From Capex Boost to Joint Couple Taxation: Expectations in Budget 2026

The countdown has begun for Budget 2026. Everybody is waiting for the announcement on February 1, 2026. According to the expectations of many, the central government is expected to meet its budget target for fiscal deficit. It will also face some shortfalls in revenue. Weak net tax collections in FY26 may negatively impact overall revenue.

The government is likely to increase spending for development projects because of a strong dividend payout from the Reserve Bank of India and stricter control on spending revenue.

Expectation Details of Budget 2026

The following are the 5 main expectations from the Budget:

1.Capex Rise of 10.4%

The government may increase spending on capital projects, such as roads, railways and infrastructure, by 10.4%. In the last Union Budget for 2025, the government allocated Rs 11.21 trillion for capital spending.

2.RBI Pay Dividend of Rs 3 trillion

Non-tax revenues are expected to be important in FY26, mainly due to higher dividends that will help balance the effects of slow tax growth on overall revenues. It is believed that the RBI’s large dividend payout of Rs 3 trillion will significantly support revenue earnings. In FY26, the government managed its finances largely because of strong non-tax revenues, highlighted by a record RBI dividend of Rs 2.7 trillion.

3.Decline in Revenue Spending

The government expects spending to go down as part of its effort to manage finances better. Last year's budget estimated that the revenue expenditure would be Rs 38.2 trillion for FY26.

4.Joint Taxation of Couples

While many people will focus on the income tax relief announcement on February 1, there is a possibility that couples may face higher joint taxes.

5.Fiscal Deficit Easing to 4.3%

The fiscal deficit is expected to decrease from 4.4% of GDP in FY26 to 4.3% of GDP in FY27. This means that the fiscal deficit will improve slightly to 4.3% of GDP.

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