Budget 2026-27: Tax Relief and Market Reforms

The Union Budget 2026-27, to be presented by Finance Minister Nirmala Sitharaman on February 1, 2026, is a big event in India.

It's the 88th budget and comes early in the second full year of Prime Minister Narendra Modi's third term.

People are watching to see if the budget will focus on economic reforms or be influenced by upcoming state elections.

The budget is expected to support sectors like railways, small businesses, defence, infrastructure, and green energy.

Economists suggest the budget should avoid populist measures and focus on long-term reforms.

Taxpayers and market participants hope for more tax relief, including higher exemption limits on long-term capital gains and reduced transaction taxes.

There's also a push for job creation and investments in digital learning and clean energy.

The big question is whether the budget will prioritize economic reforms or electoral gains.

The government is expected to cap the fiscal deficit at 4.3% of GDP in FY27, with a focus on a medium-term debt consolidation path.

Capital expenditure is expected to increase by around 14% to Rs 13.1 trillion in FY27, equivalent to 3.3% of GDP.

Gross tax revenues are expected to grow by around 7% in FY27, led by direct tax growth of around 11%, while indirect tax revenues are expected to grow by a subdued 2%.