Across conversations with agency leaders, five clear Budget expectations have emerged.

1. Tax stability

For agencies, certainty in taxation has become more valuable than frequent reform. With business planning increasingly driven by data, automation and long-term contracts, agencies say frequent changes create friction rather than progress.

“The Income Tax Act, 2025, is a positive step towards modernising India’s tax framework. At this stage, stability is more important than change. Allowing the new law to settle without frequent amendments will provide much-needed certainty for business planning and compliance,” said Sujit Vaidya, CFO, South Asia, Dentsu.

Pointing to structural friction within the current tax regime, Vaidya added, “Rationalising TDS rates and simplifying compliance would significantly reduce administrative burden and improve tax efficiency. A stable, pragmatic tax environment will be essential to sustain growth and support the industry’s digital transformation.”

2. Fix liquidity stress caused by TDS

Liquidity remains one of the industry’s most persistent structural challenges. Media agencies operate as intermediaries, paying media owners upfront while collecting from clients over extended credit cycles. This mismatch is being worsened by the way tax is deducted.

“A critical issue for our industry is tax blockage due to TDS being deducted on the full invoice value rather than on actual value-added income,” Vaidya said.

According to Vaidya, this approach locks up working capital unnecessarily and adds cash-flow stress in an already low-margin environment. Addressing this, they say, would ease pressure without fiscal giveaways.

“We are cautiously optimistic about business sentiment. Ad spends are showing resilience, led by continued digital adoption, performance marketing, and data-led investments. However, margin pressures and cash-flow discipline will remain key concerns for agencies operating in a low-margin environment,” Vaidya added.

3. Match AI reality with policy speed

Artificial intelligence is no longer experimental inside agencies; it is becoming infrastructure. From media planning to campaign optimisation and production, AI-led workflows are already reshaping operating models.

“India has crossed the curiosity phase on AI. The real question now is pace,” said Prakhar Srivastava, Vice President, Financial Planning and Corporate Strategy, White Rivers Media.

As AI adoption accelerates, agencies want policy to keep pace. “The Budget needs to match this reality with funding, future-ready talent, and rules people can trust,” Srivastava said, calling for deep-tech incentives, faster upskilling pipelines and built-in safeguards.

He also framed the stakes clearly: “Move slowly, and India ends up buying intelligence. Move fast, and India ships it to the world. This is a speed decision year.”

4. Incentivise digital, creators and skills

As advertising increasingly revolves around platforms, creators, MSMEs and content-led businesses, agencies want policies that reflect this shift.

“With the Budget round the corner, industry players are highly anticipating policies for boosting the digital and creative economy,” said Shradha Agarwal, Co-Founder and Global CEO, Grapes Worldwide.

Targeted incentives for startups and digital-first brands are becoming critical. “Giving startups, creators and digital-first brands the right incentives really matters,” Agarwal said.

Alongside incentives, agencies are seeking clarity. “More clarity around data privacy, encouragement for AI-led innovation, focused investments in skilling and easier compliance would go a long way in strengthening the ecosystem,” she added, noting that regulatory ambiguity is adding operational complexity across platforms and markets.

5. Revisit GST on advertising and media services

Indirect taxation is another pressure point. Agencies argued that GST rates on advertising and media services are misaligned with the sector’s role in enabling business growth and demand creation.

“Lowering GST on advertising and media services would be timely,” Agarwal said, particularly as brands remain cautious with spending. In her view, advertising can “play a decisive role in instilling confidence, spurring demand and giving impetus to digital and regional market expansion.”

Why these questions matter

Beyond specific policy changes, agencies are positioning advertising as a quiet but powerful economic lever, one that fuels consumption, confidence and business momentum, especially during uncertain cycles.

“Advertising rarely makes headlines, yet it moves the economy quietly. When brands scale, demand follows. The industry today is built on platforms, creators, data, and tech; not hoardings alone,” Srivastava said.

He argued that reducing friction could unlock disproportionate impact. “The Budget can unlock growth by encouraging innovation, backing digital-native storytelling, and simplifying compliance for modern media firms. Fewer hurdles mean stronger ideas. Stronger ideas push consumption. In shaky markets, advertising restores belief. Less clutter. More conviction. When ideas win, growth follows.”

As Finance Minister Nirmala Sitharaman prepares to present a record ninth consecutive Budget on February 1, agencies are watching less for headline-grabbing announcements and more for directional signals. With AI adoption accelerating, agency models consolidating, and media planning rapidly evolving, Budget 2026 is being viewed as a test of alignment between policy intent and the realities of a transformed advertising industry.