Budget 2026: Sitharaman's 9th Speech to Focus on Tax Cuts

Introduction to Union Budget 2026

Finance Minister Nirmala Sitharaman is set to present the Union Budget for the fiscal year 2026-27 on Sunday, February 1, 2026. The speech, scheduled to begin at 11 am in the Lok Sabha, marks a significant milestone as it is her ninth consecutive budget presentation. This sets a new record for continuous tenure in the finance ministry. In a departure from tradition, this will be the first time in independent India's history that a full budget is presented on a Sunday. The decision allows for a special live trading session on the stock exchanges, enabling immediate market reaction to the government's fiscal proposals.

A Historic Presentation Amid Economic Challenges

Sitharaman's ninth budget presentation is being hailed as a moment of pride in India's parliamentary history, as noted by Prime Minister Narendra Modi. The budget is being presented against a backdrop of global economic volatility, geopolitical tensions, and trade uncertainties, including higher tariffs imposed by the United States. Domestically, the government faces the challenge of boosting consumption and job creation while maintaining a path of fiscal consolidation. The Economic Survey 2025-26, tabled earlier in the week, projected a resilient GDP growth of 6.8% to 7.2% for the upcoming fiscal year, setting a cautiously optimistic tone.

Expected Shift in Focus to Taxation and Fiscal Strategy

This year's budget speech is expected to look markedly different from previous ones. Reports indicate a decisive shift in focus from Part A, which outlines policy initiatives and sectoral plans, to Part B, which deals with taxation and financial proposals. Consequently, a significant portion of the speech is expected to be dedicated to the government's strategy on taxation, receipts, expenditure, and overall fiscal management. This move suggests a greater emphasis on structural reforms and legal financial frameworks rather than broad-based announcements.

Income Tax Relief: The Core Expectation

As with every budget, announcements related to income tax are the most anticipated. Salaried individuals and the middle class, who received some relief in the previous budget through higher exemption limits, are hopeful for further measures. The primary expectation is an increase in the standard deduction to provide more disposable income and counter inflationary pressures. There is also considerable interest in potential adjustments to capital gains taxation, with industry bodies seeking relief on Long-Term Capital Gains (LTCG) and Securities Transaction Tax (STT).

Laying the Groundwork for the New Income Tax Act

The Union Budget 2026 holds particular importance as it precedes the implementation of the new, simplified Income Tax Act, 2025, which is set to come into effect from April 1, 2026. The budget is expected to outline clear provisions and guidelines for the transition from the previous act. This will be crucial for ensuring a smooth adoption of the new tax framework for both individual taxpayers and businesses, aiming to minimize confusion and potential litigation.

A Look Back: Tax Slabs from Budget 2025

To understand the current tax landscape, it is useful to review the structures established in the previous budget. The new tax regime was positioned as the default option, offering lower tax rates with fewer exemptions.

Under this regime, with the available rebate, individuals with an annual income of up to ₹12 lakh effectively pay no income tax.

Sectoral Hopes and Market Outlook

Various sectors have specific expectations from the budget. The defence sector anticipates a 7-12% increase in allocation to support modernization and indigenous manufacturing. Continued capital expenditure on infrastructure, particularly railways and roadways, is also expected to maintain growth momentum. For manufacturing, the focus will be on expanding Production Linked Incentive (PLI) schemes to boost domestic production and exports. In an unusual move, the Indian stock markets will remain open on Sunday, February 1, for a special trading session to coincide with the budget presentation, reflecting the high stakes for investors.

Legislative Agenda and Key Documents

Following her speech, the Finance Minister will introduce the Finance Bill, 2026, which provides the legal framework for the tax proposals. She will also table two key documents mandated under the Fiscal Responsibility and Budget Management (FRBM) Act: the Medium-term Fiscal Policy-cum-Fiscal Policy Strategy Statement and the Macro-economic Framework Statement. These documents will offer deeper insights into the government's medium-term fiscal roadmap and its assessment of the economy's health.

Conclusion: A Budget for Stability and Growth

Union Budget 2026 is poised to be a critical financial statement that balances the need for sustained economic growth with fiscal prudence. The focus is expected to be on consolidating the gains from previous reforms, simplifying the tax structure, and providing targeted relief to boost consumption. While major populist announcements may be unlikely, the budget will lay out a clear economic vision for the coming years. The speech will be closely watched by taxpayers, businesses, and investors for its impact on personal finances and the broader economic trajectory.