Union Budget 2026 LIVE Updates: Will FM Sitharaman unveil major tax, defence & import duty reforms?

"Investment in India’s infrastructure sector over the past decade has been transformative. As a result, the sector is not looking at a major reset, but rather a continuity of policy. We expect the government’s capital expenditure push to remain intact in Budget 2026, with scope for a modest increase over last year to bridge infrastructure gaps. There is also a significant opportunity to deepen public–private partnerships beyond roads into non-traditional segments such as urban transport, water, and social infrastructure. Asset monetisation will be another key lever—building on the success of the first National Monetisation Pipeline and expanding it into newer sectors. Overall, Budget 2026 is likely to focus on strong public investment, smarter private participation, and sharper asset efficiency," said Raghav Madan, Director, Deloitte.

Employment generation and workforce skilling are expected to remain the focus areas in Finance Minister Nirmala Sitharaman's ninth consecutive budget today. Recent Budgets have relied on production-linked incentive schemes and higher infrastructure spending to support job creation, particularly in manufacturing and construction. However, economists note that employment gains have been uneven, with services absorbing most new workers while manufacturing-led hiring has lagged.

Formal job creation continues to face challenges such as skill mismatches, compliance costs and limited credit access for MSMEs, which remain among the country’s largest employers. Skilling programmes and digital training initiatives have expanded in recent years, but industry stakeholders argue that stronger alignment between education, vocational training and emerging sectors is essential.

Ahead of the Budget, businesses are seeking targeted incentives for labour-intensive industries, simplified compliance norms and support for first-time hiring. With millions entering the workforce each year, Budget 2026 will be closely watched for measures that can convert economic growth into durable employment gains.

Gross GST collections rose 6.2% year-on-year to ₹1.93 lakh crore in January 2026, up from ₹1.82 lakh crore in the same period last year, reflecting steady consumption even as global uncertainty lingered. Domestic revenues did the heavy lifting, rising nearly 4.8% to ₹1.41 lakh crore, while import-related GST also grew at a faster pace.

As Nirmala Sitharaman prepares for her Sunday Budget presentation, the defence sector is no longer just looking for a higher allocation—it is looking for the liquidity to execute. Following the Operation Sindoor that happened in mid-2025, the ministry of defence reportedly exhausted 62% of its ₹1.72 lakh crore outlay by November 2025. Brokerages project a double-digit jump in defence capex for FY27, noting that sustained spending is critical to maintain the indigenisation momentum for platforms like HAL’s Tejas and BEL’s electronics suites.

Nuvama Institutional Equities expects an 8% growth in capital expenditure, with a  tilt toward R&D, Unmanned Aerial Vehicles (UAVs), and anti-drone technologies to address new-age warfare requirements identified in recent months.

Industry sentiment is shifting decisively away from headline-grabbing announcements towards policy clarity, continuity and execution, according to Grant Thornton Bharat’s pre-Budget expectations survey. With the economy projected to grow at around 6.5–7% in FY26 and central government capital expenditure now more than three times its FY20 level, businesses are assessing how the Budget will sustain momentum while crowding in private investment. Against a backdrop of global uncertainty and a calibrated fiscal consolidation path targeting a deficit of about 4.4% of GDP, Budget 2026 is being watched as a signal of India’s medium-term economic intent.

Amid sustained foreign selling, investors are closely watching whether Finance Minister Nirmala Sitharaman will announce relief measures in the Union Budget to revive FPI sentiment, particularly on long-term capital gains (LTCG) tax. Currently, LTCG arises from the sale of capital assets such as stocks and property held for more than 24 months and is taxed at 12.5% across all capital assets. However, in the case of listed equity shares, equity-oriented mutual funds and units of business trusts, gains up to ₹1.25 lakh are exempt from tax. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd., said expectations of sweeping tax relief are muted this year, given the substantial income tax cuts announced in the 2025 Budget. However, selective tweaks remain possible. “If there is an increase in the exemption limit for long-term capital gains tax from the current ₹1.25 lakh to a higher threshold, that would be positive for the market,” he said.

 Expectations are building around direct tax relief for the salaried class and targeted rationalisation of import and customs duties, with experts saying the government is likely to strike a balance between fiscal consolidation and growth support. Tax and policy specialists said the Budget could deliver meaningful relief to individuals, particularly salaried taxpayers while using calibrated tariff changes to strengthen domestic manufacturing and address long-standing duty distortions. On the indirect tax front, Krishan Arora, Partner – Indirect Tax at Grant Thornton Bharat, said the government is expected to maintain a measured approach to customs duties, with a sharper focus on sectors affected by inverted duty structures, such as textiles.

As the Union Budget 2026 approaches, India’s travel and tourism industry is rallying around a common set of expectations centred on connectivity expansion, tax rationalisation and policy recognition of hospitality as core economic infrastructure. With domestic travel demand deepening across leisure, pilgrimage, weddings and business travel, industry leaders say the focus now needs to shift from demand creation to removing capacity and cost constraints.

Connectivity remains the sector’s most pressing concern. Travel companies are seeking faster implementation of the UDAN regional connectivity scheme, expansion of airport capacity in Tier II and Tier III cities, and higher allocations for rail infrastructure and last-mile connectivity. Industry executives say better coordination between air and rail planning is essential to support tourism circuits under Swadesh Darshan 2.0 and the PRASHAD pilgrimage scheme, as emerging destinations see rising footfalls.

Domestic aviation demand continues to scale, with passenger traffic crossing 15 crore between January and November 2025. However, companies warn that infrastructure bottlenecks could cap growth. Several regional airports revived in recent years remain underutilised due to commercial and operational challenges, underscoring the need to operationalise existing capacity alongside new investments.

Taxation is another major friction point. Airlines and travel platforms have reiterated calls to bring aviation turbine fuel under GST to ease cost volatility, while bus operators are seeking parity in GST treatment for non-AC tickets booked online versus offline. Hospitality companies are also pushing for GST rationalisation and restoration of input tax credit to improve competitiveness and affordability.

Hotel chains are urging the government to grant infrastructure status to hospitality, arguing it would unlock long-term financing, accelerate investment beyond metros and strengthen local employment ecosystems. Industry players are also seeking continued support for spiritual tourism corridors and relief on ESOP taxation to improve workforce stability across travel and hospitality businesses.

Companies across FMCG, retail, consumer durables and agri-linked sectors are calling for a measured approach that supports consumption without stoking inflation, while addressing cost pressures and tax frictions.

A key ask is a boost to household spending power, especially among the middle class. Industry executives argue that sustained consumption growth will hinge on higher disposable incomes, with several pitching for income tax relief to revive discretionary demand amid rising input costs and currency volatility.

Tax clarity and GST rationalisation also feature prominently. Companies are seeking neutral treatment of post-sale discounts, relief from inverted duty structures, and faster refunds of accumulated input tax credits to ease working capital stress. Executives say incremental improvements to GST rules, rather than sweeping changes, would strengthen pricing discipline and operational stability.

Manufacturing and localisation remain another focus area. Consumer durables players have urged continuity in customs duty relief on critical components such as Open Cell panels, warning that any hike could raise television prices by around 10 percent and dampen demand. Others have sought duty rationalisation on key inputs, expansion of PLI schemes and support for component manufacturing to improve cost competitiveness.

Rural demand and agri infrastructure are also in sharp focus. Industry leaders have called for higher investment in logistics, cold chains and food processing, alongside policy support for domestic oilseed cultivation to reduce import dependence and stabilise prices.