Budget 2026 Expectations LIVE: Will Sitharaman's Union Budget Give Income Tax Relief To Taxpayers?

Budget 2026 Expectations LIVE: Will Sitharaman's Union Budget Give Income Tax Relief To Taxpayers?

Budget 2026 Expectations Live Updates: Union Finance Minister Nirmala Sitharaman is set to present the Union Budget 2026 this weekend. This year, the budget is approaching at a time when the global economy is under intense pressure due to tariff wars and mounting economic headwinds. Moreover, India is pushing hard to negotiate a trade deal with the USA amid the high tariffs.

Expectations are rising across sectors, from salaried taxpayers and middle-class households to businesses and investors.

As always, salaried taxpayers will be keenly watching for income tax relief, simplified compliances, and rationalisation of TDS and TCS norms

Market participants are closely watching for relief measures on personal taxation, higher capital expenditure push, support for manufacturing and MSMEs, and policy clarity for emerging sectors such as green energy and digital infrastructure.

The Union Budget 2026 will be presented on February 1, 2026, by Finance Minister Nirmala Sitharaman in the Parliament. It is expected to start at 11:00 am.

Under the new tax regime, individuals earning up to Rs 12 lakh a year are effectively exempt from paying income tax, provided the income qualifies as “normal income”. This excludes special-rate incomes such as short-term capital gains (STCG) and long-term capital gains (LTCG).

For ongoing FY 2025–26 income tax return (ITR) filings, the new regime applies automatically. Salaried taxpayers can still opt for the old regime at the time of filing their return. However, a belated ITR, filed after the due date, can only be submitted under the new regime.

Rs 0 to Rs 4,00,000: Nil

Rs 4,00,001 to Rs 8,00,000: 5%

Rs 8,00,001 to Rs 12,00,000: 10%

Rs 12,00,001 to Rs 16,00,000: 15%

Rs 16,00,001 to Rs 20,00,000: 20%

Rs 20,00,001 to Rs 24,00,000: 25%

Above Rs 24,00,000: 30%

Stay tuned as we track top Budget 2026 expectations, key demands from taxpayers and industry.

Finance Minister Nirmala Sitharaman will present her ninth consecutive Budget on February 1 in the Lok Sabha amid expectations of overhaul of Customs duty regime, much on the lines of GST structure rationalisation, and more reform measures to boost economy in the wake of heightened geo-political uncertainty.

Budget is also likely to outline the path of targeting of debt-to-GDP ratio as India's fiscal management focus shifts from managing deficit to lowering of debt. For individuals, who last year got a big relief in terms of Income Tax exemption limit hike to Rs 12 lakh and later GST rate cuts, are still hoping for some relief in standard deduction.

Some incentives, like hike in standard deduction, to further encourage individuals to shift to new income tax regime which offers low tax rates but no exemptions, from the old regime with plethora of exemptions and deductions. Rationalisation of TDS categories into fewer rates, slabs.

(PTI Inputs)

AI is likely to get policy focus in Budget 2026, with proposals spanning agriculture, citizen services, infrastructure and manufacturing. The Budget may highlight AI-led farming advisory platforms, predictive crop models, and data-driven tools to boost productivity and manage food supply. AI is also being positioned as “people-friendly” tech, with chat-based apps to help citizens understand schemes, taxes and finances. In infrastructure, AI may be linked to optimising 5G networks and energy grids. Rising global AI demand is also expected to strengthen the case for higher allocations to India's semiconductor manufacturing ecosystem, according to sources.

According to sources, two distinctly people-first proposals are being discussed for possible inclusion in Budget 2026 under the new tax regime. One, the government is mulling the introduction of a deduction of up to Rs 2 lakh on home loan interest, an incentive that currently exists only in the old tax regime. Two, a proposal is under consideration to allow a deduction of up to Rs 50,000 for medical insurance premiums, a move that could provide relief amid rising healthcare costs.

Sushil Kumar Aggarwal, Chairman & WTD, AVRO India Ltd; National President, AIPMFMA, said, “India generates over nine million tonnes of plastic waste annually, yet formal recycling remains in single digits due to high GST, weak EPR enforcement and lack of modern technology. Budget 2026 must zero-rate GST on plastic waste, scrap and recycling equipment, and cut GST on recycled granules to make compliant recycling commercially viable and scalable.”

Kuldip Raina, Managing Director & CEO, Shalimar Paints, said, “Budget 2026 can sustain paint industry growth by boosting housing and infrastructure, especially in Tier II and III cities. Higher infra CAPEX will raise demand for industrial coatings, while rationalised GST and customs duties on raw materials can lower costs, enable R&D, and support premiumisation and rural consumption.”

Akshat Seth, Managing Director & CEO, BirlaNu, said, “The success of Budget 2026 will depend not just on infrastructure spending, but on execution quality, sustainable materials and policy stability. Supporting circular manufacturing, technology upgradation and domestic capacity will help create durable assets and long-term value for India's construction ecosystem.”

Priya Rustogi, Leader (MD), India, LIXIL IMEA, said, “Demand for premium home and bathroom solutions is rising with consumers seeking luxury, wellness and smart living. Budget 2026 should ease capital gains reinvestment limits under Sections 54 and 54F, rationalise transaction costs, streamline NRI TDS norms and ensure policy stability to support high-end real estate investment.”

With the Union Budget 2026 approaching, speculation has intensified over whether the government may finally phase out the old income tax regime and make the new tax regime the sole system for individual taxpayers. According to a Times of India survey on Budget 2026 expectations, most tax experts said the government may look to eventually do away with the old income tax regime, though the transition is likely to happen in a phased manner.

Vijay Kaushik, chairman and executive director of Vibhor Steel Tubes, said, “The Union Budget 2026-27 is a crucial opportunity to reinforce India's manufacturing and infrastructure growth agenda. The government's continued thrust on infrastructure development through increased spending, particularly across oil, gas, water, sewage, telecom and urban development, will drive sustained demand for quality steel tubes and pipes. We also look forward to measures that enhance domestic steel consumption, curb illegal imports and support MSME manufacturers through easier access to credit, and rationalise input costs.”

Policy support for technology upgradation, energy efficiency, and simplified compliance will further strengthen the competitiveness of Indian manufacturers and enable the sector to contribute meaningfully to employment generation and long-term economic growth, he added.

Rakesh Jain, CEO of IndusInd General Insurance, said, “Health insurance, now the core of the general insurance market, needs policy support to counter rising medical inflation and enhance access, especially for vulnerable groups. Similarly, India's evolving mobility and infrastructure ecosystems demand sophisticated, future‑ready risk solutions backed by stable regulation, stronger domestic reinsurance capacity, and clear catastrophe frameworks.”

Significant focus on insuring houses and SME/MSMEs is also critical to ensure that the asset and lifestyle creation of India is not at risk due to physical or economic volatility, he added.

Krishnan Ramachandran, MD & CEO, Niva Bupa Health Insurance & Member of the Executive Committee, General Insurance Council, said, “Key expectation from the upcoming Union Budget is extending Section 80D benefits to individuals opting for the new tax regime. Health protection should be encouraged irrespective of the tax structure chosen. With rising healthcare costs and increasing longevity, the current deduction limit of up to Rs 1 lakh may no longer be adequate. A comprehensive review and enhancement of this limit to at least Rs 1.5 lakh would meaningfully strengthen preventive care and long-term health planning.”

Shivani Wagh, Joint MD, Supriya Lifescience Ltd, said, “The Union Budget 2026–27 comes at a time when India's healthcare and life sciences ecosystem is expected to evolve beyond cost-led growth and focus more sharply on innovation, preventive care, and export competitiveness. Policy direction this year will influence how effectively the sector scales over the next decade. India currently supplies nearly 20% of the world's generic medicines and over 60% of global vaccines, while pharmaceutical exports have crossed USD 30 billion. As global markets become more complex, future growth will depend on strengthening advanced manufacturing and research capabilities rather than relying on volume alone. Expanding and refining Production-Linked Incentive (PLI) schemes to cover additional APIs, biopharmaceuticals, and export-oriented products can help improve supply security and global competitiveness.”

The API segment, projected to grow from Rs 1.07 trillion in 2023 to Rs 1.82 trillion by 2030, needs continued policy support through PLI expansion, GST correction, and targeted customs duty relief for critical inputs. These measures would help reduce external dependencies and improve cost efficiency across the value chain, she added.

“Innovation funding remains another priority. Industry R&D investments are expected to reach Rs 170 billion by FY2028, highlighting the need to restore R&D-linked tax incentives and provide fiscal support for clinical research. Initiatives such as the Research, Development and Innovation (RDI) outlay and the Bio-RIDE scheme have created a strong base, and scaling them further would support startups, MSMEs, and biomanufacturing capabilities,” Wagh said.

“From a healthcare standpoint, greater emphasis on preventive care is essential. Rising non-communicable diseases, mental health challenges, and ageing demographics call for sustained investment in early diagnosis, digital health infrastructure, and primary care. Expanding insurance coverage through targeted tax incentives can also improve risk protection and access,” she added.

The Union Budget 2026 will be presented on February 1, 2026, by Finance Minister Nirmala Sitharaman in the Parliament. It is expected to start at 11:00 am.

Source: News18
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