Historic Sunday Budget: Why February 1 Date Persists and What Investors Expect from FM Sitharaman

The tradition of presenting the budget on February 1 dates back to 2017, when then-Finance Minister Arun Jaitley shifted the annual presentation from late February to early February. The aim was to give Parliament more time to discuss, debate, and pass the budget, allowing new tax provisions and spending allocations to take effect well before the start of the new financial year on April 1.

Focus on Tax Relief for Middle-Income Earners

A major spotlight of Budget 2026-27 is expected to be tax relief, especially for middle-income taxpayers and salaried employees. One of the most closely watched areas is Section 80C, which allows deductions for specified savings and investments.

Section 80C: Potential Big Change

• Currently, deductions under Section 80C are capped at ₹1.5 lakh—a limit unchanged since 2014, despite inflation and rising incomes.

• Analysts and taxpayers alike are hopeful that this ceiling could be raised to ₹3 lakh, which would significantly enhance the incentive to save and invest in instruments such as PPF, EPF, ELSS, and life insurance.

• An upward revision could also make the old tax regime more attractive for many taxpayers.

Mutual Fund Industry Seeks Boost

Beyond personal income tax, the mutual fund sector is also lobbying for supportive measures to stimulate investment:

• Higher tax-free LTCG limits, potentially increasing the current ₹1.25 lakh exemption threshold.

• Relief for long-term equity fund holders, possibly through enhanced incentives for equities held over five years.

• Restoring indexation benefits for debt funds to improve post-tax returns.

• Introduction of a Debt-Linked Savings Scheme with tax deductions outside existing 80C limits.

Such changes aim to encourage everyday investors, deepen participation in capital markets, and channel more domestic savings into productive investments—boosting wealth creation over the long term.

Economic Outlook and Policy Direction

Although major reforms are not yet confirmed, expectations point towards a budget that prioritizes:

• Middle-class relief

• Savings and investment incentives

• Broader economic growth support

These measures come against a backdrop of positive macroeconomic indicators, with policymakers balancing fiscal prudence and growth-oriented reforms.

What to Watch on Budget Day

Market participants, tax professionals, and ordinary taxpayers will be listening closely for key announcements on:

• Changes in tax slabs or deductions (especially Section 80C)

• Incentives for savings and investments

• Proposals aimed at strengthening capital markets

• Updates on government spending priorities

As India readies for Budget Day, expectations are high that this year’s fiscal blueprint will offer a meaningful blend of stimulus, reform, and relief, positioning the economy for sustained progress in 2026-27.