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Fintech and banking seek tax breaks, liquidity support ahead of Budget 2026

The industry is pushing for higher LTCG exemptions, GST rationalization, and NBFC liquidity support as Union Budget 2026 approaches on February 1.

80%+UPI digital payments share

Economy1 min read

🗓️ Budget 2026 is 3 Days Away — Here’s What Fintech & Banking Want
Image: Finsamudra LinkedIn archive
14 billion+Monthly UPI transactions
$6.83 billion → $33.5 billion by 2034India digital payments market projection

Union Budget 2026, set for February 1, comes as India's digital payments ecosystem scales at record pace. UPI now powers over 80% of digital payments, with 14 billion+ monthly transactions flowing through the network. The industry is using this moment to press for structural support.

Tax incentives top the wishlist. Fintech players want higher LTCG exemption limits, GST rationalization for digital lending startups, and targeted tax breaks to ease growth. The ask reflects startup funding challenges and the rising cost of compliance in a maturing sector.

Banking and NBFC sectors are seeking liquidity support and credit guarantee schemes for MSMEs, alongside PSL target adjustments. These moves would ease funding pressures on non-bank lenders and unlock capital for small business lending.

Digital infrastructure requests focus on three pillars: continued UPI investment, Account Aggregator ecosystem funding, and DigiLocker expansion. The startup ecosystem is also pushing for angel tax clarity and ESOP taxation relief to improve capital access and employee incentives.

The asks reflect India's digital finance trajectory. Current market size stands at $6.83 billion, with projections to reach $33.5 billion by 2034. Budget allocations to infrastructure and tax policy will directly shape whether fintech, banking, and lending platforms can scale to meet this demand.

Why it matters

For DSAs and loan connectors, budget outcomes on NBFC liquidity and PSL targets will determine how much capital flows through their lending partnerships. Higher LTCG exemptions and GST rationalization directly reduce fintech partner costs, which can translate into better margins or more competitive pricing for agents on the ground. Credit guarantee schemes for MSMEs expand the borrower pool these platforms can serve profitably.

UPI and Account Aggregator funding decisions affect the rails on which loan applications move. Continued investment in digital infrastructure speeds up KYC, document verification, and fund disbursement—operational gains that matter to high-volume DSAs. ESOP and angel tax clarity also affects fintech partner valuations and employee retention, which indirectly impacts service quality and stability for connectors dependent on these platforms.

Sources

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Finsamudra DeskNewsroom · 29 Jan 2026, 6:18 pm IST
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