Budget 2026 tomorrow: Are big personal tax changes waiting for you? Capex, stability may take centrestage 

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget for 2026–27 on February 1, expectations of tax relief have once again taken centre stage. For salaried employees, middle-class families, senior citizens and investors, the Budget remains a moment of hope, an opportunity for meaningful easing of the tax burden. This will be Sitharaman’s ninth consecutive Budget and the third full Budget of the Modi 3.0 government, adding to the significance of the announcement.

Much of the anticipation this year revolves around the new income tax regime. Over the past few Budgets, the government has delivered substantial changes -- rationalising tax slabs, simplifying compliance and introducing zero tax on income up to Rs 12.75 lakh for salaried taxpayers through a higher rebate and standard deduction. With these reforms already in place, taxpayers are now asking a more pointed question: is there room for further big-bang tax relief?

Market experts caution against expecting dramatic announcements. Nikunj Saraf, CEO of Choice Wealth, said while hopes of tax cuts are understandable, large personal income tax concessions this year appear unlikely. “Substantial relief has already been delivered over the last few Budgets. Tax slabs have been rationalised, compliance has become simpler, and disposable income has improved for a wide section of taxpayers,” he said.

Tax cuts

According to Saraf, the absence of fresh headline tax cuts should not be seen as reluctance on the government’s part. “From a policy perspective, repeating major tax concessions year after year isn’t sustainable. Fiscal discipline matters, especially as India positions itself as a long-term growth economy,” he noted. In this context, stability in tax policy may offer greater value than frequent tinkering.

Instead of focusing narrowly on tax relief, the government appears to be emphasising long-term growth levers. “Budgets today are less about quick wins and more about building strong foundations,” Saraf said, pointing to a broader shift in fiscal strategy.

One such pillar is consumption. India’s consumption story, he noted, is no longer confined to metros or high-income households. Spending in smaller towns is rising, aspirations are broadening, and employment is gradually becoming more formal. Even without fresh tax cuts, steady income visibility, improving credit access and demographic momentum could help keep demand resilient. Companies with strong brands and extensive distribution networks are likely to be long-term beneficiaries of this trend.

Another enduring theme is the deepening of financial services. As households increasingly move away from physical assets towards financial products, banks, NBFCs, insurers and asset managers are becoming central to India’s growth narrative. What the sector needs most, Saraf argued, is policy predictability rather than frequent tax changes. A stable environment encourages long-term participation, strengthens household balance sheets and builds confidence in financial markets.

Capital expenditure

Capital expenditure is also emerging as a structural driver rather than a cyclical one. Government investments in manufacturing, logistics, energy and urban infrastructure are creating multiplier effects—supporting job creation, private investment and demand over time. While these benefits may not be immediately visible, they tend to be more durable than one-off tax incentives.

Infrastructure spending, often overlooked in the short term, plays a quiet but critical role. Better roads, ports, railways, power systems and digital networks reduce friction across the economy, lower costs and improve productivity. These gains accrue gradually, but patient investors are often rewarded as efficiencies translate into sustained growth.

For investors, Saraf offered a clear takeaway: portfolios should not be built around Budget-day reactions. “Markets may move in the short term, but long-term wealth is created by staying aligned with durable themes,” he said. Mutual funds across equity, hybrid and long-term growth strategies, he added, remain a disciplined way to participate in India’s structural journey. While tax efficiency matters, it should complement sound asset allocation—not replace it.

As the Budget papers are unveiled tomorrow, the message appears clear: while expectations of big tax relief may need tempering, the government’s focus on stability, capex and long-term growth could prove equally meaningful for households and investors over time.