Union Budget 2026: Financial services sector's wishlist

As the Union Budget 2026 approaches, financial sector expectations are being framed around market deepening, lowering friction costs, and strengthening long-term savings, retirement, insurance themes.  The sector is looking for stability, tax certainty, and targeted interventions that deepen credit, savings, and capital markets, according to media reports. As growth is moderating and geo-political conditions are still fluid, banks, NBFCs, mutual funds, and insurers are seeking a balanced approach that supports financial inclusion and enduring system stability.​ 

Corporate bond market deepening 

A key expectation is credible steps to be taken to expand the corporate bond market. In pre-budget consultations, capital market representatives suggested measures to deepen the bond market.  A NITI Aayog report also lays out a roadmap to expand the market, including ideas like tax and regulatory reforms. It also introduces diversified instruments such as long‑tenor and sustainability‑linked bonds and enhance liquidity through improved trading and settlement systems. 

Market transaction costs: STT and capital gains  

Another recurring ask is a review or reduction of Securities Transaction Tax (STT).  On the overall investment taxation discussion, stakeholders advocated for the rationalisation of LTCG tax, positioning it as supportive for long-term wealth creation and market participation. 

Insurance: tax parity, retirement security, inclusive products 

Within financial services, insurance industry expectations include structural tax reforms and tax parity, sharper support for retirement security, and a push for inclusive products like micro-insurance.  This is being discussed in the backdrop where India has recently legislated raising the insurance FDI cap to 100%.  

Stability and certainty in the tax regime 

Banks, insurers, and market participants want a stable direct tax regime with minimal ad-hoc changes, especially in corporate tax and capital gains rules.  Among the expectations are faster dispute resolution, reduction of ambiguity in tax provisions, and more predictable timelines for implementing any new tax measures.​ 

Encouraging long-term savings and investments 

The industry expects measures that encourage long-term financial savings through mutual funds, insurance, pension products, and fixed-income instruments. Wishlist include higher or better-aligned limits under popular savings and deduction sections. 

Stakeholders also demand slight change in capital gains tax rules so that it becomes more tax-efficient for common investors to stay invested for a longer period, and relatively less attractive to buy and sell too quickly or for the short-term. 

Credit support for MSMEs and priority sectors 

Banks and NBFCs are asking for continued and enhanced credit guarantee schemes, refinance lines, and risk-sharing mechanisms for MSME and priority sector lending. There is also a push for better data-sharing frameworks and digital infrastructure to underwrite small borrowers more efficiently without compromising asset quality.​ 

Simplification of TDS/TCS and compliance 

Across financial products, there is demand for a simpler, rationalised TDS/TCS framework that reduces fragmentation and compliance burden for both institutions and investors. Industry stakeholders want clearer thresholds, standardised rates, and better alignment between different financial instruments in terms of tax rules.​ 

Strengthening capital markets 

Capital market participants expect policy continuity in encouraging equity, debt, and REIT/InvIT markets as a channel for financing infrastructure and corporate growth. Suggestions include tax clarity for investment vehicles, measures to deepen the corporate bond market, and steps that can further broaden retail and institutional participation.​ 

Support for digital financial infrastructure 

Banks, NBFCs, and fintech are looking for continued investment and policy support for digital public infrastructure, including payments, account aggregators, and digital KYC. There is demand for clearer guidelines and tax treatment for emerging fintech models and to support for cybersecurity and data protection frameworks that can keep pace of rapid digitisation.​ 

The financial services sector’s Budget 2026 expectations are centred on deepening bond markets, lowering transaction friction (like STT), and improving the long-term savings/insurance ecosystem. 

If Union Budget 2026 can deliver predictability in tax rules, encourage long-term savings, boost MSME credit, simplify TDS/TCS, deepen capital markets, and channel more capital into green and digital finance, it will significantly strengthen India’s financial services ecosystem. This, in turn, can support sustainable growth and provide a more robust funding backbone for the broader economy.