Finance Minister Nirmala Sitharaman is set to present the Union Budget 2026-27 on Sunday at 11 AM, and expectations are running high across taxpayers, businesses and investors. This will be her ninth consecutive Union Budget, making it one of the most closely watched fiscal exercises in recent years.
The Budget arrives at a critical moment for India’s economy. GDP growth has climbed to a six-quarter high of 8.2%, yet global challenges remain. Ongoing geopolitical tensions, volatile commodity prices and uneven monetary easing by major global central banks continue to create uncertainty.
Against this backdrop, Budget 2026-27 is expected to focus on fiscal discipline while supporting growth through targeted tax relief, higher capital spending and reforms aimed at boosting private investment.
Budget 2026 Expectations: Fiscal Deficit and Government Borrowing
One of the first things to watch in Budget 2026 is the government’s fiscal roadmap. Experts expect the Finance Minister to target a fiscal deficit of around 4.2% of GDP for FY27, signalling continued commitment to consolidation.
Government borrowing is likely to increase to fund infrastructure projects and welfare schemes, while efforts may continue to reduce overall government debt to 49–51% of GDP over the medium term.
Union Budget 2026: What to Expect from the Budget on Income Tax?
Income tax relief remains one of the biggest expectations from Budget 2026. The salaried class and middle-income taxpayers are looking for:
- A possible hike in the standard deduction to ₹1 lakh from the current ₹75,000
- Further expansion of Section 87A rebates under the new tax regime
- Simplification of income tax rules to improve ease of filing
Any move in this direction could boost consumption and disposable income.
Budget 2026: Will STT & Corporate Tax Rules Change?
Market participants are watching for potential changes to the securities transaction tax (STT) and corporate tax rules that affect manufacturing and global supply chains. Any reforms here could significantly impact investor sentiment.
Budget 2026: Long-Term Capital Gains Tax in Focus
Investors will closely track whether Budget 2026 offers relief on long-term capital gains (LTCG). There are expectations of higher exemption limits or rationalised tax rates, especially as equity and mutual fund participation continue to rise among retail investors.
Union Budget 2026:Â What to Expect from the Budget on Defence Spending
Defence is expected to be a key focus area in Budget 2026. The government may announce a significant increase in military spending, possibly around 20%, along with steps to ease foreign investment norms in defence manufacturing. This could support domestic defence production and reduce import dependence.
Budget 2026:Â Capital Expenditure PushÂ
Infrastructure spending is expected to remain a growth engine. Budget 2026 may increase allocations for:
- Roads and highways
- Railways and metro projects
- Urban infrastructure
- Renewable and green energy
Over the past five years, capital expenditure as a share of GDP has steadily risen, and this trend is likely to continue.
Union Budget 2026: Key Expectations from Exporters – Lower Import Duties
Export-oriented industries are hoping that Budget 2026 will lower import duties on essential inputs such as electronic components and textile raw materials. This becomes crucial as exporters face pressure from higher global tariffs and trade-related challenges.
Budget 2026: Private Sector Investment & Ease of Doing Business
Another major expectation from Budget 2026 is policy support for private sector investment. Measures such as tax incentives, regulatory simplification and faster approvals could help create a more business-friendly environment.
Union Budget 2026: Deregulation & Demand-Boosting Measures
Taxpayers and businesses also expect deregulation through targeted tax cuts and policy reforms. These measures could stimulate demand, improve consumer confidence and support economic growth.
Budget 2026: India’s Borrowing Strategy
Finally, Budget 2026 will shed light on how the government plans to manage its borrowing while balancing growth and fiscal responsibility. Bond markets will closely analyse these signals.
Why Union Budget 2026 Matters?
Budget 2026-27 is expected to set the tone for India’s economic strategy amid global uncertainty. From tax relief and defence spending to infrastructure and private investment, the announcements made could shape the country’s growth path in the coming year.
