Union Budget 2026: Key Highlights & What to Watch Out For

Union Budget 2026–27 will be presented in Parliament on Sunday, 1 February 2026 at 11:00 AM IST. NSE and BSE will run a special live trading session on the same day during normal market hours. MCX and NCDEX will also run a special trading session on the same day.

This Budget matters because it sets taxes, duties, spending, and borrowing for FY 2026–27.

1) The economic base before the Budget

The Economic Survey for 2025–26 projects GDP growth of 6.8% to 7.2% for FY 2026–27. This projection sets the base for revenue forecasts and spending plans.

Fiscal math will stay in focus. Official data shows the central government fiscal deficit at 54.5% of the full-year FY26 target at the end of December. This figure shapes the borrowing plan and bond market demand.

2) Income tax: the top demand line from households

Pre-Budget coverage shows strong focus on personal income tax. Taxpayers want changes that raise take-home pay and reduce paperwork.

• Common expectation themes include slab and rate changes under the new tax regime.
• Reports also point to demands for a higher standard deduction.
• Some coverage highlights demand for deductions that do not exist in the new regime today, such as health insurance deduction under Section 80D.

What to watch out for in the Finance Bill

• Slab structure under the new regime.
• Standard deduction rule and amount.
• Rebate threshold and conditions.
• Changes in TDS rules that affect refunds and cash flow.
• Capital gains rules and exemption limits discussed in pre-Budget reporting.

A headline rate change has less value if surcharge scope expands. You must read the surcharge and cess clauses.

3) Jobs and skilling: the Budget test on delivery

Jobs remain a key voter issue. Budget action on jobs runs through capital spending and private investment.

• Infrastructure spending creates project demand.
• It supports construction and logistics work.
• It supports supplier industries such as cement, steel, and engineering.

Skill programs need clear links with hiring. Industry groups in pre-Budget coverage ask for skill funding tied to industrial needs.

What to track

• Capital expenditure outlay and project focus.
• Skill allocations and program design.
• Hiring support measures that reduce cost for first-time job creation.

4) MSME expectations: GST friction, credit access, and compliance load

MSMEs ask for simpler compliance and faster access to schemes. They also ask for GST relief on process and refunds in many states. Key issues include input tax credit blocks and refund delays. Industry voices want easier access to government schemes and fewer forms.

What to track

• Credit guarantee expansion and bank execution.
• GST compliance simplification and refund speed.
• Measures on prompt payment in government procurement.
• Tech upgrade support for small firms.

A scheme without bank channel design does not change ground results. A scheme with tight gates reaches fewer firms.

5) Infrastructure, capex, and manufacturing: the growth engine theme

• Capex remains the main policy lever for growth support. Markets will focus on the capex number and the borrowing number.
• Manufacturing sectors also look at import duty structure on inputs. Duty design affects domestic cost and export margins.
• Pre-Budget coverage includes calls for industrial support and targeted incentives. It also includes focus on tech upgrades and AI-led productivity.

What to track

• Capex outlay and sector splits.
• Import duty review on key inputs.
• Support for cyber and critical infrastructure security spending, raised in sector views.

6) Housing and consumption: demand-side expectations

Housing drives demand for many sectors. It drives demand for home finance and household goods.

Budget discussions also track taxes and deductions linked to home loans. A change in home loan interest deduction changes household tax outgo for many buyers.

What to track

• Housing scheme allocations.
• Home loan tax clauses in direct tax proposals.
• Urban infra spend that supports city jobs.

Gold and Silver

Gold and silver remain a core store of value for Indian households. These metals also sit at the center of the gems and jewellery export ecosystem.

• Pre-Budget coverage shows demand from the gems and jewellery sector for import duty rationalisation on gold and silver and other inputs.
• Coverage also lists demand for customs process reform to reduce delays and compliance costs. Some reporting notes demand for GST relief on jewellery.

What the Budget can change for gold and silver

• Customs duty rates on gold and silver imports.
• Customs procedures and clearance rules for bullion and jewellery trade.
• GST policy and compliance rules that impact jewellery sales.

What households must watch

• Price impact after any duty and tax change.
• Rules that affect digital gold, ETFs, and other investment routes, if the Finance Bill includes changes.
• Market reaction on Budget day because commodity markets also trade in the special Sunday session.

Gold and silver prices react to global rates and rupee moves. Budget duty and tax rules change the local landing cost. That change shows up in retail quotes and making-charge plans.

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