Budget 2026 Expectations: MSMEs Want Input Tax Credit on Employee Health Insurance

Commenting on the need to fix transmission infrastructure, Laxit Awla, CEO, SAEL, stated that the 2026 Union Budget needs to frontload transmission infrastructure investments to fix grid stability and curtailment bottlenecks. It would entail strategic capital allocations to fast-track development of green energy corridors and deploy grid-scale battery storage with long-term offtake commitments. This will align evacuation capacity with generation reality, help cut congestion and improve utilisation.

Speaking about solar energy sector, Vinay Rustagi, Chief Business Officer at Premier Energies, said that the renewable sector has been a major priority area for the government and we expect more favourable announcements supporting the sector in this budget.

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"As India enters the next phase of urban and Tier-2 expansion, Budget 2026 is an opportunity to structurally boost housing demand. Continued focus on affordable housing, more practical home loan tax benefits, and faster approvals through digital governance will be critical to unlocking end-user confidence and sustaining momentum across the real estate sector," Praveen Sharma, chief executive officer, REA India said.

"The Union Budget 2026–27 is expected to play an important role in shaping the next phase of growth for India’s livestock sector," Divya Kumar Gulati, chairman, CLFMA said.

The industry calls for continued support under Pradhan Mantry Matsya Sampada Yojana to sustain export push alongside higher allocations for hatcheries and seed production, Gulati added. He also called for digital infrastructure and climate-resilient climate-resilient aquaculture to help scale operations.

The industry is expecting further duty relief on pond and hatchery equipment, quality feed inputs, and cold-chain and processing infrastructure, along with better GST rationalisation.

"In 2025, India’s insurance ecosystem underwent a structural transformation starting with Sabka Bima Sabki Raksha reforms unlocking 100 % FDI % which will enhance capital availability, global competitiveness, and product diversity," Prantik Mitra, director, Client Advisory Group, Alliance Insurance Brokers, said.

Mitra urge for GST exemption on indivisual life and health premiums and clarity on tax incentives. The industry also looks forward to progress on composite licensing, reduced operational costs, and support the development of simpler, bundled products that are easier for customers to understand and afford, he added.

Dr Partha Chatterjee, Dean of Academics and Professor of Economics, Shiv Nadar University, Delhi-NCRs aid Budget 2026 should protect gains from strong growth and easing inflation while shifting focus to better-quality growth through jobs, wages and rural demand.

He added that the budget must also prepare the economy for global uncertainty by strengthening resilience, reducing risks for producers, exporters and MSMEs, and promoting long-term investment.

“The real test is improving the quality of growth—jobs, wages and rural demand—so the benefits are durable and widely shared,” he said.

Vikas Tarachandani, Co-founder of SURE said Budget 2026 should strengthen tax benefits on home loans to improve affordability for Indian households, for whom housing loans remain the largest long-term financial commitment. He also stressed the need for simpler, borrower-friendly disclosures by lenders on interest rate calculations and future changes, saying clearer loan terms could help reduce overpayment and improve household financial resilience.

“If we make loan terms easier to understand, we can meaningfully reduce overpayment at a national level and improve household financial resilience,” he added.

Sandesh Sharda of Gro More Portfolio Management LLC and Titan – Ideabaaz said Budget 2026 presents an opportunity to unlock the next phase of growth for India’s startup ecosystem through stable policies, simpler compliance norms and better access to long-term capital. He said continued support for technology- and impact-driven enterprises would help strengthen India’s position as a global innovation hub and enable founders to build sustainable, world-class businesses from India.

“If policy stability is ensured and long-term capital is encouraged, startups can accelerate job creation, innovation and global competitiveness,” he added.

Abhimanyu Munjal, MD & CEO of Hero FinCorp said Budget 2026 presents an opportunity to strengthen India’s inclusive credit ecosystem by improving liquidity access for NBFCs and expanding avenues for long-term capital.

He said continued policy support, along with a balanced operating environment, would be crucial to accelerate credit flow to underserved segments. Munjal also highlighted the need for simpler compliance norms and stronger incentives for digital lending to deepen financial inclusion for MSMEs and first-time borrowers.

“With the right balance of innovation and risk governance, NBFCs can play a bigger role in driving consumption, entrepreneurship and employment growth across India,” he added.

Vinay Thadani, Director and CEO, GREW Solar, said Budget 2026 must look beyond capacity addition and focus on building a stronger renewable energy ecosystem for long-term growth.

“As India enters a phase of large-scale renewable deployment, Budget 2026 needs to move beyond a sole focus on capacity addition and pay closer attention to the ecosystem that supports sustained growth,” he said.

Thadani added that limited access to long-term, affordable finance and the need for stable, predictable tariff and incentive frameworks remain key gaps that should be addressed to strengthen investor confidence.

Neeraj Jain, CFO, Quess Corp, said Budget 2026 should focus on improving job quality and formalisation, not just numbers.

“Ultimately, growth must be measured not just by GDP, but by the quality and sustainability of employment created,” he added.

Jain further stated that rationalising the 18% GST on manpower staffing, aligning Section 80JJAA with the Employment Linked Incentive framework, and ensuring predictable tax assessments would lower barriers to formal employment, expand social security coverage, and support sustainable workforce growth.

Ankush Sabharwal, Founder and CEO, CoRover, said AI start-ups look forward to the budget’s focus on fostering innovation and accelerating technology sector growth.

“We expect targeted funding and grants for AI R&D, aligning with global trends that attract over $100bn in annual investment,” he added.

Sabharwal highlighted the need for infrastructure support, skill development to address a 2mn strong talent gap, and a balanced approach to build a robust AI ecosystem, contributing to India’s $5trn economy goal by 2027.

Rohit Mahajan, Founder and Managing Partner, plutos ONE, said fintech should be embraced as the backbone of the country’s economy.

“With over 12bn monthly UPI transactions and digital payments representing more than 75% of total retail transaction volume, we have now reached a point where our focus must be on strengthening core rail infrastructure,” he added.

Mahajan emphasised the need for investment in resiliency, cybersecurity and interoperability, along with support for MSMEs through data-led financial products, to make Indian fintech globally competitive.

Edul Patel, CEO of Mudrex, said India’s crypto investors are adopting a more disciplined, long-term approach, creating an opportunity for regulations to reflect this maturity.

“Reducing TDS to 0.1% and allowing loss offsetting could lower friction, encourage responsible participation, and support a transparent, compliant and sustainable crypto ecosystem in India,” Patel added.

Patel noted that while formal recognition in 2022 was a milestone, high transaction TDS and tax rigidities have pushed activity offshore, limiting transparency and prudent portfolio management.

Prince Arora, Partner – Financial Due Diligence, BDO India, said the EV ecosystem has reached a stage where scale will be driven more by supply-side infrastructure than demand incentives.

“The EV ecosystem is at a stage where scale will be dictated not by demand incentives, but by infrastructure,” he noted.

Arora called for Budget focus on charging infrastructure, battery recycling, and domestic manufacturing of key components, adding that shifting incentives towards ecosystem builders would improve long-term viability, investor confidence and accelerate EV adoption.

"If Budget 2026 moves toward a simpler New Tax Regime with clear savings incentives, along with GST simplification and sustained spending on infrastructure, green energy and MSMEs, confidence can improve. Predictable policies can help businesses invest in growth, and households can plan better. To sum up, a fair and globally competitive tax system is our aspiration for Budget 2026 which strengthens both growth and long term wealth creation," said Ram Medury, Founder & CEO, Maxiom Wealth.

"We look forward to the upcoming Union Budget. India's media and entertainment boom is powered by mobile-first, short-format storytelling, with microdramas platforms mirroring today's audience habits regional languages in bite-sized bursts. Targeted incentives for digital-first IP, regional content, and creator skilling will drive sustainable scale. Clear digital monetization rules and easier capital access for platforms like ours will fortify the ecosystem, spark jobs across the creative chain, and position India as the global leader in next-gen entertainment," Anshita Kulshrestha, founder & CEO Tuktuki Entertainment Apps.

"One of the key expectations from the budget is to offer GST relief on health insurance/other employee insurances to MSMEs which employ many more people at the lower spectrum of income in the society. MSMEs usually rely on employee benefits like Group Health Insurance to attract and retain talent. The existing GST regulations create a further burden because MSMEs cannot claim input credit for the GST paid on employee health/life insurance premiums," said Sajja Praveen Chowdary, director, Policybazaar for business.

"As we look toward Budget 2026, a unified, digital-first compliance ecosystem could be one of the most transformative reforms for startups and MSMEs. A single national compliance portal with one login, one calendar, and integrated alerts across MCA, FEMA, GST, RBI, ESOP, labour, and tax compliances would dramatically improve ease of doing business. It would reduce errors, improve transparency, and help founders stay compliant without needing entire teams just to manage paperwork," Nitin Lahoti, Founder & Director, Mobisoft Infotech.

"We are looking forward to a Budget that builds on the strong foundations laid over the last year. Further steps to rationalise TDS and TCS provisions, expand safe-harbour thresholds for transfer pricing, and enable the direct listing of Indian-origin startups incorporated abroad can strengthen long-term confidence and ease of doing business. Creating a government-sponsored fund focused on life sciences, deep tech, and defence startups can further support innovation in strategic sectors.

UPI has emerged as a core pillar of everyday finance, with deeper adoption across Tier 2 and Tier 3 cities and expanding use cases beyond peer-to-peer payments. Continued support through merchant enablement infrastructure in non-metro regions, scaling credit on UPI, and advancing account-to-account payment interoperability under the National Payments Corporation of India can help deepen usage and formalise cash-light behaviour at scale. Extending the hybrid working model for SEZs can further accelerate fintech innovation.

The India AI Mission and announced AI Centres of Excellence have set a clear direction. Rolling out agentic AI use cases in fraud detection and credit underwriting, supported by a dedicated DeepTech Fund of Funds and streamlined ESOP taxation for DPIIT-recognised startups, can drive real impact with responsible safeguards in place," Sarvjeet Virk, Co-founder & MD, Finvasia said.

“As country’s startup ecosystem crosses 1 lakh recognised startups, we look at Union Budget 2026–27 as a crucial opportunity to strengthen AI-led health-tech solutions. With nation’s digital health market projected to cross USD 70 billion in the upcoming years, targeted incentives for AI adoption, R&D, and data infrastructure can assist startups scale impact while enhancing Digital India and the foresight of a healthier Viksit Bharat 2047. Encouraging policies, digital infrastructure and funding can aids startups supports AI for customise nutrition and preventive care driving inclusive growth,” Avanish Agarwal, Founder, Nutriiya said.