Budget 2026 Expectations Live: TDS overhaul likely top tax demand in upcoming Budget

As India’s markets evolve and investor participation continues to broaden, coherence in policy matters becomes just as important as growth itself. People are willing to stay invested for the long term, but they seek clarity. That is why, going into Budget 2026, we expect meaningful direction on capital gains and holding periods.

Investors today build portfolios across equities, debt and alternative assets with horizons that stretch well beyond market cycles. When holding periods differ widely across instruments, tax considerations begin to influence decisions more than fundamentals. What markets are looking for is a framework that is easy to understand and consistent enough to plan around. Clarity creates confidence. When investors know what qualifies as long term ownership, they are far more comfortable committing capital patiently. This reduces short term churn and supports healthier market behaviour. It also aligns investor outcomes with the broader objective of capital formation. We do not see this as a question of lowering taxes. Rather, it is about drawing a clear line between investing and speculation. Simple and predictable rules can discourage excesses without penalising investors who are participating responsibly in India’s growth.

From a wealth management perspective, clear capital gains treatment allows us to channel conversations to where they belong. Asset allocation, risk management and long term goals should drive portfolios, not uncertainty around taxation. India has taken important steps in bringing household savings into financial markets. The next phase is about strengthening trust and staying power. A simplified and predictable approach to capital gains in Budget 2026 would be a strong signal that long term investors remain at the centre of policy thinking. -- Harsha Vardhana, Founder & Group CEO, Atom Financial Services:

As AI becomes core infrastructure for enterprises, the Union Budget 2026 must focus on accelerating deployment rather than just enabling access. Reducing friction in scaling AI will require sustained investment in digital infrastructure, targeted incentives for deep tech R&D, and skilling initiatives aligned with applied AI roles. At the same time, regulatory clarity around data usage, AI accountability, and sector-specific compliance frameworks is essential, particularly for regulated industries such as BFSI and healthcare. Predictable and practical regulations can help enterprises adopt AI with confidence and responsibility. From an industry standpoint, measures that improve ease of doing business, rationalise compliance overheads, and support MSMEs in adopting advanced technologies can meaningfully unlock the next phase of growth. -- Apurv Agrawal, Co-Founder & CEO, Squadstack.ai

The landmark GST 2.0 reforms implemented in September 2025 have provided a significant fillip to the healthcare industry. The reduction in GST rates from 12% to 5% on ophthalmic equipment is a visionary step that directly supports ASG Eye Hospital's "Vision 2030" to democratize affordable and accessible eye care pan-India. By lowering the tax barrier on essential medical technology, the government has set the stage for a more inclusive healthcare ecosystem where advanced treatments are no longer a luxury but a standard of care.

To further this momentum, we urge the government to address the structural challenge of "embedded taxes" that continue to inflate operational costs. Since clinical services currently remain in the "exempt" category, hospitals are unable to avail Input Tax Credit (ITC) on their procurement of equipment and services. Granting "zero-rated" status to healthcare or introducing a minimal GST slab with full ITC eligibility would unlock an estimated 5–6% of costs currently trapped within the supply chain. This structural shift would allow hospitals to pass on substantial direct savings to patients, truly maximizing the impact of the recent rate rationalizations.

In addition to GST reforms, the government could significantly lower the cost of technology adoption by doing away with the residual 7.5%–10% Basic Customs Duty and the 5% Health Cess on high-precision, non-indigenous technologies. Equipment such as Femtosecond lasers and advanced retinal imaging systems are critical for sight-saving procedures but remain expensive to import. Eliminating these landed costs will facilitate deeper penetration into Tier 2 and Tier 3 cities, ensuring that patients in smaller towns have access to the same world-class surgical offerings as those in metropolitan hubs.

Furthermore, as we move toward a tech-led healthcare future, the high cost of Artificial Intelligence (AI) integration must be addressed. While AI-driven diagnostics for conditions like Diabetic Retinopathy can revolutionize early detection, the recurring costs of high-end software licenses, GPU-based computing power, and AI-integrated hardware remain prohibitive. We propose a weighted tax deduction on AI-related capital expenditure and a reduction in duties for diagnostic machines with embedded AI software. This would incentivize hospitals to deploy automated screening tools in remote areas, significantly reducing the burden of avoidable blindness through technology. Interest subsidies for medical centres branching out in under developed areas will incentivise them to adopt a pan India approach. These measures along with expanding the scope of the current PLI scheme to encourage made in India incentive for manufacturing of medical eye equipment will set the country on course to world class medical facilities. -- Arun Singhvi, MD & CEO, ASG Eye Hospital

“Budget 2026 comes at a crucial juncture for India’s consumption-led sectors, particularly FMCG and food staples, which sit at the intersection of household spending, farmer livelihoods and food security. Over the past year, policy stability and calibrated fiscal measures have helped sustain demand without adding inflationary pressure. With rural markets showing steady recovery, continued emphasis on farm incomes, agri-infrastructure and consumption support will be vital to strengthen growth at the base of the economy.

From an agri value-chain perspective, policy support for domestic edible oilseed cultivation, such as mustard and soybean, can significantly reduce India’s edible oil import dependence and advance Aatmanirbhar Bharat. At AWL Agri Business Limited, we’ve already been working towards this goal through farmer partnerships, mustard-led model farm initiatives and integrated procurement-to-processing supply chains. Our digitisation, infrastructure development and sustainable sourcing are helping to improve productivity, assure farmer demand and enhance resilience across the value chain. A clear and predictable policy environment will further enable the industry to scale responsibly, invest with confidence and contribute meaningfully to inclusive self-reliant growth.” -- Angshu Mallick, Executive Deputy Chairman, AWL Agri Business Ltd

Tax and industry experts are calling for stability in tax rates, rationalisation of withholding taxes, faster dispute resolution, easier compliance norms for foreign companies and simpler taxation of employee stock options in the forthcoming Union Budget.

Rationalisation of tax deducted at source (TDS) has emerged as a key demand across sectors. Under the current framework, tax is deducted on specified payments such as salaries, interest, commission, rent and even cryptocurrency transactions beyond prescribed thresholds, with rates ranging from 0.1 per cent to 30 per cent. Experts say this complex structure has led to frequent disputes and litigation.

“The market expects improved visibility for the defence sector, with incremental allocations largely directed towards drones, arms and ammunition, defence electronics and indigenisation,” according to, Ankit Soni, AVP Fundamental Research, Mirae Asset ShareKhan. Markets expect the defence budget to rise 8-10%, with any increase beyond 10% seen as a positive surprise. Allocations are likely to favour drones, arms and ammunition, and defence electronics, reflecting operational priorities and indigenisation efforts. (Read More)

With stronger financial literacy and a more mature investment ecosystem, the government may find it easier to transition away from the old tax regime, he said. He added that statistics show taxpayers increasingly prefer the simpler approach under the new regime, without combining tax planning with investment decisions.

Experts note that the old tax regime continues to encourage long-term savings, which remain essential. Amit Maheshwari, Managing Partner at AKM Global, said, "While the new regime offers simplicity, transparency, and minimal documentation, abolishing the old regime could raise concerns. The old regime fosters financial discipline through investments in PPF, ELSS, insurance, and home loans, and supports protections such as mediclaim and other social security-linked deductions. A full transition to the new regime without these incentives may gradually discourage tax-linked savings and personal risk mitigation."

Official data shows that of the 7.28 crore ITRs filed for AY 2024-25 by July 31, 2024, 5.27 crore (72%) were under the new tax regime. The adoption likely increased after the Union Budget 2025-26 introduced more benefits and extended tax exemption up to Rs 12 lakh, up from the previous Rs 7 lakh limit. The Budget also revised income tax slabs, placing the 30% rate on incomes above Rs 24 lakh per year.

Another source noted that the old regime could continue and gradually phase out as fewer taxpayers use it. "The old tax regime remains advantageous for those with long-term investments, savings, or home loans," the source added.

"A large number of taxpayers have moved to the new income tax regime over the years, which offers several advantages. Roughly 80% of taxpayers are now in the new regime," said a source familiar with the matter. The Budget may indicate a sunset date for the old regime, though an immediate discontinuation is considered unlikely.

Good morning and welcome to Moneycontrol. As the buzz grows around the Union Budget presentation this year, there is a lot of discussion around one of the most imporatnt aspect of budget - personal tax. With the new income tax regime becoming increasingly popular among taxpayers, the Union Budget 2026-27 is expected to provide clarity on the future of the old income tax system.