Budget 2026 Expectations: Tax Cuts, Jobs, and Key Policies for Consumers
Finance Minister Nirmala Sitharaman will present the full Union Budget for 2026-27 on February 1, marking the new government’s first major economic blueprint. The budget is expected to focus on stimulating growth, easing inflation pressures, and addressing core consumer concerns like disposable income and employment.
Key Expectations from Budget 2026
- Income Tax Relief: Higher basic exemption limit and increased standard deduction for salaried individuals.
- Housing Boost: Higher deduction on home loan interest and revised price caps for affordable housing.
- Job Creation: Policies to incentivise employment in manufacturing and tourism, with enhanced support for MSMEs.
- EV Push: Extension of FAME III subsidies and expansion of charging infrastructure.
- Rural Focus: Increased funds for PM-KISAN, MGNREGA, and new credit schemes for farmers.
- Digital Economy: Measures to boost digital transactions and extend tax benefits for startups.
Income Tax Relief for Salaried Individuals
A major expectation is the simplification of the income tax structure. Industry bodies have strongly recommended raising the basic exemption limit from ₹3 lakh to ₹5 lakh under the new tax regime. There is also a widespread call to increase the standard deduction for salaried employees from ₹75,000 to ₹1 lakh, offering direct relief from inflation.
Boost for Home Buyers and Affordable Housing
The real estate sector is pushing for a significant increase in the home loan interest deduction limit under Section 24(b)—from ₹2 lakh to ₹5 lakh. For affordable housing, a key proposal is to raise the price cap in metropolitan cities to ₹1 crore from the current ₹45 lakh, aligning with current market prices to stimulate demand.
Job Creation and MSME Support
With employment as a critical focus, the budget is likely to introduce policies that incentivise job creation, especially in labour-intensive sectors like manufacturing and tourism. Enhanced credit access and extended Production-Linked Incentive (PLI) schemes for are also anticipated to boost entrepreneurship and small businesses.
Electric Vehicle (EV) Incentives
To accelerate India’s EV adoption, the industry is advocating for an extension of the FAME III scheme with a substantial outlay. Key demands include reintroducing subsidies for two-wheelers and a major push to expand charging infrastructure nationwide.
Agriculture and Rural Focus
Expectations are high for increased allocations to flagship schemes like PM-KISAN and MGNREGA. Proposals also include a new credit guarantee scheme for farmers and greater investment in agricultural infrastructure to boost productivity and rural incomes.
Digital and Startup Economy
The budget may introduce measures to further digitise financial transactions and enhance digital public infrastructure. For startups, extending the tax holiday period and simplifying compliance norms are key expectations to foster innovation and ease of doing business.
The final budget announcements will reveal the government’s priorities, balancing fiscal prudence with steps to drive consumption-led growth and manage inflation.
