From capex to tax reform: 5 key things to expect from Budget 2026

Budget 2026 is expected to strengthen oilseed and pulses self-sufficiency, promote crop diversification such as millets, and boost investment in storage, cold chains and climate-resilient farming to reduce wastage and improve farm incomes.

• Union Budget 2026 aims for higher capex, fiscal discipline, and economic growth
• Key expectations include tax simplification, customs reforms, and GST relief
• Focus on agriculture reforms, food security, and climate-resilient farming

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As Finance Minister Nirmala Sitharaman readies to present the Union Budget 2026 on February 1, expectations are building around a set of targeted policy measures aimed at sustaining economic momentum, easing regulatory friction and reinforcing India’s global competitiveness amid a challenging international environment.

India’s economy is projected to expand by 7-7.5 per cent in 2026-27, supported by steady consumption and continued public investment.  At the same time, policymakers face pressures ranging from prolonged tax litigation and climate risks to agriculture to financial stress in power distribution and procedural hurdles in customs and GST.

Against this backdrop, the Centre is expected to balance medium-term fiscal consolidation with a strong emphasis on capital expenditure, with the fiscal deficit estimated at around 4.3 percent of GDP and infrastructure spending likely to see a double-digit increase.

The following are the key expectations from the Union Budget 2026-27:

>> Tax simplification and dispute resolution: Industry is seeking faster disposal of pending tax cases, tax neutrality for fast-track demergers, rationalisation of holding periods for slump sales, clarity on MAT for foreign companies, and reduced transfer pricing disputes through clearer definitions.

>> Sustained capex with fiscal discipline: The Centre is expected to continue medium-term fiscal consolidation while maintaining a strong push for infrastructure spending, with capital expenditure likely to rise sharply to support growth.

>> Customs and trade facilitation: Key demands include rationalisation of customs duty slabs, a fully operational single-window clearance system, quicker Authorised Economic Operator certifications, and measures to unlock large sums stuck in customs litigation.

>> Food security and agriculture reforms: Budget 2026 is expected to strengthen oilseed and pulses self-sufficiency, promote crop diversification such as millets, and boost investment in storage, cold chains and climate-resilient farming to reduce wastage and improve farm incomes.

>> Sectoral reforms and GST relief: Expected measures include amendments to improve the financial health of power distribution companies and targeted GST reforms to speed up refunds, ease inverted duty structures, reduce disputes and improve cash flows for exporters and MSMEs.