India Budget 2026 Expectations HIGHLIGHTS: The countdown to Union Budget 2026-27 has begun and like every year, taxpayers are keenly awaiting any announcement on tax relief. In the previous Budget 2025 mega relief for middle-class were announced- where annual income up to Rs 12 lakh was made tax-free under the new tax regime.
Budget expectations this year
Market participants, on the other hand are hoping for an easing of capital market taxation, including a higher exemption limit on long-term capital gains.
Analysts are expecting capital expenditure to increase with Defence and allied industries are likely to be one of the key priority sectors in the Union Budget
HSBC on the other hand described the current Indian economic signals as mixed, with strong real GDP growth and improving credit trends on one hand, and weak nominal GDP growth and private investment on the other. HSBC belives “the government will focus on two pillars during such time – restraint and reforms.”
Union Budget Income Tax Expectations
Budget Expectations 2026 LIVE Updates: Crypto sector hopes for TDS reduction on VDA
Ashish Singhal, Co-founder, CoinSwitch says that India’s VDA ecosystem is at a pivotal stage, with growing adoption across the country. However, the current tax framework presents challenges for retail participants by taxing transactions without recognizing losses, creating friction rather than fairness.
"A reduction in TDS on VDA transactions from 1% to 0.01% could improve liquidity, ease compliance, and enhance transparency while preserving transaction traceability. Raising the TDS threshold to ₹5 lakh would help protect small investors from disproportionate impact." he said
"Introduced in 2022 as a stand-in for regulation at that time, VDA taxation has since been complemented by strong oversight from FIU-IND and improved compliance. This Budget presents a great opportunity to revisit the framework in a manner beneficial to both investors and the government. We remain hopeful that the government will recognize this gap and consider reviewing the current framework soon." Singhal added.
Budget Expectations 2026 LIVE Updates: Budget 2026 in focus as infra gaps threaten India’s 500 GW renewable goal
With India targeting 500 GW of renewable capacity by 2030, all eyes are on Budget 2026 to address mounting infrastructure bottlenecks.
While solar and wind additions continue, gaps in land availability and transmission connectivity are slowing projects. Assocham flags delays in CTU substations and extra-high voltage lines, leading to congestion and renewable power curtailment. Developers holding unused CTU connectivity are also blocking capacity for serious players.
Analysts say uneven renewable generation across states is pushing up system costs and losses, even as project-level tariffs remain competitive.
Budget Expectations 2026 LIVE Updates: Analysts seek tighter CTU rules, PLI extension and nuclear push in Budget 2026
Industry bodies want stricter CTU rules in Budget 2026, including timelines to surrender unused connectivity and faster rollout of transmission infrastructure. Assocham has urged the promotion of distributed renewable generation in high-consuming states to cut transmission costs and losses.
As per JM Financial, there is a need for PLI extensions for solar modules and green hydrogen, along with GST cuts on clean tech. Deloitte has sought tax consolidation for renewable SPVs, GST relief for battery storage and incentives for nuclear start-ups. Nuvama expects tighter RPO norms and policy support to put nuclear power on par with renewables.
Budget Expectations 2026 LIVE Updates: LTCG relief, health tax breaks and buyback reform on JM Financial’s wishlist
JM Financial has urged the government to raise the Section 80D health insurance deduction to Rs 50,000 to account for medical inflation. For capital markets, it has proposed lifting the tax-free exemption limit for equity long-term capital gains to Rs 2 lakh and standardising the long-term holding period at 12 months across asset classes.
On the corporate side, it wants buyback tax rules reworked so only actual capital gains are taxed. It has also pushed for clearer tax norms for global capability centres and an expansion of PLI schemes to labour-intensive sectors.
Budget Expectations 2026 LIVE Updates: JM Financial flags more tax relief room after slab revamp
Even after last year’s income tax slab overhaul and GST reforms in 2025, there is still scope for further tax relief in Budget 2026, according to JM Financial. The brokerage has called for raising the standard deduction to Rs 1 lakh from Rs 75,000 and extending home loan interest deductions under Section 24(b) to the new tax regime.
It also wants a rationalisation of tax slabs for those earning Rs 12–20 lakh to ease the burden on upper-middle-income earners.
Budget Expectations 2026 LIVE Updates: Budget 2026 must pivot to jobs as India’s $4-trillion economy hits inflection point
After a decade of infrastructure-led growth that doubled nominal GDP to $4 trillion, Budget 2026 faces a clear challenge: converting scale and formalisation into sustained, high-quality employment for a fast-expanding workforce.
Read More: Budget Focus | From $4 trillion to a jobs economy
Budget Expectations 2026 LIVE Updates: EPF, ESI data show steady formal job creation—but scale remains a concern
EPF added about 1.3 crore subscribers in FY25 while ESI saw 1.68 crore additions, indicating continued formal employment growth, even as the pace remains insufficient to absorb labour moving out of agriculture.
Read More: Budget Focus | From $4 trillion to a jobs economy
Budget Expectations 2026 LIVE Updates: EPF, ESI data show steady formal job creation—but scale remains a concern
EPF added about 1.3 crore subscribers in FY25 while ESI saw 1.68 crore additions, indicating continued formal employment growth, even as the pace remains insufficient to absorb labour moving out of agriculture.
Read More: Budget Focus | From $4 trillion to a jobs economy
Budget Expectations 2026 LIVE Updates: Sustained power demand growth, calls for stronger grid and storage push
For the power sector, ICRA believes there will be sustained growth in electricity demand and a rapidly rising share of renewables in India’s generation mix, making it necessary for the Budget to prioritise strengthening grid resilience and storage capacities.
“Continued policy support and budgetary allocations are anticipated for battery energy storage systems and pumped hydro projects, including viability gap funding. Higher allocations are also expected for transmission infrastructure, particularly interstate systems and green energy corridors. Continued reforms in the distribution segment, enhanced funding under the RDSS and sustained emphasis on smart metering remain critical to improving discom cash flows,” ICRA noted.
For the Railways sector, Nuvama expects capex to log an incremental Budget allocation after three years of relatively muted growth, with the mix shifting towards capacity augmentation, rolling stock induction, and safety works. The broader policy objective remains lowering logistics costs and improving competitiveness.
Nuvama highlighted that while India’s logistics costs have improved, they are still above the approximately 6–7% levels typical of advanced economies.
Budget Expectations 2026 LIVE Updates: Employment zones, faster urbanisation key to a jobs-led Budget 2026 strategy
The article calls for special employment zones in 350 districts, accelerated urbanisation of 5,000 census towns, and Rs 5,000–10,000 crore annual investments in top cities to anchor large-scale, quality job creation.
Read More: Budget Focus | From $4 trillion to a jobs economy
Budget Expectations 2026 LIVE Updates: FY27 capex seen rising 10% to Rs 12.3 lakh crore; gross borrowing at Rs 16–17 lakh crore
CareEdge projects central government capital expenditure to grow about 10% in FY27 to nearly Rs 12.3 lakh crore, with gross market borrowing estimated at Rs 16–17 lakh crore and net borrowing at Rs 11.5–12 lakh crore.
Read More: Govt may target 4.2-4.3% fiscal deficit in FY27: CareEdge
Budget Expectations 2026 LIVE Updates: Budget FY27 likely to peg fiscal deficit at 4.2–4.3% of GDP: CareEdge
The Centre is expected to stick to fiscal consolidation in FY27, with the deficit budgeted at around 4.2–4.3% of GDP, even as it balances growth priorities and debt sustainability, CareEdge Ratings said.
Read More: Govt may target 4.2-4.3% fiscal deficit in FY27: CareEdge
Union Budget Income Tax Expectations LIVE: ICRA calls for tax sops to boost private healthcare investments
ICRA expects the upcoming budget to likely focus on preventive healthcare given the significant rise in non-communicable and lifestyle diseases in the country.
"To boost investments in the sector, tax incentives for private sector investments in modernising medical facilities, especially in tier-2 and tier-3 cities and developing greenfield hospitals in rural areas will be a welcome step. Further, given the low doctors-to-people and nurses-to-people ratio, increased allocation towards training medical personnel would be highly beneficial. The pharma sector seeks rationalisation of GST rates on key raw materials to address the inverted duty structure, restoration of tax incentives on R&D spend, and expansion of PLI schemes to strengthen API self-reliance. Increased public healthcare spending and targeted incentives for biopharma innovation are critical to sustain growth,” Mytri Macherla, Vice President & Sector Head – Corporate Ratings, ICRA said.
Union Budget Income Tax Expectations LIVE: Budget expected to sustain infra push, boost capex and PPPs
Union Budget 2026 is expected to sustain and deepen its focus on infrastructure by increasing capital expenditure and providing clearer policy and tax frameworks to attract private investment, accelerate public-private partnerships (PPP), and modernise key sectors such as railways, aviation and digital infrastructure.
Experts stress that continued focus on new-age infrastructure — such as data centres and fibre networks — alongside traditional transport and logistics investments is critical to long-term economic growth.
Read more: 5 big infrastructure Budget expectations 2026: predictions, wishlist and challenges
Union Budget Income Tax Expectations LIVE: JM Financial calls for EV subsidies and higher capex
In the real estate sector, JM Financial has reiterated the demand for industry status to help lower borrowing costs. For electric vehicles, it expects an extension of subsidies under a FAME-III framework to sustain adoption.
On infrastructure, JM Financial believes the government should maintain capital expenditure growth of over 15% year-on-year. It has called for higher allocations for roads, railways, urban development and data centres, along with incentives for PPP models and tax holidays for logistics parks.
JM Financial calls for enhanced tax relief under the new income tax regime. Here is JM Financial’s wishlist for personal taxation (salaried and middle class):
Standard Deduction: Increase from Rs 75,000 to Rs 1,00,000 under the New Regime.
Tax Slabs: Rationalize the Rs12–Rs20 lakh income brackets to reduce the tax burden.
Home Loan Interest: Allow Section 24(b) deduction for interest on home loans under the New Tax Regime.
Health Insurance: Hike Section 80D deduction limit to Rs 50,000 (from Rs 25,000) to account for medical inflation.
Budget Expectations 2026 LIVE Updates: Real estate sector expects affordability push
Deep Vadodaria, Managing Director, Nila Spaces says that the Budget should continue to prioritise affordable housing by giving it a realistic and execution-focused push, in line with the government’s ongoing efforts across states.
“While demand remains strong, private sector participation has slowed in recent years and needs renewed motivation, similar to what was seen in 2017–18, to significantly accelerate development. Affordable housing can address larger urban challenges much faster if supported through targeted incentives. The industry is already contributing actively, including on-ground execution in states like Gujarat, and is well positioned to scale up further.” Vadodaria said.
“At the same time, environmental regulations governing construction need urgent review, as many are outdated and not aligned with today’s air quality and winter pollution realities. The Budget can also encourage sustainable construction practices through environmental incentives, while supportive measures such as stamp duty relief at the state level can further boost momentum.” he added.
Budget Expectations 2026 LIVE Updates: Will Budget 2026 bring GST-style simplicity to income tax?
As Budget 2026 nears, speculation is growing that the government may attempt a GST-like simplification of personal income tax. Despite the new tax regime promising ease by removing most exemptions, its seven income slabs are still seen as complex.
Policy watchers believe slab compression, merging multiple middle rates into fewer, wider bands, could make income tax more predictable and easier to calculate.
Budget Expectations 2026 LIVE Updates: India Inc bullish on FY27 growth, stresses fiscal discipline
India Inc remains optimistic about India’s economic outlook in FY27, according to a FICCI pre-Budget survey. Over 80% of corporate respondents expressed confidence in growth prospects, with nearly half expecting GDP growth to stay in the 7–8% range in FY27.
The survey also highlighted strong support for fiscal prudence, as around 42% of participants believe the government will achieve the fiscal deficit target of 4.4% of GDP in FY26. Industry leaders see stable macroeconomic management, continued reforms, and prudent spending as key to sustaining momentum and investor confidence in the coming years.
Read More: Budget 2026: FICCI’s 8% GDP roadmap & the 30% defence surge—India Inc’s presents wishlist to FM
Budget Expectations 2026 LIVE Updates: Capex, manufacturing, defence and exports top Budget 2026 wishlist
FICCI’s survey shows that India Inc expects Budget 2026 to prioritise job creation, infrastructure expansion and export support.
Corporations are looking for higher government capital expenditure in manufacturing and infrastructure, including a mega electronics industrial cluster to strengthen the supply chain.
Defence manufacturing is another key focus, with demands to raise capital outlay to 30% and boost drone production through enhanced PLI and R&D funding. On exports, industry seeks smoother customs processes, SEZ reforms and tariff rationalisation into three slabs to cut costs, improve competitiveness and integrate India into global value chains.
Read More: Budget 2026: FICCI’s 8% GDP roadmap & the 30% defence surge—India Inc’s presents wishlist to FM
Budget Expectations 2026 LIVE Updates: DBS Group Research expects opex to pick up momentum for union budget 2026
DBS Group Research, Senior Economist, Radhika Rao expects expenditure compression to be an important part of the upcoming budget.
For FY26, capex disbursements have picked up pace, mostly entailing to a rise in loans to states and other entities.
"For the remaining four months of FY26, we expect revenue opex to pick up momentum but stay below the targeted pace, while capital
spending slows down due to the strong YTD catch-up. We expect a small undershoot in capital spending (-0.1% of GDP) and slower revenue expenditure to pick up some of the lack of below-budgeted revenues,"
As February 1 nears, consumers are pinning hopes on income tax relief, GST rationalisation, stable food prices, affordable housing and better health insurance, with Goldman Sachs, Deloitte, EY and CII flagging pocket-friendly priorities.
Budget Expectations 2026 LIVE Updates: Airports, UDAN and tourism push likely in Budget 2026
For the aviation sector, ICRA expects to reiterate the focus on improving regional connectivity through the Regional Connectivity Scheme (RCS) or Ude Desh ka Aam Nagrik (UDAN).
"The Budget is also likely to focus on setting up new airports and expanding the existing airport capacities at some key airports to help address the current airport infrastructure constraints faced by the airlines and to improve connectivity with the underserved/unserved destinations to boost tourism. Moreover, the development of new tourist attractions, promotion of medical tourism and streamlining of e-visa facilities, which will boost international tourism in India are also expected to remain the key focus areas,” Kinjal Shah, Senior Vice President & Co-Group Head, Corporate Sector Ratings, ICRA noted.
Budget Expectations 2026 LIVE Updates: Tradelink seeks policy support to boost fertiliser industry
"We expect the budget to look forward to policy measures that strengthen the agricultural and fertilizer ecosystem. The fertilizer industry plays a pivotal role in ensuring food security and we request the government to look at the aspects of affordability, accessibility and innovation in this sector," says Abhishek Wadekar, Founder Chairman of Tradelink International
Budget Expectations 2026 LIVE Updates: FICCI flags jobs, infrastructure and exports as key expectations
FICCI's survey shows that job creation, a sustained thrust on infrastructure, and stronger support for exports are among the key macroeconomic expectations for Budget 2026. Govt capital expenditure plans in manufacturing and infrastructure are among the key announcements that India Inc will be looking at in the upcoming budget.
FICCI said that the government must continue to lay thrust on manufacturing and capex. It added that the establishment of a mega electronics industrial cluster to co-locate OEMs, EMS firms, and component suppliers will be important to further push this strategic sector.
Read more: Budget 2026: FICCI’s 8% GDP roadmap & the 30% defence surge—India Inc’s presents wishlist to FM
Budget Expectations 2026 LIVE Updates: Tax relief, GST cuts, Food prices: 5 big consumer expectations from Budget 2026
Reports by Goldman Sachs, Deloitte, EY and CII suggest households want continuity on tax relief, deeper GST rationalisation, food price buffers, expanded housing subsidies and lower out-of-pocket healthcare costs.
With CPI inflation low but food prices volatile, and GST and income tax reforms underway, households are watching Budget 2026 for measures that boost spending power and ease everyday living costs.
Budget Expectations 2026 LIVE Updates: Motilal Oswal, Nuvama flag big defence spend boost; Drones, R&D, Navy in focus
Motilal Oswal sees a 15% jump in defence capex in FY27, while Nuvama pegs growth at 8% with higher allocations for R&D, UAVs, anti-drone systems and major projects like QRSAM and P-75I. Analysts say a structurally higher defence budget could accelerate execution-led earnings across the sector.
Read More: Defence Budget 2026: Predictions, wishlist and challenges
Budget Expectations 2026 LIVE Updates: Defence to lead Budget 2026 Capex Push; analysts see 8–15% hike in allocation
Industry observers expect Budget 2026 to stay focused on growth and capital expenditure, with defence emerging as a key beneficiary. Brokerages estimate an 8–15% year-on-year rise in defence spending, driven by Make in India priorities, emergency procurement, and faster execution of big-ticket programmes.
Read More: Defence Budget 2026: Predictions, wishlist and challenges