Union Budget 2026-27

Key Takeaways of Union Budget 2026

New Income Tax Act

Budget 2026 introduces a new Income Tax Act effective 1st April 2026 to simplify taxpayer compliance.

Simplified ITR & Extended Revision Window

ITR forms will be simplified and taxpayers can revise returns until 31st March instead of 31st December for a nominal fee. 

Fiscal Deficit Target Set

The fiscal deficit target for FY2026–27 is set at 4.3%, signalling tighter macro management.

Higher Capital Expenditure

Capital expenditure for FY27 has been raised to ₹12.2 Lakh Crores to boost infrastructure investment. 

Market Borrowing Estimate

Gross market borrowing for FY27 is estimated at ₹17.28 Lakh Crores, reflecting financing needs. 

Debt-to-GDP Outlook

Debt-to-GDP is projected at 55.6%, underscoring the need for fiscal prudence. 

Power Sector Restructuring

Public financial institutions PFC and REC will be restructured to strengthen the power sector. 

Higher STT on Futures

Securities Transaction Tax on futures has been raised to 0.05%, affecting active derivatives traders. 

PRIO Investment Limit Raised

The individual participation limit in PRIO has increased from 5% to 10%, widening investor access.

Tax Holiday for Data Centres

India-based data centre operated cloud services will receive a tax holiday extending through 2047.

Exemption for Motor Accident Tribunal Interest

Interest awarded by the Motor Accident Claims Tribunal to individuals will be exempt from income tax and free from TDS.

Lower TCS on Overseas Tour Packages

Tax collected at source on overseas tour packages is reduced to 2 per cent, removing previous amount-based stipulations.

Reduced TCS for LRS Education and Medical

TCS under the Liberalised Remittance Scheme for education and medical expenses is cut from 5 per cent to 2 per cent.

TDS Clarification for Manpower Services

Payments for manpower services will clearly attract TDS when paid to contractors, set at either 1 per cent or 2 per cent.

Automated Lower/Nil Deduction Scheme for Small Taxpayers

A rule-based automated scheme will allow small taxpayers to obtain lower or nil deduction certificates without filing applications manually.

11:05 AM 

– India will continue to take steps towards ‘Viksit Bharat’, said the FM, as she presents her 9th Union Budget in the Parliament. 

– Yuva Shakti driven budget – inspired by 3 ‘Kartavyas’: 

1. Accelerate and sustain economic growth by enhancing productivity and competitiveness

2. Fulfil people’s aspirations & build their capacity to help in India’s path to prosperity

3. Align with ‘Sabka Saath, Sabka Vikaas’ vision and ensure that every family, community, region and sector has access to resources, amenities and opportunities

– Government’s ‘Sankalp’ is to focus on poor, underprivileged, and the disadvantaged

– Reform Express: Govt. undertaken comprehensive reforms. 350 reforms rolled out since Independence Day 2026, including GST 2.0. 
 

11:08 AM

Threefold approach requires a supportive ecosystem, said the FM 

1. Sustain the momentum of structural reforms 

2. Secure a robust and resilient financial sector to mobilise savings, allocate capital efficiently and manage risks 

3. Enhance cutting-edge technologies, including AI applications, for better governance
    

11:10 AM 

Interventions in 6 areas

1. Scaling up manufacturing in 7 strategic and frontier sectors 

2. Rejuvenating legacy industrial sectors 

3. Creating ‘Champion MSMEs’ 

4. Delivering a powerful push to infrastructure 

5. Ensuring long-term energy security and stability

6. Developing City Economic Regions
   
   

11:13 AM

– India will be developed as a global pharma manufacturing hub, said the FM

• Biopharma SHAKTI (Strategy for Healthcare Advancement through Knowledge, Technology and Innovation) announced

• Biopharma SHAKTI outlay set at ₹10,000 Cr to build the ecosystem for domestic production of biologics and biosimilars 

– Govt. to launch India Semiconductor Mission 2.0 

• Support mineral-rich states of India to promote mining, research, etc. 

• Focus on industry-led research and training centres to develop tech and skilled workforce 

• Electronics Components Manufacturing Scheme outlay increased to ₹40,000 Cr
   

11:15 AM

– Dedicated Rare Earth Corridors to be set up in Odisha, Kerala, Andhra Pradesh and Tamil Nadu

– They will promote mining, processing, research and manufacturing

– The Centre will support the states to set up 3 dedicated Chemical Park 

– They will help reduce import dependency and enhance domestic chemical production
 

11:18 AM

– Reforms announced in Textile Industry – Integrated Programme with 5 sub-parts

• National Fibre Scheme to be set up for self-reliance in natural fibres, man-made fibres, and new-age fibres 

• Textile expansion scheme Textile Expansion and Employment Scheme to modernise traditional clusters 

• National handloom & handicraft programme proposed to provide targeted support for artisans and weavers 

• Tex-Eco Initiative announced to promote sustainable and globally competitive apparels and textiles 

• The FM announced Samarth 2.0 to modernise textile skilling ecosystem 

– Set up mega textile parks  in challenge mode to add value and focus on technical textiles

– Launch Mahatma Gandhi Gram Swaraj initiative to strengthen khadi, handloom and handicrafts


11:21 AM

– Scheme announced to revive 200 legacy industrial clusters

– Improve cost competitiveness and efficiency via infra and tech upgrades

– The FM announced 3 pronged approach for MSMEs: 

1. Equity Support

• Dedicated ₹10,000 Cr SME growth fund

• Top up Self-Reliant India Fund with ₹2,000 Cr

• EMS Outlay to be increased to ₹40,000 Cr

2. Liquidity Support

• Multiple measures for Trade Receivables Discounting System (TReDS)

3. Professional Support

• Govt to facilitate ICAI, ICSI, ICMAI to design short-term, modular courses and practical tools 

• These will help develop a cadre of ‘Corporate Mitras’, prioritising Tier-II and Tier-III towns
   

11:24 AM

– Infrastructure Reforms: 

• In FY27 Public Capex to be increased to ₹12.2 Lakh Cr

• Set up Infra Risk Guarantee Fund to provide partial credit guarantees

• Govt to continue focus on developing infra in Tier II and Tier III cities

– Steps to promote environmentally sustainable movement of cargo: 

• Dedicated freight corridors connecting Dankuni to Surat to be established

• 20 New National Waterways (NW) to be operationalised over the next 5 years

• Ship repair ecosystem to be set up at Varanasi & Patna

• Coastal Cargo Promotion Scheme to be launched

•  Seaplane VGF Scheme to be introduced to support seaplane manufacturing
   

11:27 AM

– City Economic Regions:

• Focus on Tier 2 & Tier 3 cities

• City Eco Regions (CER) to be mapped based on growth driver

• Allocation of ₹5,000 Cr per CER proposed

• 7 high speed rail corridors to be developed as ‘Growth Connectors’:
  
  

1. Mumbai-Pune

2. Pune-Hyderabad

3. Hyderabad-Bengaluru

4. Hyderabad-Chennai

5. Chennai-Bengaluru

6. Delhi-Varanasi

7. Varanasi-Siliguri

 

– Financial Sector Reforms

• Vision for NBFCs - clear targets for credit disbursement & tech adoption

• FM proposed a “High Level Committee on Banking for Viksit Bharat” 

• Power Finance Corporation and Rural Electrification Corp to be restructured

• Review of Forex Management to make user-friendly framework for foreign investments

 

11:30 AM

– Reforms in Corporate Bond Market

Market making framework proposed with suitable access to funds and derivatives on corporate bond indices

– Municipal Bond Market Reform

Incentive of ₹100 Cr for single bond issuance of > ₹1,000 Cr

– Ease of Doing Business

– FM proposed to increase investment limit for individual PROIs under the Portfolio Investment Scheme to 10% from 5%. 

– High-Powered ‘Education to Employment and Enterprise’ Standing Committee to be set up
 

11:33 AM

– Health Reforms

• Existing institutions for Allied Health Professionals (AHPs) to be upgraded

• New AHP Institutions established in private and Government sectors

• 1.5 Lakh caregivers to be trained in a new ‘Care Ecosystem’ for geriatric and allied care

• Scheme proposed to support states in starting 5 regional medical hubs

• AYUSH Centres, Medical Value Tourism Facilitation Centres and medical infra

• Provide job opportunities for health professionals

 

11:36 AM

– AYUSH Initiatives

• India to set up 3 new All India Ayurveda institutes

• Upgrade AYUSH pharmacies and Drug Testing Labs

• Upgrade WHO Global Traditional Medicine Centre in Jamnagar

 

11:39 AM

– Education Reforms

• Govt to support states in creating 5 University Townships in industrial corridors

• 1 girls hostel to be established in every district via VGF/capital support

• 4 Telescope Infrastructure facilities will be set up to promote Astrophysics and Astronomy

 

11:41 AM

– Tourism Reforms

• Proposed to set up a National Institute of Hospitality

• National Destination Digital Knowledge Grid to be established to digitally document key tourist spots

• Develop mountain trails in Himachal Pradesh, Uttarakhand, J&K, Araku Valley, etc. 

• Pilot scheme to develop 10,000 guides from 20 top tourism spots

• India to host first Global Big Cat Summit in 2026 

• Develop 15 archeological sites like Sarnath into cultural destinations

 

11:44 AM

– Reforms for Farmers

• Increasing farmer incomes through productivity enhancement

• Empower Divyangan via livelihood, training, & assistive devices

• Empowering the vulnerable to access mental health and trauma care

• Support high value crop development to enhance farmer incomes

• Focus on the Purvodaya States and the North-East Region to accelerate development

 

11:47 AM

– Agro/Fisheries Reforms

• Develop 500 reservoirs and Amrit Sarovars for Fisheries sector

• Support high value crops such as coconut, sandalwood, cocoa, etc. in coastal areas

• Govt. to partner with states to restore glory of Indian sandalwood cultivation

 

11:50 AM

– Healthcare and Assistance

• ‘Bharat Vistar’ to be launched - multi-lingual AI tool for farmers

• FM proposed Self-Help Entrepreneur (SHE) Scheme to be set up

• Divyangan Sahara Yojana to be launched, supporting artificial limb manufacturing corp.

• National Institutes for Mental Health (NIMHANS 2) to be set up in Ranchi & Tejpur

 

11:52 AM

– Purvodaya States and the North-Eastern Region

• Announced scheme to develop Buddhist circuits in NE Indian States

• Proposed development of an integrated East Coast Industrial Corridor

• Creation of 5 tourism destinations in the 5 Purvodaya States

• Provision of 4,000 e-buses to promote transport in the region

 

11:54 AM

– 16th Finance Commission Recommendations

• ₹1.4 Lakh Cr to go to states as grants in FY2027

• Debt-to-GDP ratio estimated 55.6% of GDP in FY2027

• In FY2027 Fiscal Deficit estimated at 4.4% of GDP

• Fiscal deficit of FY2027 estimated at 4.3% of GDP

 

11:56 AM

– Part B: Direct Taxes

• New Income Tax Act from April 2026

• Simplified Income Tax forms to be introduced

• Interest awarded by the Motor Accident Claims Tribunal exempted from income tax

• TCS rate on sale of overseas tour program package reduced to 2%

• TCS rates reduced in education & medical purposes, LRS reduced from 5% to 2%

 

11:58 AM

• Timelines for filing ITR 1 and ITR 2 to continue till 31st July 

• Non-audit business cases or trusts to be allowed till 31st August

• Time to revise returns from 31st Dec to 31st Mar, with a nominal fee

• Introduce 1 time 6-month foreign asset disclosure rule

• Limit of undisclosed assets to be ₹1 Cr. 

• Rationalise Prosecution Framework under I-T Act

 

12:02 PM

• One-time 6-month foreign asset disclosure scheme to be introduced 

• Taxpayers can disclose income or assets below a certain size

• Applicable for two categories of taxpayers: 

1. Who did not disclose overseas income or asset

2. Who disclosed overseas income and/or paid due tax but couldn’t declare asset

 

12:05 PM

• Tax holiday to any foreign company till 2047 who are providing cloud services

• 15.5% common safe harbour margin for all IT services

• Safe harbour to electronic makers at 2% profit margin

• Simplified TDS process for NRI property sales 

• TCS on overseas tour packages reduced to 2% 

• Taxpayers can update returns even after reassessment proceedings are initiated

 

12:10 PM

• STT on Futures raised to 0.05% from 0.02%

• STT on Options Premium Trading raised to 0.15% to 0.1%

• Remove custom exemptions from some Made in India goods

• Promote to pay additional tax on share buyback

• Final MAT Rate cut from 15% to 14%

 

12:15 PM

– IT & global Business Sector 

• Threshold for availing safe harbour for IT services enhanced to ₹2,000 Cr

• Safe harbour for IT services shall be approved by an automated rule-driven process

• Unilateral Advance Pricing Agreement (APA) process to be fasttracked for IT services

• Exemption from Minimum Alternate Tax (MAT) to be provided to all non-residents who pay tax on presumptive basis

 

12:20 PM

– Other Tax Proposals

• TCS rate for sellers of alcoholic liquor, scrap, minerals to be rationalized to 2% 

• TCS rate for sellers of tendu leaves to be reduced to 2% from 5%

• Buyback for all types of shareholders to be taxed as Capital Gains

• This will make effective tax 22 percent for corporate promoters

 

12:25 PM

– Ancillary Customs Reforms

• Limit for duty-free imports of inputs used for seafood products for export to 3%

• 17 anti-cancer drugs and 7 more medicines for rare diseases exempt from duty

• Entire value of biogas to be excluded while calculating the Central Excise duty payable on biogas blended CNG

• FM proposed to facilitate eligible manufacturing units’ sales  in SEZs to Domestic Tariff Area (DTA) at concessional duty rates

 

12:30 PM

– Customs Reforms

• BCD exemption on multiple goods & raw materials

• BCD exempt on raw materials for manufacturing civilian training and other aircraft

• Tariff on all dutiable goods imported for personal use reduced to 10%

• BCD exemption on capital goods for lithium-ion cells to also cover battery energy storage systems

• BCD exemption on import of sodium antimonate for solar glass manufacturing

• BCD exemptions on imports of goods required for Nuclear Power Projects to be extended till the year 2035