Budget Expectations 2026 Live Updates: Detailed Expectations & Predictions
Income Tax Relief & Middle-Class Focus
After last year’s sweeping overhaul that made income up to ₹12 lakh tax-free under the new regime, experts expect fine-tuning rather than drastic changes this time.
Key expectations include a hike in the standard deduction from the current ₹75,000 to around ₹1 lakh to offset inflationary pressures. There is also buzz around slab rationalisation, with possibilities such as an expansion of lower tax brackets or the 30% slab starting at ₹30 lakh, compared to ₹15 lakh currently.
Many tax professionals are pushing for the inclusion of Section 80D (health insurance) benefits under the new tax regime. On housing, expectations include the restoration or extension of Section 80EEA, higher rebates for mid-income homebuyers, and an expansion of PMAY.
Capital market investors are watching closely for changes in LTCG and STCG. A higher exemption limit—such as ₹2 lakh for equity LTCG versus the current ₹1.25 lakh—and possible easing of tax rates are being discussed.
Other hopes include higher TDS thresholds on interest and rent, simplification of compliance, and extended ITR filing deadlines.
Capital Expenditure (Capex) & Infrastructure
The government is expected to maintain high capital expenditure in the ₹11–12 lakh crore range, with continued focus on roads, railways, urban infrastructure, green energy, and defence.
Defence spending is likely to rise amid ongoing border tensions, with renewed emphasis on domestic manufacturing under Atmanirbhar Bharat. Industry also expects stronger momentum in PPP models, asset monetisation (with a target of around ₹10 lakh crore), and incentives to crowd in private investment across infrastructure and logistics.
Fiscal Discipline
Fiscal prudence remains a key theme. The fiscal deficit target is expected to stay around 4.4% of GDP, or see a marginal improvement to 4.3%, while keeping the revenue deficit and debt-to-GDP trajectory under control.
The government is likely to tread cautiously amid global headwinds, including potential Trump-era tariffs, trade war risks, and signs of moderation in domestic consumption.
Sector-Specific Expectations
Manufacturing and exports may see support through PLI scheme extensions, duty cuts on raw materials, and export incentives to counter possible U.S. trade pressures.
Clean energy and power are expected to get higher allocations, particularly for renewables, green hydrogen, and the EV ecosystem, including tax incentives and charging infrastructure.
Agriculture may see enhanced MSP support, rural prosperity schemes, and relief from rising input costs.
Education and skilling are likely to get a stronger push for NEP implementation, workforce training, and job creation. Real estate could benefit from renewed support for affordable housing through PMAY and tax relief for buyers.
For MSMEs and startups, expectations include easier access to credit, input tax credit on health insurance, and further compliance simplification. Defence and electronics manufacturing may receive higher outlays and incentives to strengthen India as a design-and-manufacturing hub.
Macro & Market Outlook
GDP growth is projected at 7–7.5% for FY26, and the Budget is expected to reinforce this trajectory by supporting domestic demand and investment.
Markets will closely track signals on capex continuity, equity-friendly tax measures, and reform announcements. With rising global volatility, especially around U.S. trade policy, domestic economic resilience will be critical.
Live Buzz (as of Jan 23, 2026)
Industry surveys by FICCI, CII, and JM Financial highlight job creation, infrastructure, exports, and manufacturing as top Budget priorities. Tax experts largely expect continuity in the new tax regime with targeted relief for the middle class.
The Economic Survey, due on January 31, is expected to set the tone with a growth forecast of around 7.3–7.4%. Notably, the Sunday Budget presentation adds symbolic weight, marking a rare moment in recent history.
