Tax Regime Expectations
Experts predict significant focus on tax-related reforms in Budget 2026. One key area of discussion is the potential simplification of income tax provisions.
There are talks about making the new tax regime more attractive to encourage broader adoption. Discussions also include possible measures for tax clarity and quicker dispute resolution to make doing business easier. Furthermore, tax experts advocate for higher deductions, relief on the 30% tax slab, and adjustments related to capital gains. The government may also be looking at the possibility of joint tax filing for married couples. The government is expected to cap the fiscal deficit at 4.3% and push for medium-term debt consolidation, according to ICRA.
Sectoral Focus Areas
Budget 2026 is expected to heavily focus on specific sectors crucial for India's economic growth. The auto industry is seeking incentives for Electric Vehicles (EVs) and clear guidelines on GST, anticipating a recovery facilitated by GST 2.0. The real estate sector is calling for tax relief and stable policies. The real estate sector in Gurugram, for example, has attracted substantial investments totaling Rs 86,588 crore. In the financial sector, experts are also anticipating the launch of EPFO 3.0, including UPI withdrawals, and new PF portal updates for improved services. Morgan Stanley has highlighted essential reforms needed across autos, telecom, railways, and defense.
Market & Economic Outlook
Economists anticipate positive economic growth despite global trade and tariff tensions. Moody’s forecasts India to grow at 7.3% in FY26. The IMF has upgraded India's growth forecast to 7.3% for 2025. With a focus on strengthening the economy, the government’s efforts include an integrated Ombudsman scheme slated to go live from July 1, 2026. The government continues to foster digital payment adoption; digital payments hit 22,831 crore in FY25, demonstrating a 41% CAGR. Core industries in India experienced growth of 3.7% in December 2025, with cement leading the list.
Key Investment Trends
Significant investment inflows and market trends highlight the dynamic nature of the Indian economy. Capital inflows into the real estate sector have surged by 25% to a record $14.3 billion in 2025, as stated by CBRE. The stock market, however, has seen some corrections. The Sensex dipped over 1,400 points in two days, and the Nifty50 fell below 25,200. This drop has been attributed to profit-booking in shares of ICICI Bank and HDFC Bank after Q3 results. The trend of flexi-cap funds has been gaining traction. Silver ETFs have also jumped by 8% as prices hit record highs. The anticipation for the NSE IPO nears, with SEBI's Chief hinting at an NOC possibly by the month-end.
Important Considerations
Budget 2026 also necessitates a review of key aspects, like the income tax refund process. Concerns have emerged regarding potential delays in income tax refunds, prompting taxpayers to seek clarification on the reasons behind such delays. Moreover, the government is introducing the New Income Tax, effective April 1, to streamline provisions, along with new features like the combined loans, insurance, and card benefits in the new salary account for government staff. The focus on resolving issues related to ITR refunds underscores the importance of efficient financial practices. The RBI is also launching an Integrated Ombudsman Scheme 2026; Grievance Redressal is set to go live from July 1.
