Key expectations from Union Budget 2026–27: Tax relief, capex and sectoral push
Ahead of the Budget speech, experts and markets are watching several key focus areas. On income tax, expectations include a hike in the standard deduction from ₹75,000 to ₹1 lakh, following last year’s reform that made income up to ₹12 lakh effectively tax-free.
On infrastructure, capital expenditure on Railways is expected to rise 15–20%, with a projected outlay of ₹2.65 lakh crore, prioritising safety systems such as Kavach 4.0 and expansion of Vande Bharat trains.
A major structural change is also due, with the Income Tax Act, 2025 set to replace the 1961 Act from April 1, 2026, simplifying the tax code from 819 sections to 536.
Sectorally, higher allocations are anticipated for defence (with emphasis on private domestic technology), green energy(including GST rationalisation for batteries), and urban housing through enhanced PMAY 2.0 subsidies.
Markets to watch: Investors are tracking a possible increase in the LTCG tax-free threshold from ₹1.25 lakh to ₹2 lakh to encourage long-term equity participation.
