Budget 2026 highlights: What the insurance sector expects from Finance Minister Nirmala Sitharaman

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Shilpa Arora, Co-Founder and Chief Operating Officer of Insurance Samadhan, said India’s tax framework for healthcare has failed to keep pace with sharply rising medical costs.

“Medical inflation is running at 12–14% annually, but Section 80D limits are stuck in a different decade,” she said, pointing out that deductions of Rs 25,000 for self and family, Rs 50,000 for senior citizen parents, and Rs 5,000 for preventive check-ups are inadequate given current hospital and diagnostic expenses.

Arora said the Budget should raise the overall health insurance deduction to at least Rs 1–1.25 lakh and increase the preventive health check-up limit to Rs 20,000, adding that “encouraging early diagnosis reduces hospitalisation costs and long-term claim burdens.”

On retirement planning, Arora said fully taxing annuity income discourages retirees from opting for guaranteed lifetime income. “With rising longevity and healthcare expenses, annuities should be treated as a social security tool,” she said, suggesting partial or full tax exemption on annuity payouts or higher deductions at the time of purchase to make post-retirement income more predictable and healthcare-ready.

Rakesh Kumar, MD and Founder of Square Insurance, said general insurance in India remains significantly under-penetrated despite rising everyday risks for individuals and businesses.

“General insurance penetration is close to 1% of GDP, while the global average is over 4%,” he said, adding that Budget 2026 should focus on making insurance simpler, more affordable and preventive in nature. Kumar said incentives for risk reduction in areas such as agriculture, MSMEs and infrastructure can help lower future losses, while support for digital distribution and faster claims processing can bring down costs. “Insurance should be seen as a long-term economic safeguard, not just a post-disaster solution,” he said.

On costs, Kumar said rising commission expenses are a growing concern, driven by intense competition, higher reliance on single-premium products and bancassurance, and front-loaded commission structures.

Citing IRDAI data, he said total commissions crossed Rs 60,000 crore in FY25 and are growing faster than premiums. “The issue is not commissions themselves, but how and when they are paid,” he said, suggesting commissions be spread over the policy life and linked to persistency and service quality, along with a stronger push towards digital sales and better agent productivity to control costs without hurting distributors.

Kunal Mundra, Founder and CEO of Astranova Mobility, said parts of the current GST framework are misaligned with India’s electric vehicle ambitions.

“While electric vehicles are taxed at 5%, batteries continue to attract an 18% rate,” he said, adding that this gap complicates pricing and weakens models such as battery-as-a-service and battery swapping.

Mundra said aligning GST at 5% across EVs and core components would reduce the total cost of ownership, improve clarity for manufacturers and users, and help accelerate adoption, especially in commercial segments where scale and affordability matter most.

Media, digital and manufacturing MSMEs are looking to Budget 2026 for stronger access to credit, simpler compliance and protection from global trade shocks. Abbhinav R. Jain, Co-founder and CFO of AdCounty Media, said the sector wants the government to address the “missing middle” in financing.

“We need a data-driven, seamless financing solution,” he said, calling for an increase in credit guarantee limits for MSEs and exporters to Rs 10 crore and Rs 20 crore, respectively.

Jain also proposed a common digital platform that integrates GST, e-invoicing, ITR and bank data to enable instant, collateral-free loans of up to Rs 50 lakh.

He said GST 2.0 measures such as quarterly filings for firms with turnover below Rs 5 crore and AI-led compliance tools could cut administrative burdens by 40%, while a Rs 10,000 crore MSME growth fund routed through fintechs could help scale millions of new entrepreneurs.

From the manufacturing side, Raghunandan Saraf, Founder and CEO of Saraf Furniture, said Budget 2026 should focus on faster and cheaper credit along with trade resilience.

He said exporter term loan guarantees should be raised to Rs 40 crore and a dedicated Trade Resilience Fund created for sectors hit by tariffs, such as gems and leather.

“Cash-flow-based lending through GST-linked scorecards can unlock up to Rs 1.5 lakh crore in new liquidity,” Saraf said. He also called for stronger public procurement preference for ZED-certified units, a Rs 5 lakh credit card scheme for micro-enterprises, and focused training centres for Industry 4.0 and green technologies to help MSMEs move up the global supply chain.

Sunny Bhanushali, Founder of Aliens Tattoos, said Budget 2026 should widen policy focus beyond software and SaaS to include creative and design-led startups.

“Creative startups operate at the intersection of culture, design and technology, and we are building entirely new markets,” he said, calling for incentives for IP creation, support for design-led exports and easier access to working capital to accelerate growth.

From a skilling perspective, Bhanushali said India’s creative economy remains under-recognised despite strong demand.

“Tattoo art today represents a serious career pathway,” he said, adding that Budget 2026 should strengthen vocational and creative education through better student financing, support for modern art institutions and integration of creative skills within Skill India frameworks. He said structured training can turn hobbyists into globally employable artists and help unlock thousands of sustainable creative careers.

Payas Agarwal, Director of Great Value Realty, said the Union Budget 2026 offers a timely opportunity to unlock further potential in India’s real estate sector, especially luxury housing in NCR.

He said rising household incomes and sustained consumer confidence are driving strong demand, with luxury homes increasingly seen as long-term investments rather than discretionary purchases.

“We are expecting the introduction of a streamlined single-window approval system and steps to ease regulatory bottlenecks,” Agarwal said, adding that such measures could improve project execution timelines, enhance capital efficiency and benefit both developers and homebuyers.

Pavan Kumar, Founder and CEO of White Lotus Group, said Union Budget 2026 offers an opportunity to bring deeper policy clarity to India’s luxury and design-led real estate segment.

He said stakeholders are looking beyond short-term incentives and want structural clarity on capital gains taxation that recognises luxury housing as a long-duration investment rather than a speculative asset. “Simplifying long-term capital gains provisions and incentivising longer holding periods can help stabilise pricing and attract global capital,” Kumar said.

He also flagged GST on input tax credits and works contracts as a major cost driver for high-end projects, adding that a predictable GST framework would improve cost efficiency and pricing clarity. Kumar said continued support for institutional platforms such as REITs and policy fine-tuning across housing segments can strengthen real estate’s role as long-term economic infrastructure.

As Budget 2026 approaches, real estate developers are calling for policy changes to better reflect current housing costs and revive demand. Shiv Garg, Director of Forteasia Realty Pvt. Ltd., said the existing Rs 45 lakh cap for affordable housing and the linked 1% GST benefit no longer match land and construction costs in most urban markets.

“A realistic price bracket of Rs 80–90 lakh and a cut in GST on works contracts from 18% to 12% can help revive stalled projects and open up new supply,” he said, adding that higher PMAY-Urban allocations and faster approvals would benefit first-time buyers and improve housing quality.

Echoing similar concerns, Aman Gupta, Director of RPS Group, said mid-income buyers in NCR and other high-growth regions are missing out on benefits because most homes are priced above the current affordable housing limit.

He said raising the cap to around Rs 90 lakh, reviving the additional interest deduction under Section 80EEA, and easing credit for developers could lower acquisition costs and EMIs. Gupta added that sustained investment in metro, expressway and urban infrastructure would support housing demand in peripheral corridors.

Anurag Goel, Director of Goel Ganga Developments, said housing should be treated as essential infrastructure in a rapidly urbanising India. He said while PMAY-Urban 2.0 signals strong intent, policy fine-tuning is needed to ensure supply matches demand.

“Rationalising GST on under-construction homes, widening the affordable housing price band and extending targeted tax deductions will make projects viable, especially in Tier 1.5 and Tier 2 cities,” Goel said, adding that policy clarity would encourage investment in sustainable, high-density housing near transport hubs.

Siddharth Maurya, Founder and Managing Director of Vibhavangal Anukulakara Pvt. Ltd., said Budget 2026 is being closely watched by investors and homebuyers as a signal of how serious the government is about accelerating “Housing for All” and urbanisation.

“The ask is simple: redefine affordable housing, offer more precise and time-bound tax incentives, and extend the 1% GST benefit to a broader and more realistic price range in major cities,” he said. Maurya added that reducing GST on developers’ input services and works contracts would help cut costs and prevent low-quality construction.

He also called for higher PMAY allocations and continued investment in metro, regional rail and logistics infrastructure, saying these steps could strengthen real estate’s role in job creation, consumption and long-term wealth creation for Indian families.

Koheli J Puri, Founder and Managing Director of StudioXP, said India’s office market is entering a phase where growth is no longer driven only by added space.

“There is a clear shift towards flexible formats, greener buildings, technology-led workplaces and expansion beyond metros,” she said, adding that Global Capability Centres are diversifying locations and employees now expect smarter and more agile work environments.

Puri said Budget 2026 can convert this momentum into long-term capacity building through policy clarity, ESG incentives, stronger digital infrastructure and easier approvals, helping India move towards a future-ready office ecosystem that supports jobs, productivity and sustainable urban growth.

Atul Monga, Co-Founder and CEO of BASIC Home Loan, said India’s macroeconomic outlook remains cautiously optimistic, supported by steady domestic demand, controlled inflation and strong public capital expenditure despite global volatility. He said with geopolitics reshaping trade, energy costs and capital flows, “the ability to rely on internal consumption will be integral for medium-term economic stability.”

On housing, Monga said affordable home financing deserves focused policy attention. “For first-time and affordable homebuyers, predictable EMIs, clear tax benefits and easier access to credit matter far more than short-term interest rate movements,” he said.

He called for higher deductions on home loan interest and principal repayment, restoration of higher limits for self-occupied homes, and targeted tax relief for first-time buyers to revive genuine demand without pushing up prices. Monga also flagged the need for policy continuity and better liquidity access for NBFCs and fintechs, adding that support for technology-led underwriting can help expand responsible credit to self-employed and informal borrowers and make housing-led growth a stabilising force amid global uncertainty.

Niraj Kacha, Founder and CEO of KiWeb Solution, said India’s next phase of digital growth will depend on stronger internet infrastructure, practical AI and digital marketing education, and wider execution beyond metro cities.

“Budget 2026–27 has an opportunity to move Digital India from intent to impact,” he said, adding that affordable broadband in Tier II and Tier III regions is critical to closing the digital gap.

Kacha also called for support to industry-led skilling programmes and incentives for startups that generate local digital jobs, saying the right policy push can help India shift from being a digital adoption market to a global talent engine driven by grassroots innovation.

Anup Garg, Founder and Director of World of Circular Economy, said climate and sustainability priorities must be firmly embedded in India’s economic strategy as the country heads into the Union Budget.

He said the transition needs to be aligned with near-term decarbonisation targets, the Viksit Bharat 2047 vision and India’s net-zero goal for 2070. “India will require over USD 10 trillion in climate investments by 2070, so the Budget must move beyond signalling intent and focus on enabling execution,” Garg said.

He said a key priority should be the creation of clear, investable frameworks to unlock private and international capital. This includes a strong climate finance taxonomy and de-risking tools such as blended finance, credit enhancements and transition finance, especially for capital-intensive sectors like steel, cement, transport and long-duration energy storage.

Garg also flagged rising trade pressures, noting that measures such as the EU’s Carbon Border Adjustment Mechanism could hurt exporters from developing economies. “Targeted fiscal support for industrial decarbonisation, clean manufacturing and low-carbon exports will be critical to protect competitiveness,” he said. Garg added that budgetary support for digital and AI-driven ESG systems can improve disclosures, lower compliance costs and help convert India’s climate ambition into long-term economic opportunity.

Punit Agarwal, Founder of KoinX, said current crypto tax rules often lead to a mismatch between actual trading outcomes and tax liabilities. Citing platform data, he said many users who were overall in losses still ended up paying taxes because losses cannot be offset under existing rules.

Agarwal said clearer, data-driven visibility into how profits, losses and taxes work in practice would help move discussions beyond assumptions and enable more constructive engagement between investors, platforms and policymakers.

Divyesh Dalal, Managing Director and Country Head – Global Transaction Services, Corporate Banking (Financial Institutions and SMEs) at DBS Bank India, said measures announced in the previous Budget helped MSMEs scale up while retaining access to credit and government support.

He said higher MSME thresholds, expanded credit guarantee cover for micro and small enterprises, startups and exporters, and targeted working capital products improved credit availability, especially for first-time and under-collateralised borrowers.

Dalal said these steps have led to stronger demand for structured working capital, higher formalisation and greater use of digital banking, as reflected in the Economic Survey. Ahead of Budget 2026, he said there is scope to ease liquidity pressures by upgrading the Udyam framework for richer data, extending MSME dispute resolution beyond CGTMSE-linked cases, and continuing policy support for digitisation, tech adoption, re-skilling and export-oriented SMEs to help them navigate global volatility.

Prateek Maheshwari, Co-Founder of PhysicsWallah, said the Budget should focus on making education more affordable and accountable. “The current 18% GST on educational services is a burden. Lowering this is essential to make quality learning accessible to every family,” he said.

Maheshwari also called for a shift towards outcome-based budget allocation, adding that funding should be linked to results such as improved learning outcomes and employability. He said this approach would ensure public spending directly empowers youth and helps build a skilled nation.

Anjana Ghosh, MD of Scale Sherpas, said last year’s Budget focused on fiscal consolidation, capex-led growth and infrastructure, with steps on skilling and formalisation, but the impact on consumption-heavy sectors like FMCG has been gradual, especially in rural and general trade markets.

“This year, expectations are for a sharper pivot towards reviving consumption and boosting disposable incomes, particularly in rural and semi-urban India, which drives nearly 60% of FMCG demand,” she said.

Ghosh added that targeted support for jobs and skilling is crucial, given the FMCG ecosystem supports over 3 million frontline jobs, while faster digital and logistics enablement for kirana stores, which account for nearly 90% of FMCG sales, along with GST rationalisation and ease-of-doing-business reforms, can help brands grow sustainably.

Archit Gupta, Founder and CEO of ClearTax, said the new tax regime has become the preferred option for earners below Rs 25 lakh due to its simplicity and lower rates, but a significant section still sticks to the old regime.

Citing ClearTax data, he said 26% of taxpayers continue with the old regime because their financial planning is built around legacy benefits such as HRA and home loans. “For this group, switching isn’t just a tax calculation, it disrupts a long-term wealth structure,” Gupta said.

He suggested reintroducing home loan interest deduction under Section 24(b) in the new regime, expanding retirement deductions beyond NPS, taxing ESOPs only at the time of share sale, and making the full 80% NPS lump sum withdrawal tax-free to make the new regime more attractive for long-term wealth creation.

Aakash Uppal, Partner and Leader – Direct Tax (North & East) at BDO India, said advance tax collections at the Centre have grown marginally by 4.16% on a gross year-on-year basis, with corporate taxes remaining the largest contributor.

He said the increase has also been supported by a decline in tax refunds, largely due to tighter scrutiny of fraudulent claims. Uppal added that while the economy appears stable, the pace of tax collections could vary depending on sectoral performance, especially amid evolving US tariff policies and the proposed India–US trade deal.