Over the last few years, participation in Indian financial markets has widened far beyond institutions and professionals. Regular earners, first-time savers, and long-term planners are paying attention now. They are now reading budget headlines for guidance rather than excitement.
Budget 2026 comes at a time when inflation has eased, and households are spreading their savings across many needs, making expectations more practical than emotional.
This article tells about the possible expectations from Budget 2026, including capital gains, retirement planning, and important signals in various sectors.
Relief on Long-Term Capital Gains (LTCG)
Currently, a 12.5% of LTCG is levied on equity with an exemption of up to ₹1.25 lakh. This rate and threshold came into effect on July 23, 2024.
The common sentiment is that the tax rate should be lowered and the exemption limit must be increased to improve the market perception.
This will improve long-term participation in the capital markets and encourage more inflows from the Foreign Institutional Investors (FIIs). In the 2026 budget, long term capital gain changes have been highly expected.
Intra-scheme mutual fund switching
Mutual fund investors often rebalance. They move between growth and dividend options. They adjust risk inside the same fund house.
Currently, intra-scheme switching is subject to capital gains tax, even though the money never leaves the investment ecosystem. That feels unintuitive to many.
As of December 2025, Indian mutual fund Assets Under Management (AUM) have crossed ₹80 lakh crore. With portfolios becoming larger and more sophisticated, investors want flexibility without tax friction.
Industry bodies, including AMFI, have suggested that allowing tax-neutral switching within the same scheme category could encourage better asset allocation without unnecessary exits.
Revival of Sovereign Gold Bonds
Sovereign Gold Bonds (SGBs) were meant to shift demand away from physical gold. They offered 2.5% annual interest plus price appreciation with capital gains tax exemption at maturity.
The last SGB scheme was launched in February 2024, and since then, there have been no fresh issues. This is surprising, considering the role of gold in Indian households.
Investors are now expecting clarity. They want either the revival of these bonds or a formal explanation for the sudden pause.
Sector-Wise Expectations
Different sectors walk into Budget 2026 with very different hopes. The sector-wise expectations are as follows:
Agriculture
Over 42% of India’s workforce is engaged in agriculture, even though the sector contributes only about 17–18% to GDP. This imbalance has persisted for decades.
Current policies focus largely on income support and procurement mechanisms. While necessary, they address symptoms more than structure.
Budget 2026 expectations include higher allocation towards storage infrastructure, irrigation efficiency, and agri credit availability. The emphasis may gradually move from relief-oriented spending to productivity-led growth, which could improve income stability over time.
Banking, Financial Services, and Insurance (BFSI)
With a 27% contribution to the GDP, BFSI is one of the most significant sectors in India.
Despite the rapid growth of banks and NBFCs, regulatory sensitivity is still very high. Valuations can be significantly impacted by even minor modifications to capital adequacy requirements or liquidity criteria.
The expectation is not aggressive reform. Instead, market participants are looking for regulatory clarity and stability. Predictable policy signals often matter more than incentives in this sector.
Information Technology (IT)
India’s IT services exports crossed $200 billion, but growth has moderated due to global economic uncertainty.
Hiring has slowed. Deal cycles are longer. Margins are under pressure. The sector is no longer driven by volume alone.
Focus on digital skilling, artificial intelligence adoption, and research-oriented incentives should be expected from the new budget. The objective would be to help the sector move from cost efficiency to capability building, supporting long term competitiveness rather than short term expansion.
Automobile
The automobile sector contributes nearly 7% to India’s GDP and supports over 37 million jobs, directly and indirectly.
Currently, electric vehicles are becoming increasingly popular; however, there are still some issues with infrastructure. Charging availability and battery supply chain issues are two significant areas of concern when it comes to electric vehicles.
It is expected that instead of providing additional subsidies, the 2026 Budget will enhance existing structures to boost domestic battery production and improve charging infrastructure.
Healthcare
With India’s current healthcare expenditure at under 2% of the GDP, public health infrastructure, diagnostic services, and preventive services in many areas are still underdeveloped. As a consequence, private health costs have continued to increase.
There will be expectations for increased public health budget allocations and targeted incentives related to diagnostic and preventive services.
Taxation Changes
Taxes quietly influence how people save, spend, and invest. In FY 2024-25, 9.19 crore income tax returns were filed, reflecting broader compliance and higher reported incomes.
India’s tax framework includes several provisions, yet many have seen little change over the years, even as household expenses have climbed steadily. Between 2011–12 and 2023–24, average monthly per-capita consumption rose from ₹1,430 to ₹4,122 in rural areas and from ₹2,630 to ₹6,996 in urban areas.
Despite this rise in baseline living costs, tax limits in many cases continue to reflect older income and expenditure realities.
As families increasingly align investments with insurance, education, and long-term financial planning, expectations from the new budget are focused on simplifying the tax framework and updating limits, rather than introducing new provisions.
Stronger NPS benefits
Retirement planning often gets delayed, not ignored.
The National Pension System (NPS) currently has around 2.1 crore subscribers, which is modest compared to the scale of India’s working population. While tax benefits exist, complexity and restricted access reduce their appeal.
At present, additional tax benefits are more attractive to government employees than private sector workers. Budget 2026 is expected to address this imbalance by improving employer contribution limits, easing partial withdrawals, and making NPS easier to understand and use for long-term savers.
Section 80C limit hike
Section 80C has been doing too much heavy lifting for too long.
The Section 80C allows a maximum deduction of ₹1.5 lakh. There is limited room for flexibility because this one limit has been stretched over time to cover various Section 80C investments such as loan repayments, insurance premiums, ELSS investments, PPF, and EPF.
It is anticipated that the Budget 2026 for section 80c will consider a modest raise in the limit. Even a small revision would ease pressure on households and restore relevance to one of the most widely used tax-saving provisions.
Conclusion
People today are not looking for surprises. They prefer things that are consistent and an environment that will allow for decisions to be made without the need to constantly question rules or regulations. Budget 2026 will be successful if it creates a clear path, simplifies things, and establishes a flexible system. A consistent approach will result in a better outcome than an approach based on hype and empty promises.
