Budget 2026 Expectations Highlights: Will FM Nirmala Sitharaman fulfill everyone's wishes on 1 February?

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Kunal Savani, Partner, Cyril Amarchand Mangaldas (CAM) noted that many senior citizens have passive income in form of capital gains. Given the current focus on section 87A of the Income-tax Act, 1961, the government may clarify in the upcoming Budget, whether these senior taxpayers can use this rebate on their capital gains, he said.

This in turn will provides the well needed relief to such senior taxpayers, he added.

Section 87A offers a tax rebate to resident individuals with lower incomes, making their net tax payable zero if their total income falls within specified limits. Currently up to ₹5 lakh under the Old Tax Regime (rebate ₹12,500) and up to ₹12 Lakhs under the New Tax Regime (rebate ₹60,000) for FY 2025-26.

“Further, it is prudent to expect the government to establish a comprehensive scheme or benefits covering the in-home care, assisted living support and transitional care facilities,” he added.

Tax experts have urged the Finance Minister Nirmala Sitharaman to prioritise simplification and taxpayer relief amid economic recovery ahead of the Union Budget 2026.

“Streamlining income tax laws tops the list, slashing redundant provisions and digitising compliance to cut the burden on salaried individuals and MSMEs, freeing up time for productive investments,” said Nupoor Maharaj, Advocate, Delhi High Court & Supreme Court of India.

Here are the key demands:

— The middle-class demands higher standard tax deductions of ₹1 lakh and automatic slab indexation tied to inflation, so their real incomes is not pushed into higher tax brackets just because of rising prices.

— To supercharge the new tax regime, the expert has urged the government to allow limited deductions for health insurance, housing loans, and NPS contributions, making it a default choice without sacrificing incentives.

— The sector has also called for standardizing capital gains holding periods, rationalising ESOP taxation with deferred liability options, and offering startup-friendly exemptions to fuel innovation.

— The government has also been urged to tackle litigation by empowering faceless assessments and mandating 30-day refunds, while ruling out surcharge hikes or a new wealth tax to preserve investor confidence.

As the Union Budget nears, the real question is whether insurance coverage can truly keep up with rising medical bills and everyday financial shocks people face, said Rakesh Goyal, Director, Probus.

“Caught between insurers seeking clarity and hospitals following inconsistent practices, policyholders feel helpless. This makes the need for a proactive healthcare regulator impossible to ignore,” he said.

In view of the sector's requirements, Goyal believes that the upcoming Budget is the right moment to address the gaps, while also taking steps toward a simpler and more investor-friendly financial system through the idea of a single regulator.

“Medical inflation continues to rise faster than income. A look at tax benefits for health and term insurance in the upcoming Budget can help address this gap effectively, ” he further added.

Ayush Misra, the co-founder and CEO of AmpereHour Energy expects the government to bring a strong policy signal reinforcing India’s commitment to a resilient, secure, and clean energy future.

He further explained that BESS and advanced EMS are crucial to building flexible power grid, hence, targeted incentives to reduce upfront capital costs will be important to accelerate energy storage deployment and enable this transition.

“Continued viability gap funding is essential to scale projects during this early phase, while a clear, phased roadmap on manufacturing incentives and import duties for battery packs and containers will build investor confidence, ensure competitiveness of local manufacturing, and unlock private capex into domestic facilities,” he said.

According to Misra, since the battery supply chain is heavily concentrated in China, and prices already rising, BESS projects face near-term volatility.

“Over the long term, India must prioritise battery manufacturing self-sufficiency through clear duty structures and sustained manufacturing incentives to ensure energy security,” he added.

Nikunj Parashar (retd) founder and CEO of Sagar Engineering Ltd. believes that the defence budget is an important factor in sustaining preparedness while gradually strengthening indigenous manufacturing.

“As collaborations between the armed forces, DPSUs, and private industry increase, budgetary support has been crucial to building confidence for long-term investment in indigenous systems and subsystems,” he said.

With the upcoming iteration of the Defence Acquisition Procedure (DAP), he added that a timely opportunity is presented to implement targeted reforms, including:

— Phased localisation

— Multipliers focused on Micro, Small, and Medium Enterprises (MSMEs)

— Stronger vendor-driven ecosystem development, to further liberalise the defence ecosystem, expedite procurement timelines, and effectively catalyse self-reliance in defence manufacturing.

Sagar Vishnoi, the director and co-founder of Future Shift Labs India, said that India must significantly increase investment in research and development, both in terms of funding and institutional support, in order to catalyse deep-tech innovation.

“A sharper focus is needed on frontier areas such as deep tech, space technology, semiconductors, and advanced computing, alongside sustained capital allocation for AI startups,” he said.

According to Vishnoi, scaling AI literacy missions is also equally important. These initiatives can be driven collaboratively by the Centre, state governments, academia, and the private sector and to build a future-ready workforce.

“India must also prioritise sovereign AI capabilities by investing in domestic compute infrastructure, indigenous datasets, and home-grown models to ensure strategic autonomy, economic resilience, and global competitiveness,” he added.

“Green manufacturing and the MSME transition will not move at the required pace without deliberate financial support,” said Labanya Prakash Jena, the director of Climate and Sustainability Initiative (CSI).

She further noted that while existing technologies such as energy efficiency upgrades and distributed solar already make economic sense for MSMEs, access to affordable, and long-term finance remains a key constraint in the sector.

Here's what she expects from the Union Budget 2026:

— The Budget can play a catalytic role by enabling lower-cost capital and risk-sharing mechanisms for MSMEs investing in clean technologies.

— It should also look into sustained investment in clean energy R&D, especially at the laboratory and pre-commercialisation stages, to ensure India builds domestic capabilities and emerges as a global clean technology manufacturing hub.

Ankur Bansal, Managing Director, BlackSoil, outlining expectations around policy support for blended capital models, said that India needs a stronger execution-led frameworks, and improved access to flexible, non-dilutive credit.

“The upcoming Budget must recognise that India’s funding needs have evolved beyond a pure equity-led model. What the ecosystem now needs is policy support for blended capital, where venture debt and alternative credit work alongside equity," the executive noted.

He further added that the focus should be on execution over announcements, with frameworks that enable cash-flow-aligned, sector-specific credit and stronger risk-sharing. This will enable MSMEs and growth-stage startups to access flexible, non-dilutive capital that supports sustainable scale.

Piyush Agarwal, the co-Founder and CRO at Reo.Dev, said that India must provide better incentives for deep-tech and infrastructure SaaS, especially when it comes to R&D tax credits, cloud and data infrastructure costs, and simpler ESOP taxation.

“India has the world's largest population of software developers. And yet, game changing innovation in deep-tech and AI is still originating in the west,” he said.

If these initiatives are taken into consideration in the upcoming Budget, then it will help startups build from India, as well as hire and retain “world class” engineers, Agarwal added.

He also noted another key gap is capital efficiency, due to which many Indian SaaS companies are forced to set up offshore structures as they scale, not by choice but due to capital access, tax complexity, and compliance friction.

“Easier access to domestic growth capital, clearer GST treatment for SaaS exports, and continued DPIIT support would help companies scale globally while staying rooted in India,” he said.

Finally, as more and more people start using AI, according to Agarwal, it will be important to have policies that support responsible data access, computing infrastructure, and AI experimentation in businesses.

"If the budget matches how developer-led businesses grow, India could become the global control center for next-generation software companies, not just where they’re built, but where they scale.”

Rajeev Juneja, the President of PHDCCI said that the upcoming budget's priority for Infrastructure development should shift from only capital expenditure to lifecycle performance and durability.

“India’s infrastructure spending has expanded, but the past year has highlighted challenges around premature asset deterioration, rising maintenance costs, and uneven quality outcomes, driven largely by short-term cost focus and fragmented standards,” he noted.

He also said that the right approach will be evaluating infrastructure assets by how long they perform and at what long-term cost. Key suggestions include:

— Introducing lifecycle-based performance metrics alongside capex.

— Creating a dedicated maintenance system.

— Renewal allocation with longer performance-linked contracts, accelerating standards-led adoption of proven technologies through IRC/BIS pathways.

“Industry recommends the introduction of time-bound tax incentives and rationalisation of customs and excise duties for defence and homeland security manufacturing and R&D activities, aimed at reducing costs, enhancing competitiveness, and improving procurement affordability. Time-bound tax incentives and rationalised duties will lower input costs, improve cash flows, and enhance the viability of domestic manufacturing and R&D. This will support indigenisation objectives, encourage private investment, and improve procurement affordability for Government agencies,” says PHDCCI.

“As we look ahead to the Union Budget 2026, we are optimistic that the government will continue to prioritise public health and quality-of-life outcomes through stronger focus on clean drinking water, sanitation, and last-mile infrastructure. We also expect Union Budget 2026 to maintain a strong push towards domestic manufacturing and competitiveness, with industry looking forward to continued momentum on PLI-led incentives, easier access to credit for MSMEs, and measures that strengthen supply-chain resilience. Simplification of compliance and a stable, predictable tax framework will be critical to improve ease of doing business and unlock long-term investments in R&D and energy-efficient product innovation,” says Livpure MD Rakesh Kaul.

“PHDCCI suggests zero import duty for Gold Ore Concentrate (HSN 26169010), in line with Copper Ore Concentrate Budget which enjoys nil duty, even though it yields approximately 12 tons of gold annually as a by-product. Furthermore, due to reduction in import duty on finished gold from 15% to 6% in the Union Budget 2024 25, direct imports of finished gold become more attractive than domestic refining, hindering the growth of India’s refining infrastructure,” says Rajeev Juneja, president of PHDCCI.

“The Union Budget’s relevance to technology will lie in how clearly it supports long-term, platform-led transformation rather than isolated technology adoption. The sector is eyeing predictability especially in areas such as data governance, AI regulation, and digital skilling, as these determine how confidently India Inc. can invest in scalable, integrated, and AI-enabled enterprise platforms. Clarity on data and compliance expectations is critical. Policies that strengthen formalisation, traceability, and transparency directly influence how organizations design their core platforms and how data is captured, governed, reconciled, and made usable across brands and functions. These are not incremental decisions as they will shape the durability of digital foundations over multiple business cycles,” says Titan Company CIO Krishnan Venkateswaran.

“Budget 2026 is a chance to correct a structural imbalance in India’s health insurance system. While group health insurance covers nearly half of insured Indians, it receives no tax support, even as retail insurance enjoys tax benefits. Zero-rating GST on group health premiums and allowing full input tax credit can significantly lower costs for employers and unlock greater investment in preventive care. With the New Tax Regime reducing the relevance of Section 80D, it’s time to shift incentives toward prevention, early detection, and regular health monitoring. Supporting workforce health isn’t just a social priority—it’s an economic one. Budget 2026 must shift India’s health mission from insurance for all to healthcare for all,” says Mayank Kale, CEO and co-founder of Loop Health.

“Looking ahead to Budget 2026, the insurance sector expects policies that build on strong reform momentum of 2025 and translate into wider and more effective protection for citizens. A key expectation is higher and clearly defined tax incentives for pure protection products, especially term life. Separating tax benefits for protection from savings-linked insurance would help close India’s protection gap, attract first-time buyers and encourage people to prioritise risk cover over investment-oriented policies. The industry also looks forward to progress on composite licensing, which would allow insurers to offer life, health and general insurance under a single framework and can improve efficiency, reduce operational cost and support the development of simpler, bundled products that are easier for customers to understand and afford. A Budget focused on affordability, trust and access can help advance the vision of Insurance for All by 2047,” says Prantik Mitra, Director – Client Advisory Group at Alliance Insurance Brokers.

“The government has taken several positive steps to strengthen agricultural liquidity and post-harvest management, particularly through the rollout of e-Negotiable Warehouse Receipts (e-NWRs). With GST rationalisation across key agri inputs, a clear regulatory framework for warehousing, and interest subvention support, the foundation is firmly in place. The next phase should focus on scaling adoption especially among small and marginal farmers by expanding budgetary allocations for micro-warehouses, cold storage and post-harvest infrastructure, while simultaneously strengthening farmer awareness and training through FPOs. A sustained and gradual increase in allocations, coupled with education and last-mile implementation, will be critical to unlocking the full potential of e-NWRs and improving farm-level liquidity without distress sales,” says Aditya Sesh, Founder & MD Basiz (Member of Expert Committee at the Ministry of Agriculture & Farmers Welfare, Government of India)

“As we look towards 2026, the Indian logistics sector is entering a phase of meaningful transformation. Macroeconomic stability, sustained MSME activity, continued public investment in infrastructure, and recent GST rationalisation measures that have boosted consumer demand are together creating strong conditions for growth. For MSMEs, tech-enabled goods transportation by road is emerging as a critical lever for competitiveness, market access, and participation in wider value chains, enabling small businesses to reach new markets and respond quickly to evolving customer demand,” says Uttam Digga, CEO, Porter.

An all-party meeting is underway in Delhi on Tuesday to discuss ways to ensure smooth functioning of the two Houses during the upcoming Budget session of Parliament.

Defence Minister Rajnath Singh is chairing the customary meeting.Parliamentary Affairs Minister Kiren Rijiju is among those present.

Congress leader Jairam Ramesh is among the opposition leaders attending the meeting.