Budget 2026 Income Tax Expectations Live Updates: Industry, Taxpayers Push Wish Lists As Two Days Left For FM Sitharaman's Budget Speech

Budget 2026 Income Tax Expectations Live Updates: Industry, Taxpayers Push Wish Lists As Two Days Left For FM Sitharaman's Budget Speech

Union Budget 2026 Income Tax Expectations Live Updates: As the Economic Survey 2025–26 was tabled in Parliament yesterday, it has set the stage for the upcoming Union Budget 2026, offering a detailed snapshot of India's economic performance, challenges and outlook ahead of the Budget speech.

The Survey highlights that India's economy is expected to grow around 7.4% in the current year, and is projected to expand between 6.8% and 7.2% in FY27, underlining steady growth despite global uncertainties.

Against this backdrop, expectations across key sectors are taking shape as stakeholders look to the Budget for support that sustains growth, strengthens jobs and eases financial pressures:

Taxpayers & Households: Many taxpayers want practical improvements to the income tax structure that preserve simplicity while supporting long-term financial planning — including broader deductions for home loan interest and diversified retirement savings options.

New Tax Regime vs Old Tax Regime

Businesses & Industry: With industrial output and investment showing resilience, firms are looking for policies that bolster capital formation, ease compliance, and expand infrastructure spending — especially in manufacturing and technology-driven sectors that promise jobs and exports.

Startups & Innovation: The startup ecosystem expects incentives around employee stock options and capital access, along with regulatory tweaks that encourage risk capital and talent retention without increasing compliance burdens.

Financial Markets & Banking: With savings moving into equity and mutual funds, markets hope for measures that deepen liquidity and reduce the cost of capital. The banking sector also seeks a stable fiscal framework that supports credit growth without compromising asset quality.

Education Budget 2026 | Real Estate Budget 2026 | Tech Budget 2026

Agriculture & MSMEs: Rural demand remains central to consumption growth, and the agriculture and MSME segments are looking for continued credit support, risk-mitigation tools, and investment in rural infrastructure that boost productivity and income.

A Logistics Sector Skill Council budget poll has called for a 40 per cent hike in AI skilling investment in the forthcoming General Budget to boost employment in the country. The recommendation is set to accelerate the government's mission to make India's workforce future-ready and globally competitive, a statement said.

The Logistics Sector Skill Council's latest budget poll covering 10 cities and 160 companies called for a 40 per cent increase in investments for AI-driven skilling and training to boost job generation.

Gagan Arora, Founder and President, Vertex Group, said that as the Economic Survey highlights, while India's unemployment rate remains steady at 5 per cent and labour force participation is on the rise, bridging skill gaps in technology and emerging sectors is essential for accelerating job creation. The government should announce dedicated budget allocations, at least 40 per cent higher than current levels, for large-scale skilling programs in AI, data analytics, and emerging technologies, he suggested.

Market price stabilisation hinges on mechanisms such as the minimum support price, the Market Intervention Scheme and the Price Deficiency Payment Scheme, which are aimed at providing targeted income support and price certainty to farmers while maintaining market efficiency and allowing demand-supply dynamics to operate freely.

However, uptake of these schemes has been lower than expected. utilisation for price support schemes under the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM AASHA) initiative was only ~64 % in fiscal 2022 and 89 % in fiscal 2023. Moreover, these schemes received only 5-6% of the Department of Agriculture and Farmers' Welfare's total budget in fiscal 2026.

Therefore, to enhance price stabilisation under PM AASHA, the Union Budget may consider increasing the allocation for this umbrella scheme and combining it with a streamlined onboarding process, time-bound direct benefit transfer settlements, and state incentives or conditional grants to improve utilisation, says Pushan Sharma, Director, Crisil Intelligence.

Prateek Maheshwari, Co-Founder, PhysicsWallah, said: “My expectation for the budget is to make education affordable and accountable. I want to see a reduction in the GST on educational services. The current 18% rate is a burden. Lowering this is essential to make quality learning accessible to every family. Additionally, I want to see a shift to outcome-based budget allocation. This would be transformational for Bharat because it moves the focus from spending to impact. We shouldn't just fund infrastructure but results, such as improved learning outcomes and increased employability. When we link budget to performance, we ensure that every rupee spent directly empowers our youth and builds a skilled nation.”

With the Indian rupee hovering near record lows and foreign investors pulling out a hefty $4 billion this month — taking total outflows in 2025 to $19 billion — attention has turned firmly to Finance Minister Nirmala Sitharaman.

Payas Agarwal, director of Great Value Realty, said, “As we look ahead to the Union Budget 2026, it presents a timely opportunity to further unlock the potential of India's real estate sector, particularly in the luxury housing segment. Rising household incomes and sustained consumer confidence are driving strong demand for luxury residences across the NCR. As lifestyle expectations evolve, luxury housing is increasingly viewed not as a discretionary purchase but as a long-term investment in quality living. We are expecting an introduction of a streamlined single-window approval system, along with measures to ease regulatory bottlenecks. This can significantly enhance project execution timelines and improve capital efficiency for both developers and homebuyers.”

“India's crypto conversation has largely focused on enforcement and taxation, but the next phase needs to address market structure and sustainability.

The real question for Budget 2026 is not whether virtual digital assets should exist, but how regulated activity can be kept onshore, transparent, and economically viable. Today, compliant Indian participants face friction that often pushes volumes offshore, weakening oversight rather than strengthening it.

Budget 2026 should therefore focus squarely on VDAs. One meaningful step would be to rethink transaction-level taxation. The current withholding mechanism adds operational burden without materially contributing to revenues. A more effective alternative would be a VDA transaction tax, similar to the securities transaction tax in capital markets that achieves traceability while also generating predictable revenue.

Such a structure would help bring volumes back to spot markets, reduce excessive reliance on high-risk derivatives, and introduce greater stability into a growing ecosystem that is increasingly intersecting with mainstream finance,” says Manhar Garegrat, Country Head – India, Liminal Custody.

Atul Grover, managing director of Becton Dickinson India and member of MTaI, said, “As we approach the Union Budget 2026, we acknowledge the government's continued commitment to enhancing patient access through the strengthening of healthcare infrastructure, including the expansion of hospital capacity and medical education. We look forward to budgetary measures that will further elevate the quality of care till the last mile, supported by increased investments in critical areas such as infection prevention and control to enhance safety outcomes for patients as well as healthcare professionals, antimicrobial resistance mitigation, and comprehensive cancer diagnosis and management.”

Kalyan Goswami, director general of the Agro Chem Federation of India, said, “We suggest reducing the import duty on pesticides from 10 per cent to 5 per cent to ensure that farmers receive the full benefit of newer, better technology. While fertilisers are rightfully taxed at a concessional GST rate of 5 per cent, pesticides continue to attract an 18 per cent GST rate, significantly raising the cost of cultivation for farmers, reducing affordability of vital crop protection solutions, and a risk of lower adoption, ultimately compromising productivity and food security. We believe that the decision should be made in the context of India's overall agricultural strategy. New pesticides are uplifting farmers' income and a number of farmers have doubled their income with the help of such newer pesticides. We should ensure that the highest-quality agri-inputs are made available to farmers at the best prices.”

“For start-ups operating in the audio-visual category, growth is closely linked to infrastructure creation. More PSUs, tech parts, and smart cities directly translate into demand for electronic media solution providers. FM Nirmala Sitharaman should prioritise public infrastructure, digital workplaces, and smart urban projects to create real opportunities for India tech solution providers,” said Alok K. Chaubey, founder of Keytech Enterprises.

“India's insurance distribution ecosystem is entering a phase, supported by regulatory reforms and accelerating tech adoption. The increase in the FDI cap to 100% and the enactment of the Sabka Bima Sabki Raksha Act reflect a clear intent to deepen insurance penetration and strengthen distribution capabilities. As we look ahead to Budget 2026, incremental policy support for technology-led distribution models further accelerate access to insurance. Digital infrastructure, API-led partnerships, embedded insurance, and the POSP model are enabling scalable, cost-efficient distribution while preserving local trust. These shifts are critical to expanding protection across underserved and underpenetrated markets in India,” says Dhirendra Mahyavanshi's, Chairperson, MD & CEO of Turtlemint.

“Strategic disinvestment has progressed in a calibrated manner over recent years. Since 2016, in-principle approval has been accorded for strategic disinvestment for 36 CPSEs, of which 13 transactions have been completed, with the remainder at various stages of implementation. During FY26, approvals were also accorded for stake dilution or exit from select joint ventures, including NTPC's divestment from Utility Powertech Limited. These actions were complemented by governance reforms that empowered CPSE Boards to undertake the closure, merger, or disinvestment of subsidiaries.

Going forward, receipts from equity monetisation can be strengthened by selectively reducing Government equity in certain CPSEs beyond the minimum public shareholding norms, guided by market conditions and enterprise-specific factors,” says the Economic Survey.

“With credit expansion continuing to be robust yet lopsided, the Budget 2026 is therefore likely to favour credit flow to less penetrated sectors as opposed to headline recapitalisation of the banks. The focus of policy will probably be on credit guarantee improvements, lending credit to MSMEs risk-sharing, and enhancing recoveries under IBC. In our view, the quality of transmission of credit is much more important than raising balance sheets. The next banking cycle will be characterised by sustainable credit growth,” says Akhilesh Pandey, Partner & Practice Leader, Financial Due Diligence, BDO India. He highlights the potential Effects: Improved credit allocation, reduced NPAs, improved lending cycle.

“The Upcoming Union Budget presents yet another opportunity to further strengthen India's travel and tourism sector. Reducing indirect taxes would increase affordability, boost global competitiveness, and encourage tourism. Such actions would promote long-term value, employment generation, and steady growth throughout the hospitality ecosystem. At the same time, the government should assign funds for improving tourism infrastructure and facilities for domestic and international travelers. Industry status is long overdue demand for hospitality sector which generates enormous foreign exchange and provides employment to crores of people,” says Abhishek Sahai, General Manager, Conrad Pune.

Arjun Bajaj, Director – Videotex, said: “As the Union Budget approaches, the television manufacturing industry hopes for a focused policy support that reflects the reality of TVs no longer being a luxury product, but an integral part of the Indian household. With the Indian TV industry valued at nearly USD 15 billion, it plays a significant role in domestic manufacturing, employment generation, and value addition under the Make in India vision.

Despite this scale, the sector has not received the same policy priority as categories like mobile phones. One long-standing expectation that has remained unaddressed across multiple Union Budgets is the introduction of a dedicated PLI framework for television manufacturing. Such a move could significantly accelerate localisation, strengthen domestic value chains, and improve global competitiveness.

While earlier GST rationalisation provided some relief, persistent challenges such as limited display fab availability, volatility in memory prices, rupee depreciation and ongoing semiconductor supply constraints have diluted its impact. Although the government has taken important steps to build a domestic ecosystem for critical components, semiconductors, and display fabs, a stronger and more coordinated ecosystem push is needed to truly encourage domestic manufacturing. In the interim, the industry hopes this Budget considers temporary duty relief and targeted support for critical components to improve supply stability, cost competitiveness, and support the long-term growth of India's TV manufacturing industry.Additionally, export-focused measures such as duty drawbacks, logistics support, and rationalised trade barriers will be critical to enhance competitiveness, enable scale beyond the domestic market, and strengthen India's position in global electronics and television exports.”

Supria Danda, CoFounder & Managing Partner, said: Union Budget 2026 must focus on removing structural barriers that slow early-stage enterprise AI and deep-tech startups. This includes clear and predictable policies, stronger tax incentives for fund-backed startups, simplified compliance for early capital deployment, and targeted R&D and infrastructure support for high-growth sectors.

For founders and investors, confidence comes from long-term policy continuity—not incremental incentives. A decisive push toward enterprise-led innovation, combined with easier access to early-stage capital and sustained R&D support, can firmly position India as a global hub for enterprise AI.

Dr. Chiranjeevi Phanindra, Founder & CEO, Cosmoserve Space: “As India continues to emerge as a significant player in the global space economy, Budget 2026 is an important opportunity to reinforce policy support for homegrown space technology innovators tackling high-impact challenges. At Cosmoserve Space, our mission is to make Earth's orbits safer and more sustainable by developing autonomous robotic spacecraft that locate, capture, and de-orbit space debris, a problem that threatens satellites, scientific missions, and future space infrastructure. Strategic incentives for R&D, testing facilities, and collaborative frameworks with global space operators will help startups like ours accelerate technology validation and scale. Strengthening India's research ecosystem and creating targeted support for space sustainability efforts, including orbital debris mitigation, will enable deeper industry participation, attract global partnerships, and unlock high-value engineering jobs. With the right focus in Budget 2026, India can lead not only in satellite deployment but also in safeguarding the orbital environment that underpins our digital and scientific infrastructure.”

Ashish Singhal, Co-founder, CoinSwitch, said, “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 recognising 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.”

Dr Apoorva Ranjan Sharma, Co-Founder & Managing Director, Venture Catalysts, said: In today's difficult global setting, the Union Budget offers a critical chance to strengthen confidence in the startup and innovation ecosystem in India. From a venture capital point of view, it is essential to focus on maintaining the tempo of indigenous entrepreneurship and making India an attractive long-term investment destination.

One of the most critical demands from this budget is enhanced support for early-stage startups in terms of fiscal incentives, simplified compliance procedures, and assured access to capital. Initiatives that ease doing business, especially for first-time entrepreneurs, will ensure that innovation remains inclusive and does not remain confined to Tier 1 cities.

Equally important is the need to simplify the tax and regulatory environment for investors. Enhanced clarity on capital gains tax treatment, angel tax exemptions, and fund structuring regulations will help tap more domestic capital in a globally uncertain funding environment. Encouraging investments from family offices, HNIs, and institutions will make the startup investment ecosystem more resilient and accelerate innovation in AI, climate tech, and manufacturing.

“As India approaches the Union Budget 2026, there is a strong opportunity to firmly position critical minerals, recycling and rare earth elements as strategic enablers of long-term economic and industrial self-reliance. Recycling today is not only about sustainability, it is about material security. India continues to rely heavily on imports for lithium, cobalt, nickel and rare earths that power electric mobility, clean energy, electronics and defence. Building native recycling, refining and recovery capabilities are some practical ways to reduce this dependence and create resilient, domestic supply chains. E-waste, end-of-life batteries and industrial scrap represent a strategic resource base that can be unlocked at scale through technology.

Budget 2026 can accelerate this transition by recognising recycling and advanced materials recovery as core industrial infrastructure, enabling easier access to long-term capital and encouraging Indian deep-tech innovation in automation, robotics and process engineering. Targeted fiscal incentives for advanced recycling technologies, rare earth processing and downstream manufacturing will help Indian startups and scale-ups compete globally. With the government's growing mission-level focus on critical minerals, this budget has the potential to convert intent into impact, strengthening Atmanirbhar Bharat and advancing a truly circular economy.” – Nitin Gupta, Co-Founder & CEO, Attero

Dr. K. Rathnam, Whole Time Director & CEO, Milky Mist Dairy Food Limited, said, “We welcome the government's continued support on the GST front and believe there is scope for further rationalisation of key inputs such as packaging material, refrigeration equipment, animal feed and veterinary services. This would go a long way in easing rising cost pressures and improving overall efficiency across the value chain.

A strong policy push towards strengthening cold-chain infrastructure and logistics is critical. Enhanced capital subsidies, interest subvention schemes and easier access to long-term credit will help bridge existing infrastructure gaps, reduce wastage and improve milk quality, especially in hinterland regions. Targeted incentives for both dairy companies and farmers are equally important.

From an industry standpoint, incentives for value-added dairy products, automation, advanced quality-testing laboratories and sustainability initiatives will encourage private players to invest in modern, scalable capacity aligned with global standards.”

Mr. N. ArunaGiri, CEO, TrustLine Holdings, said, “Expenditure pressures remain elevated, particularly with higher outlays planned for Fertilizers subsidy compared to last year, requiring the government to navigate a very tight fiscal framework. Compounding this is the constraint of lower nominal GDP growth, which further limits fiscal flexibility. Given the government's stated commitment to fiscal consolidation, it would be unrealistic to expect any major sops, especially in the form of tax cuts.

Expectations of capital gains tax relief or other capital-market friendly tax measures are unlikely. The government is likely to maintain capital expenditure broadly at current levels as a percentage of GDP, but without dramatic shifts in allocation. That said, this Budget is unlikely to be a dull one. While large giveaways may be off the table, we expect the reform momentum to continue and possibly accelerate, which we believe will be the defining feature of this Budget.

On the reform front, one of the most critical developments to watch will be progress on the Electricity (Amendment) Act. Any meaningful push in this direction would mark a major milestone in power distribution and broader power sector reforms.”

Among salaried taxpayers, expectations from the Budget are modest but sharply defined. Experts believe that the middle class needs substantive relief, not token adjustments. Increasing the standard deduction would deliver immediate benefits, adding that the Rs 2 lakh cap on home loan interest has remained unchanged for years despite steadily rising property prices.

Aligning the year in which income is earned with the year of reporting and assessment is meant to simplify compliance and make the process more intuitive, said Anita Basrur, Partner at Sudit K Parekh & Co. LLP. She added that revised return forms are expected to seek more detailed disclosures for deductions such as house rent allowance (HRA), home loan interest, and claims under Sections 80C and 80D. These will need to be closely matched with data in the Annual Information Statement (AIS) and Form 26AS, signalling a more rigorous, data-driven compliance regime.

The shift to the Income Tax Act, 2026, is already shaping expectations. Among its most noticeable changes is the introduction of a “tax year” system, replacing the long-standing concepts of “previous year” and “assessment year”.

The most heated issue for the middle class is the reforms in the income tax. For many middle-class households, the key question is whether the year ahead will offer greater clarity, predictability and fewer compliance shocks—especially as a new income-tax law comes into force from April 1.

Source: News18
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