Finance Minister Nirmala Sitharaman is set to present her record ninth consecutive Union Budget on February 1, 2026. The budget is expected to introduce reform measures to support India's economic growth amidst uncertain global conditions. The Budget session of Parliament is scheduled to commence on January 28, 2026, with the President's address.

Key Sector Expectations

Budget 2026 is expected to focus on India's growth through allocations to various sectors including railways, infrastructure, urban development, manufacturing, auto, defence, electronics, MSME, renewable energy, and AI. Other sectors like healthcare, tourism, agriculture, and logistics are also likely to receive attention from the government.

• Agriculture and Rural Sector: With falling crop prices and slowing farm income growth, the budget is expected to focus on agricultural reforms, rural spending, and cooperatives. Provisions for diversification from cereals to high-value items like horticulture and livestock are anticipated. Measures to address surpluses in rice, wheat, maize, fish, and milk, alongside deficits in oilseeds and pulses, are also expected. Solarisation of farms is likely to receive further boost.
• Manufacturing: Higher depreciation benefits are expected to promote local manufacturing, along with tax incentives for AI and robotics.
• MSMEs: Enhanced credit support and deeper penetration of financial access, especially to micro and small enterprises, are anticipated. An enhanced credit guarantee cover for MSMEs, increasing it from ₹5 crore to ₹10 crore, is also expected.
• Renewable Energy: Targeted tax incentives, GST rationalisation, and support for battery energy storage systems are expected to accelerate clean energy deployment. The renewable energy sector may also see the introduction of a group tax consolidation regime.
• Financial Services: Expectations include deduction for head-office expenditure for foreign banks and continued growth support for the IFSC at GIFT City.
• Infrastructure: Focus is likely to remain intact for defence, railways (related to safety, signaling, and rolling stock), and shipbuilding.
• Real Estate: Lower stamp duty charges and housing incentives are being considered. Real estate bodies are also urging the government to increase tax relief for homebuyers, suggesting that the deduction limit for interest on home loans should be raised.
• Consumer Goods & Retail: Tax incentives for healthy and sustainable products, neutral tax treatment on post-sale discounts, and improved input tax credit mechanisms are expected.
• Insurance: Budget 2026 is expected to support wider insurance coverage across life, health, and MSMEs. Easier credit access, simplified KYC, and clearer digital lending rules can make insurance premium financing mainstream.

Taxation and Investment

The budget is expected to focus on stability and tax parity in financial markets. Key expectations include improving investor sentiment by reducing LTCG tax to 10% and rolling back STT to encourage higher FII participation. Some experts believe that the Section 80C limit should be increased to ₹3.5 lakh. There are also expectations of relief on Long-Term Capital Gains (LTCG). The government might introduce a new joint taxation scheme for married couples to ease compliance, along with other benefits.

Individual Taxpayer Expectations

Common citizens anticipate several changes in the upcoming budget:

• Income Tax Slab Updates: Some expect changes in the income tax slab of the new regime and an easier compliance mechanism. The standard deduction under the new regime might increase to Rs 1 lakh, encouraging public spending.
• Home Loan EMIs: A separate income tax benefit for home loan EMIs is being requested, as currently, home loan principal repayments compete with other investments under Section 80C's ₹1.5 lakh cap.
• NPS Benefits: Stronger tax incentives are sought to encourage more people to plan for retirement early through the National Pension System.
• HRA Exemption Revision: Experts suggest revising HRA limits to better match today's rental costs.
• Faster Income Tax Refunds: Taxpayers are hoping for more transparency and accountability in the refund process, with recommendations for real-time refund tracking and fair interest on delayed refunds.

Other Key Expectations

• Startup Ecosystem: The ₹1 lakh crore RDI Fund has been a catalyst, bridging the gap between research and commercialisation and giving deeptech and science-led startups confidence to build for scale.
• Climate-resilient agriculture: The budget is expected to boost climate-smart agriculture, improve small farmers' incomes, expand credit access, and promote sustainable farming. Providing incentives for water conservation is another core area of intervention.
• Global Engagement: Policy pushes for foreign investment and technology collaboration are anticipated.

Economic Outlook

India's economic resilience, rooted in strong macro buffers and reform momentum, positions it well to navigate global uncertainty and sustain medium-term growth momentum. India is expected to remain the world's fastest-growing major economy. Growth is expected to stand between 7.5% and 7.8% in fiscal 2025 to 2026.