As the Union Budget 2026 approaches, tax experts are mounting pressure on the government to significantly expand the scope of deductions under the new tax regime. Home loans, medical insurance, and preventive healthcare benefits have emerged as the top priorities for reform, with industry leaders arguing that enhanced deductions would provide much-needed relief to Indian households facing rising living costs.

Medical Insurance and Healthcare Priorities

Medical inflation continues to pose significant challenges for India's healthcare system, with projections indicating rates of 11.5%-14%, among the highest in Asia. This inflationary pressure has intensified calls for comprehensive tax reforms in the healthcare sector.

Prashant Mishra, founder and CEO of Agnam Advisors, advocates for simplifying the new tax regime by integrating key deductions. "Simplifying the new tax regime by integrating key deductions such as housing loan interest, medical insurance under Section 80D (raised to Rs 50,000 for self/family and Rs 1 lakh for seniors), and a potential 25% slab for Rs 30-50 lakh earners would ease compliance burdens and provide equitable relief amid rising living costs," he stated.

Preventive Healthcare Focus

Srikanth Kandikonda, Chief Financial Officer at ManipalCigna Health Insurance, emphasizes the critical need for increased public health spending. "Currently, public health expenditure in India remains below global benchmarks and even short of the National Health Policy target of 2.5% of GDP in 2025," he noted.

The proposal for separate tax benefits for preventive healthcare represents a significant policy shift:

• Enhanced tax benefits for OPD services beyond current Section 80D limits
• Separate deductions for preventive health screenings
• Incentives to encourage wider adoption of preventive care
• Focus on reducing long-term hospitalization costs

Comprehensive Tax Reform Recommendations

Experts are proposing a multi-faceted approach to tax reform that extends beyond healthcare. The recommendations include enhanced retirement savings deductions and incentives for sustainable investments.

Mishra further suggests that "enhancing retirement savings deductions and incentives for green projects or AIFs in GIFT City aligns with sustainable, long-term strategies tailored for HNIs."

Industry Expectations and Market Impact

Shubham Gupta, CFA and Co-founder of Growthvine Capital, highlights the broader economic implications of these proposed changes. "As we get closer to the 2026 Union Budget, the focus of both taxpayers and businesses is on developing a fairer, more simplified, and predictable new tax regime, which many believe will improve household consumption and savings," he observed.

With the new tax regime now serving as the default option, expectations are mounting that Finance Minister Nirmala Sitharaman will use Budget 2026 to balance lower tax rates with meaningful incentives. The proposed reforms aim to boost home ownership, encourage insurance adoption, and strengthen overall household financial security while addressing demographic shifts and unlocking productivity for working professionals.

The Finance Ministry conducted the traditional halwa ceremony on Tuesday, signaling the commencement of the most guarded phase of Union Budget 2026-27 preparation. Finance Minister Nirmala Sitharaman attended the ceremony alongside senior officials and key staff responsible for preparing the annual financial statement scheduled for presentation on February 1.

Lock-in Phase and Confidentiality Measures

Following the halwa ceremony, approximately 60-70 officers will enter a strict lock-in period, remaining isolated from outside contact until the Union Budget 2026-27 is presented before Parliament. This stringent confidentiality measure ensures no advance disclosure of tax plans, spending decisions, or policy announcements.

Deregulation Focus and Economic Growth Strategy

The Union Budget 2026-27 is widely anticipated to emphasize deregulation across multiple sectors. The government aims to simplify regulatory frameworks, reduce compliance demands, and streamline business processes as India navigates challenging global economic conditions.

Policymakers are expected to target laws and procedures that create delays in investment, trade, and manufacturing activities. The deregulation initiative will be complemented by measures supporting domestic manufacturing, exports, and private capital investment. By eliminating regulatory obstacles and shortening approval timelines, the government seeks to strengthen supply chains and foster long-term economic growth while enhancing competitiveness for Indian industry.

Printing Operations and Administrative Logistics

Despite the Ministry of Finance relocating operations to Kartavya Bhavan last year, printing for Union Budget 2026-27 will continue at the North Block press. While new equipment has been installed at Kartavya Bhavan with trial runs underway, officials prefer utilizing the established North Block facility this year to maintain reliability and security protocols.

The lock-in period, historically tied to physical printing requirements at North Block, now reflects both digital workflows and security considerations. With most budget preparation conducted electronically, the duration of official seclusion has decreased in recent years.

Cultural and Administrative Significance

The halwa ceremony carries both cultural and administrative importance in the budget preparation process. In Indian tradition, sharing the sweet dish represents an auspicious beginning for significant undertakings. Administratively, it marks the conclusion of drafting and discussion phases, signaling the Budget document's entry into its final, tightly controlled stage.

Even as Union Budget 2026-27 preparation increasingly relies on digital processes, core confidentiality protocols remain unchanged. The lock-in mechanism prevents any potential leakage of fiscal data, including tax modifications, expenditure plans, and new policy initiatives. With the ceremony completed, the Budget process enters its final phase before the February 1 parliamentary presentation.