MM TAX CLUB

The Union Budget for FY 2026–27 will be presented in the Parliament of India on:

 1 February 2026 (Sunday) at around 11:00 AM by Finance Minister Nirmala Sitharaman — her ninth consecutive Budget.

Session Timeline

•  Budget Session starts: 28 January 2026.

•  Economic Survey presentation: 29 January 2026 — sets the economic context before Budget day.

•  First phase of session ends: Around 13 Feb, followed by a recess and then the second phase through early April.

 The Budget Day is announcement day, while most proposals — especially tax changes — come into effect from the new financial year (Apr 1, 2026).

Why Budget 2026 Matters

This budget comes at a critical juncture with the economy facing slowing growth, inflationary pressures and global uncertainties, and also with the rollout of the New Income Tax Act expected in the new financial year.

Expectations are high from both taxpayers and industry for clarity on tax reforms, investment incentives and economic boost measures.

 Top Income Tax Expectations

Here’s what many citizens and experts are hoping for:

 Higher Standard Deduction

There are strong calls to increase the standard deduction for salaried taxpayers to ₹1 lakh (from current ₹50,000–₹75,000).

 Increase in 80C Limits

Taxpayers want the Section 80C deduction limit raised — possibly up to ₹3 lakh — to encourage savings and investment.

 New & Simplified Slabs

Under discussion are elevated income thresholds for higher tax brackets — such as raising the limit for the top 30% slab to ₹35 lakh — and tweaks in slab structure to benefit the middle class.

 LTCG Rules Tweaks

There’s debate around simplifying Long-Term Capital Gains rules and reducing burdens on long-term investors.

 Old vs New Tax Regime

Most taxpayers have shifted toward the New Tax Regime due to simplicity, and budget watchers speculate whether the government will continue nudging towards it or sunset old regime benefits.

New Income Tax Act & Implementation

Though not officially confirmed, key income tax reforms, including the implementation of the New Income Tax Act, are widely expected to be under spotlight:

Effective Date

Even though the Budget is presented on 1 Feb, income tax changes generally begin from 1 April 2026 — the start of the fiscal year.

 What It Means For Taxpayers

• Any new slabs or deductions will mostly apply from FY 2026–27 onward.

• The Budget might also address clarity and certainty around the New Income Tax Act to help taxpayers and businesses plan better.

  Sector & Policy Expectations

  While income tax is a big focus, other policy areas that stakeholders are watching include:

  Growth & Investment

  Industry bodies want policies that boost private investment, job creation, and MSME growth.

  Infrastructure & Green Energy

  Budget supporters expect allocations to railways, roads, renewables, and emerging technologies like AI.

  Healthcare & Rural Support

  Many hope for improved healthcare spending and rural development allocations.

  Relief for Homeowners & Salaried Class

  There are discussions around enhanced deductions for home loan interest or other taxpayer-friendly measures.

   What Analysts & Economists Are Saying

  Experts believe the 2026 Budget should balance fiscal prudence with growth support — ensuring tax clarity, encouraging investment, and fostering a stable environment for economic expansion:

  “The Budget should focus on boosting private investment and provide tax certainty to support growth amid global uncertainty.” — EY India.

  Conclusion

  The Union Budget 2026 promises to be landmark not just for its timing and economic backdrop but also for expectations around sweeping tax reforms and taxpayer relief measures. With the presentation on 1 February 2026, all eyes — from middle-class taxpayers to large corporations — will be on announcements that could shape India’s economic trajectory for the coming year and beyond.

Why the Market Is Open on a Sunday

Indian stock markets — normally closed on Sundays and public holidays — will open for live trading on Sunday, February 1, 2026, to coincide with the presentation of the Union Budget 2026-27 by Finance Minister Nirmala Sitharaman.

This is a rare exception to the usual calendar. Markets are typically off on weekends, but because the Union Budget often triggers sharp price movements and strategy shifts, exchanges want investors to react in real time.

In fact, this will be only the second time in history that NSE & BSE are open on a Sunday for this reason.

Special Trading Schedule for Budget Day

The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have issued circulars confirming that regular trading hours will apply, even though it’s a Sunday:

• Pre-open session: 9:00 AM – 9:08 AM

• Normal trading: 9:15 AM – 3:30 PM

Certain special sessions — like the T+0 settlement session and auction sessions for settlement defaults — will not be held on this day.

 What Markets Will Be Open

It’s not just equity trading that will be live:
✔️ Equity markets (cash and derivatives)
✔️ F&O segments
✔️ Commodity and other derivative segments

All will remain operational so traders and investors can reposition their portfolios instantly based on Budget announcements.

Market Significance of Budget Day Trading

Union Budget announcements — covering taxation, government spending, fiscal policy and sector incentives — often cause immediate shifts in asset prices. Opening the market on Budget Day helps:

1. Real-time price discovery

Investors and institutions can trade as soon as new policies are announced rather than waiting until Monday.

2. Reduce weekend delay risk

Normally, data released over a weekend leaves markets to price in all news at the next weekday open, which can build volatility. Open trading helps distribute the impact over the day itself.

3. Transparency and efficiency

Instant reactions from participants can better reflect broad market sentiment rather than outdated positions. This also allows adjustments in sectors directly affected by Budget measures.

 Brief Historical Context

Budget presentations rarely fall on weekends. But in recent years:

• The 2025 Union Budget was presented on a Saturday, and markets remained open for a trading session.

• For 2026, with the Budget on a Sunday, exchanges again opted for a special trading day to match the announcemen.

•  Final Thoughts for Investors

• If you’re an investor or trader:

• ✔️ Expect volatility: Budget Day trading often sees quick reactions.
  ✔️ Plan your positions: Earnings, sector shifts or tax changes can impact specific industries.
  ✔️ Watch the announcements live: With markets open, you don’t have to wait until Monday.

  Whether you’re a long-term investor or a day trader, Budget Day offers a unique opportunity to gauge market sentiment in real time. Given that this special session follows standard market timings, preparation and strategy are key.

At a time when the global economy is navigating uncertainty—rising interest rates, geopolitical tensions, and slowing growth—India’s economy continues to stand out for its macroeconomic resilience and fiscal discipline. The Economic Survey 2025–26, tabled in Parliament by Union Finance Minister Smt. Nirmala Sitharaman, highlights how a carefully calibrated fiscal strategy has helped India maintain stability while continuing to invest in long-term growth.

Fiscal Prudence Without Compromising Growth

One of the strongest signals of fiscal consolidation is the steady reduction in deficits:

• Fiscal deficit is budgeted at 4.4% of GDP in FY26, down from 4.8% in FY25

• Revenue deficit has fallen to 0.8% of GDP, its lowest level since FY09

This narrowing gap reflects a clear shift in expenditure quality—less spending on consumption and more focus on asset creation. Revenue expenditure moderated from 13.6% of GDP in FY22 to 10.9% in FY25, freeing up space for productive capital investment.

Capital Expenditure: Building for the Future

India’s commitment to infrastructure-led growth remains strong:

• Effective capital expenditure increased from 2.7% of GDP (pre-COVID) to 4.3% in FY26

• Infrastructure sectors such as roads, railways, airways, and waterways account for over half of total capex

• Transfers to states, telecom, and housing & urban affairs saw robust double-digit growth

This sustained capex push aligns closely with the Prime Minister’s vision of Viksit Bharat, emphasizing long-term economic capacity over short-term gains.

States as Key Partners: The Role of SASCI

The Special Assistance to States for Capital Expenditure (SASCI) scheme has emerged as a critical enabler of state-level investment. Through interest-free, long-term loans:

• States maintained capital expenditure at around 2.4% of GDP

• ₹4.5 lakh crore has been allocated over the last five years

The scheme smartly balances reform-linked incentives with state-specific priorities, helping create durable assets while crowding in private investment.

Revenue Mobilisation Gets Stronger

India’s revenue story is equally encouraging:

• Revenue receipts rose to 11.6% of GDP in FY25

• Better collection efficiency and technology-driven measures helped curb leakages

• Income tax return filings increased from 6.9 crore (FY22) to 9.2 crore (FY25)

• Direct tax share rose to 58.2% of total tax revenue, up from 51.9% pre-COVID

The Income Tax Department’s NUDGE framework—using data to encourage voluntary compliance instead of coercive enforcement—has played a key role in widening the tax base.

GST 2.0: Strengthening Trade Competitiveness

GST continues to mature as a robust consumption tax:

• Gross GST collections reached ₹17.4 lakh crore (Apr–Dec FY26), up from ₹16.3 lakh crore last year

• Taxpayer base expanded from 60 lakh in 2017 to over 1.5 crore

• E-way bill volumes grew 21% YoY, reflecting strong trade activity

The proposed GST 2.0, with a simplified two-rate structure, is expected to reduce compliance costs, encourage formalisation, boost domestic manufacturing, and ease the cost of living.

Debt Sustainability on Track

Despite high public investment, India’s debt metrics are improving:

• Debt-to-GDP ratio declined to 55.7% in FY25

• Government remains on track to achieve ~50% by FY31

India’s public investment efficiency stands out globally, with general government investment at 4% of GDP, nearly one-fifth of total government revenue.

The Road Ahead

The Survey emphasizes the need for:

• Rationalising subsidies and cross-subsidies

• Better prioritisation of state-level revenue expenditure

• Advancing trust-based compliance using data and technology

• Stabilising equity monetisation and improving surplus management

With upcoming reforms in GST 2.0 and personal income tax, India is moving towards a tax system that is simpler, broader, and more growth-friendly.

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India’s fiscal story is quietly strong. ????????????

The Economic Survey 2025-26 shows how a calibrated fiscal strategy has helped India stay stable amid global turbulence:

✔️ Fiscal deficit down to 4.4% of GDP
✔️ Revenue deficit at lowest since FY09 (0.8%)
✔️ Capital expenditure rises to 4.3% of GDP
✔️ ₹4.5 lakh crore support to States via SASCI
✔️ Income tax filings cross 9.2 crore
✔️ GST collections touch ₹17.4 lakh crore (Apr–Dec FY26)

With stronger revenue mobilisation, tech-driven compliance, and sustained infrastructure spending, India’s fiscal framework is balancing growth with discipline.

The Preface to the Economic Survey 2025–26, tabled in Parliament by Union Finance Minister Smt. Nirmala Sitharaman, sets the tone for how India must navigate an increasingly uncertain global and domestic economic landscape. At its core, the Survey calls for a fundamental shift in the way the State thinks and acts—from cautious regulation to entrepreneurial policy-making under uncertainty.

From Control to Capability: The Entrepreneurial State

The Survey argues that today’s challenges cannot be met with slow, risk-averse governance. Instead, India needs a State that can act before full certainty emerges, structure risk rather than avoid it, experiment boldly, learn fast, and correct course without paralysis.

Importantly, this is not presented as a theoretical idea. The Survey highlights how India has already begun moving in this direction—through mission-mode initiatives in semiconductors and green hydrogen, reforms in public procurement to support first-of-its-kind domestic innovation, and state-level deregulation compacts that replace inspection-based controls with trust-based compliance. These, the Survey notes, are early signs of a State transitioning from compliance-driven governance to capability-driven governance.

Strong at Home, Uncertain Abroad

Despite facing consecutive global shocks since the Covid-19 period, India’s economy has shown remarkable resilience. The Survey notes India’s strong macroeconomic performance, even as global conditions deteriorated following geopolitical realignments and tariff actions, including those imposed by the United States in April 2025.

Reflecting this momentum, the Survey projects real GDP growth of over 7% in FY 2025–26, with another year of growth expected at or near the same level. Yet, it flags a key paradox: India’s strongest macroeconomic performance in decades is unfolding in a global system that no longer reliably rewards such success with capital inflows, currency stability, or strategic insulation.

A World in Flux: Three Possible Global Scenarios

The Economic Survey outlines three plausible global scenarios for 2026:

1. Managed Disorder – A less coordinated, more risk-averse global economy where integration continues, but trust erodes and non-linear shocks become more common.

2. Disorderly Multi-Polar Breakdown – Intensifying strategic rivalries, coercive trade practices, sanctions, realigned supply chains, and greater financial contagion across borders.

3. Systemic Shock Cascade – A lower-probability but high-impact scenario where financial, technological, and geopolitical stresses amplify each other, potentially exceeding the severity of the 2008 global financial crisis.

Across all scenarios, India is relatively better placed due to its large domestic market, strong foreign exchange reserves, less financialised growth model, and strategic autonomy. However, the Survey cautions that insulation is not guaranteed. Disruptions to capital flows and pressure on the rupee may become a persistent feature, not a temporary shock.

Running a Marathon and Sprinting at the Same Time

In response to these risks, the Survey delivers one of its most striking metaphors:

“India must run a marathon and sprint simultaneously, or run a marathon as if it were a sprint.”

This means India must pursue long-term growth while simultaneously building buffers against short-term shocks. Rising incomes will inevitably increase imports, regardless of indigenisation efforts. Hence, India must generate sufficient foreign currency earnings, diversify supply chains, strengthen payment systems, and build strategic reserves.

The recommended stance for 2026 is described as strategic sobriety, not defensive pessimism—prioritising resilience, redundancy, and liquidity while continuing to push for growth.

The Real Challenge: Process Reforms

While policy reforms matter, the Survey stresses that process reforms matter even more. It is the daily interaction between the government and citizens—rules, incentives, and administrative reflexes—that ultimately determines whether reforms succeed.

Encouragingly, the Survey highlights state-level deregulation and smart regulation initiatives over the past year as strong evidence that the State machinery can reinvent itself—shifting from regulation and control to facilitation and enabling.

State, Society, and Deregulation for Viksit Bharat

The Survey brings together three critical elements—state capacity, society, and deregulation—in the pursuit of Viksit Bharat and greater global influence. In a democracy, the State remains the primary agent of development, but it must upskill, reskill, and mentally prepare to operate on unfamiliar and often hostile terrain, where old rules no longer apply and new ones are still evolving.

The possibility of overlapping global crises also presents India with a rare opportunity to help shape the emerging global order. Doing so will require the most agile, flexible, and purposeful governance since Independence.

Choosing Resilience Over Quick Fixes

The Survey concludes on a realistic yet hopeful note. In a world reshaped by geopolitical realignments, India stands to gain immensely if it chooses resilience over short-term fixes, innovation over complacency, and delayed gratification over immediate relief.

Staying the course toward Viksit Bharat, the Survey argues, is not just an option—it is unavoidable.

A Reconfigured Economic Survey

This year’s Economic Survey departs from tradition in both structure and scope. It features 17 rearranged chapters, organised based on the depth and time-relevance of national priorities rather than precedent. The Survey is also longer than usual, reflecting the breadth of issues covered.

Additionally, it includes special essays on three medium-to-long-term themes:

• The evolution of Artificial Intelligence

• The challenge of quality of life in Indian cities

• The role of state capacity, the private sector, and households in achieving strategic resilience and indispensability

The Economic Survey 2025–26, tabled in Parliament by Union Finance Minister Smt. Nirmala Sitharaman, paints a confident picture of India’s economy navigating global uncertainty while strengthening its domestic fundamentals. Despite geopolitical tensions, trade fragmentation and financial volatility across the world, India continues to stand out as the fastest-growing major economy.

Let’s break down the key takeaways in a simple, human way ????

Big Picture: Growth That Holds Firm

The First Advance Estimates project real GDP growth of 7.4% and GVA growth of 7.3% in FY26, reaffirming India’s strong growth momentum. Potential growth for India is estimated at around 7%, with FY27 growth expected in the 6.8%–7.2% range.

What’s driving this?

• Strong consumer demand, helped by low inflation and stable employment

• Solid investment activity, with Gross Fixed Capital Formation growing 7.8%

• Continued dominance of the services sector, which remains the main growth engine

Private consumption now accounts for 61.5% of GDP, the highest level since 2012, indicating healthy demand across rural and urban India.

Fiscal Stability: Credibility Matters

Prudent fiscal management has paid off. India received three sovereign credit rating upgrades in 2025, boosting global confidence.

Key fiscal highlights:

• Centre’s revenue receipts rose to 9.2% of GDP in FY25

• Direct tax base expanded sharply, with income tax returns rising to 9.2 crore

• Gross GST collections touched ₹17.4 lakh crore (April–December 2025)

• Capital expenditure remains strong at around 4% of GDP

India has also reduced its general government debt-to-GDP ratio by 7.1 percentage points since 2020, while still investing heavily in infrastructure.

Banking & Financial Sector: Healthier Than Ever

India’s banking system is in its best shape in decades:

• Gross NPAs fell to a multi-decade low of 2.2%

• Net NPAs dropped to just 0.5%

• Bank credit growth accelerated to 14.5% YoY

Financial inclusion continues to deepen:

• 55.02 crore Jan Dhan accounts opened (majority in rural and semi-urban areas)

• 12 crore unique investors, with nearly 25% women

• Mutual fund participation spreading beyond metros

External Sector: Playing the Long Game

India’s integration with global trade is steadily improving:

• Share in global merchandise exports rose from 1% (2005) to 1.8% (2024)

• Services exports hit an all-time high of USD 387.6 billion

• Remittances reached USD 135.4 billion, highest in the world

Foreign exchange reserves climbed to USD 701.4 billion, covering 11 months of imports and 94% of external debt, providing strong external resilience.

Inflation: Lowest in the CPI Era

One of the biggest positives of FY26 has been inflation control:

• Average CPI inflation (April–December 2025): just 1.7%

• Among major emerging economies, India recorded one of the sharpest inflation declines

Lower food and fuel prices played a major role, boosting real purchasing power.

Agriculture & Rural Economy: Stronger Foundations

Thanks to a good monsoon:

• Foodgrain production reached 3,577.3 LMT, a record level

• Horticulture output surpassed foodgrain production

• Over ₹4.09 lakh crore released to farmers under PM-KISAN

Rural infrastructure and market access improved through e-NAM, AMI, AIF, and digitisation initiatives.

Industry, Manufacturing & Infrastructure: Building for the Future

Manufacturing is showing clear signs of structural recovery:

• Manufacturing GVA grew 7.72% in Q1 and 9.13% in Q2 FY26

• PLI schemes attracted over ₹2 lakh crore in investment and created 12.6 lakh jobs

• India Semiconductor Mission approved projects worth ₹1.60 lakh crore

Infrastructure growth remains a standout:

• High-speed corridors expanded nearly 10 times since FY14

• Railways added 3,500 km in FY26

• India is now the 3rd largest domestic aviation market

• DISCOMs posted a profit for the first time in FY25

Social Progress: Inclusion at Scale

India continues to make rapid progress on social indicators:

• Multidimensional poverty declined from 55.3% (2005-06) to 11.28% (2022-23)

• 31 crore unorganised workers registered on the e-Shram portal (54% women)

• Maternal and child mortality reductions outpaced global averages

• Education infrastructure expanded to 23 IITs, 21 IIMs and 20 AIIMS

The Big Idea: Disciplined Swadeshi

The Survey proposes a three-tiered “Disciplined Swadeshi” strategy:

1. Build critical capabilities where strategic risks are high

2. Reduce input costs and strengthen competitiveness

3. Move from self-reliance to strategic indispensability

The goal is clear: make the world buy Indian products not by compulsion, but by choice.

Final Word

The Economic Survey 2025–26 shows an India that is growing fast, managing risks smartly, and investing in long-term resilience. With stable inflation, healthier banks, rising exports, and deepening inclusion, the foundation for sustained growth looks solid.

For businesses, investors, and taxpayers alike, the message is simple: India’s growth story is not just intact—it’s maturing.