Top 11 Expectations from Union Budobtain

The Union Budobtain 2026 is expected to focus on economic stability, encouraging public consumption and prioritizing quicker and simpler compliance mechanism, manufacturing, agriculture, green energy, MSMEs, AI and robotic technologies, through incentives and infrastructure development. The Finance Minister will present the Union Budobtain 2026 on Sunday, 1 February 2026, at 11.00AM.

Budobtain 2026 Expectations

1. Direct Tax

Budobtain 2026 Expectations for Salaried Employees

Standard deduction may increase.

Increase in the ceiling limit of home loan interest deduction.

Easier compliance mechanism.

Faster disposal of assessments and refund processing.

Old regime expected to continue for the next few years.

Meagre to no modifys expected in the new regime income tax slabs.

i. Income Tax Slabs

Expectation

Significant relaxations in the income tax slabs under the new regime is less likely.

Reason

Budobtain 2025 and 2024 has given considerable tax concessions and rebates.

ii. Standard Deduction

Expectation

Standard deduction may be increased from Rs 75,000 to Rs 1 lakh under the new regime.

Reason

To increase taxpayer’s disposable income and keep pace with inflation

iii. Old v/s New Tax Regime

Expectation

Reason

As the returns filed under the new regime keeps increasing, the old regime may be abolished in the near future.
But it is not expected to be abolished in the upcoming budobtain, as many taxpayers still file their returns under the old regime.

iv.Increased benefit to Senior Citizens

Expectation

Maximum ceiling limit for deduction under section 80TTB may be increased from Rs. 50,000 to Rs 1 lakh.
New regime may allow certain benefits to senior citizens.

Reason

Section 80TTB deduction limit was last revised many years ago.
Relaxation expected in deduction limit and slab rates to keep pace with the inflation and increase senior citizen’s disposable income.

v. TDS Rationalization

Expectation

Multiple TDS rates may be reduced to 2-3 broadly classified TDS rates.

Reason

Complications in deciding TDS rates for various transactions.

vi.Streamlining Gold Taxation

Expectation

Presently, different forms of gold investment is taxed at different rates.
The upcoming budobtain may bring uniformity in tax treatment of gold.

Reason

To simplify the compliance process, rerelocate arbitrage in gold investments.

vii. Interest Deduction under Section 24(b)

Expectation

Maximum home loan interest deduction under Section 24(b) for self occupied property may be increased from Rs. 2 lakhs.

Reason

The last revision was built many years ago. To encourage home acquireers and keep pace with inflation, limits may be increased.

viii. Decriminalization of Income Tax Provisions

In the 2025 budobtain, certain provisions, such as non-compliance with selected TCS provisions, were decriminalized.
As a continuation, further decriminalization of income tax provisions is expected in the impconcludeing budobtain.

ix. Joint Taxation for Married Couples

Expectation

This budobtain may include a recommconcludeation of joint taxation for married couples.

Reason

To ease the compliance burden in dual income houtilizeholds and create utilize of the slab rate of both the spoutilizes.

x. Foreign Tax Credit at the TDS deduction stage

Foreign tax Credit

If an assessee pays tax in two countries for the same income, foreign tax credit can be claimed utilizing relief under section 90 and 90A of the act.
This situation usually occurs when the income is taxed in both the source countest and resident countest.

Expectation

Reason

TDS is currently deducted even when Foreign Tax Credit is available, resulting in unnecessary locking of funds, as the credit can only be claimed while filing the ITR.

xi. ESOP Taxation for Relocated Employees

ESOP vestnig for Non-Residents

When the ESOP is vested on the employees, the difference between the market price and the discounted price (vesting price) is treated as a perquisite, taxed as salary income.
When employees relocate abroad during the vesting period , a portion of perquisite arise when he is a non-resident.
Therefore, amlargeuity arises in taxation of ESOP perquisite, which is vested when the assessee is a non-resident.

Expectation

Clarification in such amlargeuity is expected to be clarified.

xii. Increased Depreciation Benefits for Manufacturing Industries

Expectation

Additional depreciation benefits may be provided for manufacturing industries.

Reason

The current provisions provide deduction only for the first year of operation, in selected states.
Increased depreciation deduction can promote the manufacturing sector, promoting ‘Make in India’ initiative.

xiii. Taxation of Capital Gains on Contingent Consideration

Existing provisions

In mergers and acquisitions, a portion of the consideration is often contingent on future, uncertain events, namely the company’s performance with respect to EBITDA and revenue tarobtains.
The current provisions of the act do not address the taxation of capital gains in these situations.

Expectation

Clarifying tax provisions on this issue is expected to be a matter of discussion in the forthcoming budobtain.

xiv. Relaxation of Section 80JJAA

Expectation

Relaxation is expected in the existing threshold limit under section 80JJAA – deduction for new employees cost.

Reason

To encourage new job generation.

2. Indirect Tax

i. GST Reforms

As GST 2.0 was introduced during the financial year 2025-26, improving tax revenue and tax compliance at the same time, further simplification of GST provisions is expected, especially in the area of Input Tax Credit, to ensure free flow of working capital and ease of doing business in the Indian economy.

ii. Customs and Foreign Trade

Reforms in Customs Litigation

Digitalization of customs litigation and the introduction of quicker dispute resolution mechanisms can significantly enhance compliance certainty for importers, while improving efficiency and predictability in international trade processes.

Reforms in Tariff Structure

Simplification and global alignment of customs tariff structure can reduce complexity in duty determination and ease the compliance for both importers and exporters.

Measures for Liberalization of Export Rules

As a measure to increase global competitiveness in a volatile geopolitical environment, providing additional incentives and benefits for exports may improve overall economic performance and the balance of trade and payments.

Advance Rulings

Advance rulings are seen as an effective tool for reducing customs litigation in complex matters.
Expanding the scope of the same is expected to reduce litigation volume, litigation costs, and the time spent on litigation.

3. Impact on Agriculture & Agri-Linked Stocks

Expectation

Agriculture spconcludeing may be raised to ₹1.5 lakh crore
New Seeds Bill may be introduced.
Warehoutilizing facilities for perishable produce may be expanded and modernized.

Reason

Improving farm productivity, boosting PM-KISAN, quality and contribution of agricultural sector to India’s GDP.
Increased budobtain supports crop insurance and irrigation.

4. Real Estate Sector

Expectation

Reducing stamp duty charges and expanding the definition of affordable houtilizing, potentially to Rs. 75–90 lakh.
Single-window clearances, quicker resolution of stalled projects, and granting ‘Infrastructure Status’ to the sector.

Reason

Encourage ownership and boost demand.
Enable affordable long-term financing.

5. Encouraging Global Engagement

Expectation

Strengthen India’s integration with global markets by encouraging foreign investment, technology transfer, and cross-border collaboration.
an optional presumptive tax scheme can be introduced for foreign entities engaged in technical consultancy, digital and E-commerce, and management and software.

Reason

To encourage foreign entities to increase participation in the Indian Economy,
Reshifting operational barriers and improve India’s competitiveness as an investment destination.

6. Artificial Ininformigence and Robotic Technology

Expectation

Extconcludeing production-linked and infrastructure support to AI, robotics, and deep-tech manufacturing.
Strengthening digital and compute infrastructure to support AI adoption.
Encouraging integration of AI across healthcare, logistics, education, and public services.

Reason

Given their strategic importance, greater budobtain emphasis is expected on large data, AI, and advanced robotics.

7. Manufacture & MSME Development

Expectation

Expanded and quicker access to institutional credit, especially for micro and tiny enterprises (MSMEs).
Stronger credit guarantee mechanisms to support first-time borrowers and informal businesses.
Continued focus on last-mile delivery of financial support, ensuring schemes reach tinyer towns and rural enterprises.

Reason

To support domestic manufacturing and improve the global competitiveness of Indian brands.
To improve working capital stability, and resilience against global volatility

8. Climate modify and Green Energy

Expectations

Accelerated solar manufacturing capacity to reduce import depconcludeence.
Improved grid integration and energy storage infrastructure to support renewable reliability.
Continued momentum in green hydrogen and clean industrial energy utilize.
Tarobtained Production Linked Incentive for domestic manufacture of power generation equipment.

Reason

To create green energy, especially solar power to be more competitive and scalable across India.
To increase sustainability and address climate modify.

i. Clean Mobility and Energy Transition

Expectations

Expansion of EV charging networks, especially beyond metro cities.
Support for domestic battery manufacturing and recycling.
Integration of clean mobility with public transport and urban planning.

Reason

To promote wider EV adoption and reduce pollution and climate impact.

9. Defense Spconcludeing

Expectations

Higher capital outlay for domestic defense production.
Stronger linkages between defense, infrastructure, and advanced manufacturing.
Continued focus on reducing import depconcludeence in defense equipment.

Reasons

Rising global tensions may drive higher allocations toward indigenous defense manufacturing.

10. Railways

Expectations

Increased budobtain allocation to railways is expected in the upcoming budobtain.
From Rs 2.52 trillion allocation last year, an approximate 10% increase is expected, coming to Rs 2.75 trillion.

Reason

Emphasise and improve the safety and protection systems in the railways (KAVACH).
Aid engineering, procurement and construction (EPC) of advanced coaches, and the Namo Bharat Rapid Rail service.

11. Medical Field

Expectations

Measures to reduce customs duties on essential medicines, tarobtained-therapy drugs, and advanced equipment such as robotics and radiotherapy machines.
Support for the infra-linked PLI sector is anticipated in the upcoming budobtain, to increase the number of hospital beds per capita and expand rural healthcare facilities, including funding for tele-medicine.
Policies aimed at boosting pharmaceutical production, bringing medical devices under PLI 2.0, and reducing import depconcludeence through R&D incentives and GST rationalisation are also expected.

Reason

To improve affordability and access to advanced health care.
To support domestic manufacturing and reduce depconcludeence on imported health care equipment.

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