Union Budget 2026–27: Key Highlights

    Overall Theme of Budget 2026–27

  • Focus on “Action over rhetoric” and “People over populism”.
  • Aim is to build a Viksit Bharat with:
    - Sustained economic growth (~7%)
    - Fiscal discipline
    - Strong public investment
    - Trust-based governance
  • Budget balances growth, stability, and inclusion

    1. Direct Tax Highlights

    Income Tax Structure
  • No change in income tax slabs or rates.
  • Stability provided so taxpayers can plan better.
  • A new simplified Income Tax Act to be implemented from 1 April 2026.
    • Major Reliefs for Individual Taxpayers
  • Interest received from Motor Accident Claim Tribunal (MACT) made fully tax-free.
  • Any TDS on MACT interest removed.
  • Depositories allowed to accept Form 15G / 15H even if investments are across multiple companies.
  • Lower or Nil TDS certificates for small taxpayers to be issued through a fully automated, rule-based system.
    • ITR Filing & Revision
  • Time limit to revise ITR extended till 31st March (earlier 31st December).
  • Nominal fee to apply for late revision.
  • Due dates clarified:
    - ITR-1 & ITR-2 → 31st July
    - Non-audit business cases / trusts → 31st August
  • Taxpayers can update returns even after reassessment starts, by paying additional 10% tax.
    • TDS & TCS Rationalisation
  • TCS on overseas tour packages reduced to 2% (earlier 5% / 20%).
  • TCS on education and medical expenses under LRS reduced to 2%.
  • TDS on manpower supply services fixed at 1% or 2%, bringing clarity.
  • TDS on sale of property by NRIs to be deposited using buyer’s PAN instead of TAN, simplifying compliance.
    • Foreign Assets & NRIs
  • One-time 6-month foreign asset disclosure scheme for small taxpayers with low-value assets.
  • Immunity from prosecution (retrospective from 1 Oct 2024) for non-disclosure of foreign assets below ₹20 lakh (non-immovable).
  • Global income of notified non-resident experts exempt for 5 years.
  • MAT exemption extended to non-residents paying tax on presumptive basis.
    • Decriminalisation & Dispute Resolution
  • Non-production of books of accounts decriminalised.
  • Delay in TDS payment decriminalised.
  • Framework introduced to allow settlement of tax disputes by paying an additional amount instead of penalties.
  • Immunity from penalty and prosecution extended even to cases of misreporting, subject to conditions.
    • MAT & Buyback Tax Changes
  • MAT proposed to be treated as final tax.
  • MAT credit set-off allowed up to 25% of tax liability under new regime.
  • Buyback of shares to be taxed as capital gains for all shareholders.
  • Promoters to pay additional buyback tax, ensuring fairness.

    2. Economy & Fiscal Position

  • Fiscal deficit targeted at 4.3% of GDP.
  • Government aims to reduce debt-to-GDP ratio to ~50% by 2030.
  • Public capital expenditure raised to ₹12.2 lakh crore, showing strong infrastructure push.
  • Inflation expected to remain moderate.

    3. Manufacturing & Make in India

  • India Semiconductor Mission 2.0 launched.
  • Schemes announced for:
    - Electronics components
    - Textiles
    - Chemicals (3 new chemical parks)
    - Container manufacturing
    - Construction & infrastructure equipment
  • 200 old industrial clusters to be revived.
  • Duty exemptions on:
    - Aircraft & defence components
    - Microwave oven parts
    - Footwear & textile exports
    - Seafood exports
  • Trusted importers to get faster customs clearance.

    4. MSME Support

  • ₹10,000 crore SME Growth Fund.
  • Mandatory use of TReDS platform by CPSEs for MSME payments.
  • GeM linked with TReDS for quicker financing.
  • Credit guarantee support for invoice discounting.
  • Corporate Mitras to help MSMEs with compliance, especially in Tier-II & Tier-III cities.

    5. Infrastructure & Connectivity

  • 7 high-speed rail corridors announced.
  • New Dedicated Freight Corridor (East to West).
  • 20 new National Waterways to reduce logistics costs.
  • ₹2 lakh crore support to states under SASCI scheme.
  • Focus on Tier-II, Tier-III cities and temple towns.

    6. Energy & Green Growth

  • ₹20,000 crore CCUS (Carbon Capture) scheme.
  • Customs duty exemptions for:
    - Lithium-ion battery manufacturing - Solar glass - Nuclear power projects (extended till 2035) - Critical minerals processing
  • Entire value of biogas excluded from excise duty.

    7. Agriculture & Rural Economy

  • Bharat-VISTAAR AI platform integrating AgriStack and ICAR.
  • Focus on:
    - Fisheries and coastal aquaculture - High-value crops - Animal husbandry - Cashew, cocoa, coconut, sandalwood
  • Development of 500 reservoirs and Amrit Sarovars.
  • Support for women-led and rural agri-startups.

    8. Education, Skills & Jobs

  • 5 university townships near industrial corridors.
  • Girls’ hostels in STEM institutions in every district.
  • Training of 1.5 lakh caregivers.
  • AVGC (gaming, animation, content creation) labs in schools and colleges.
  • Education-to-Employment Committee for service-sector jobs.

    9. Healthcare & Social Welfare

  • Medical tourism hubs in partnership with states.
  • Expansion of AYUSH institutions and testing labs.
  • NIMHANS-2 and upgrades to mental health institutes.
  • Emergency & trauma care centres in district hospitals.
  • Special schemes for Divyangjan including assistive devices and skill training.

    10. Financial Sector

  • STT increased on Futures & Options.
  • Incentives for large municipal bond issuances.
  • New framework for corporate bond market making.
  • Review of FEMA (Non-Debt Instruments) Rules.
  • High-level committee on Banking for Viksit Bharat.

    Final Takeaway

    Budget 2026–27:
  • Does not rely on big tax cuts
  • Focuses on simpler direct taxes, lower compliance burden, and trust-based system
  • Pushes manufacturing, MSMEs, infrastructure, and services
  • Strongly supports long-term growth with fiscal discipline
To delve into the main highlights of Union Budget 2026Click here

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Pre-Budget 2026 Expectations

1. Rationalise Cryptocurrency & Professional Taxation

Existing Provision:

  • Gains from Virtual Digital Assets (VDAs) are taxable at 30%, but losses are not allowed to be set off against any income, including VDA gains.
  • Under Section 44ADA, professionals are required to declare 50% of gross receipts as presumptive income.

Suggestion:

  • Allow set-off of VDA losses against VDA gains to ensure equitable taxation.
  • Reduce the presumptive profit rate under Section 44ADA from 50% to 40%, considering rising compliance costs and reduced net margins for professionals.

2. Reform House Property Loss Set-Off & Home Loan Benefits

Existing Provision:

  • Deductions for housing loan interest and loss from house property are not available under the new tax regime.

Suggestion:

  • Introduce housing loan benefits under the new tax regime. Even a limited deduction would promote homeownership and bring parity between the old and new regimes.

3. Address HRA Parity for High-Cost Cities

Existing Provision:

  • 50% HRA exemption is available only for metro cities (Delhi, Mumbai, Chennai, Kolkata); other cities are restricted to 40%.

Suggestion:

  • Extend the 50% HRA exemption to high-cost Tier-2 cities such as Bengaluru, Hyderabad, Pune, and Ahmedabad, reflecting present rental realities.

4. Senior Citizen Relief & Healthcare Support

Existing Provision:

  • Senior citizens have same basic exemption limit in new tax regime.
  • Medical deduction under Section 80D is capped and not available under the new tax regime.

Suggestion:

  • Provide a higher basic exemption limit for senior citizens.
  • Introduce additional deductions for medical expenses beyond Section 80D and allow such benefits under the new tax regime, given rising healthcare costs.

5. Increase Home Loan Interest Deduction (Section 24(b))

Existing Provision:

  • Deduction for interest on self-occupied property is capped at ₹2 lakh.

Suggestion:

  • Increase the limit to at least ₹3 lakh, irrespective of property value.
  • With property prices rising sharply and loan sizes reaching ₹50–60 lakh even for modest homes, the existing limit is inadequate.

6. Strengthen NPS Incentives

Existing Provision:

  • Additional NPS deduction under Section 80CCD(1B) is limited to ₹50,000.
  • NPS deduction is not available under the new tax regime.
  • Withdrawals are partly taxable.

7. Increase Section 80C Limit

Existing Provision:

  • Section 80C deduction limit is ₹1.5 lakh, unchanged since 2014.

Suggestion:

  • Increase the limit to ₹2.5 lakh to align with inflation and current savings needs.

8. Rationalise Capital Gains & Rebate (Section 87A)

Existing Provision:

  • Section 87A rebate is not available on LTCG and STCG from equity shares.

Suggestion:

  • Allow Section 87A rebate on equity LTCG and STCG to support small investors and encourage broader market participation.

9. Increase Standard Deduction

Existing Provision:

  • Standard deduction is currently ₹75,000 for salaried taxpayers in new tax regime.

Suggestion:

  • Increase the standard deduction to ₹1,00,000 to offset inflation and higher work-related expenses.
  • Provide a higher standard deduction for defence personnel in recognition of their service conditions.

10. Reduce TDS Rate for Professionals

Existing Provision:

  • TDS on professional and technical services is 10%.

Suggestion:

  • Reduce the TDS rate to 5% to ease cash-flow constraints and reduce refund-related inefficiencies while maintaining compliance.

11. Permanent Solution for ITR Due Date

Existing Provision:

  • Non-audit ITR due date is 31st July, leading to frequent extensions every year.

Suggestion:

  • Permanently shift the non-audit ITR due date to 31st August to improve compliance quality and reduce last-minute system stress.

FAQs on Budget 2026

Q- When the budget will be presented in 2026?

The Union Budget for the fiscal year 2026-27 will be presented on February 1, 2026, by Finance Minister Nirmala Sitharaman.

Q- Who prepares the Union budget?

The budget is a detailed planning allocation of economic resources of the country for the upcoming fiscal year. Since it has a major impact on all sectors, the budget is prepared in harmony with different ministries. Recommendations from all the ministries are submitted to the finance ministry for their demands, which are further analyzed by the budget division.

Q- Who will introduce Budget 2026-27?

Budget 2026 will be introduced by the Hon’ble Finance Minister Nirmala Sitharaman before the Parliament of India.

Q- What is the Interim Budget?

The interim Budget is presented by the ruling government when elections are due in the fiscal year. Hence, the ruling government cannot make strategic decisions for the complete fiscal year in which it might or might not have the ruling powers. The last Interim Budget was presented in 2024 by current Finance Minister Smt. Nirmala Sitharaman.

What are the 5 benefits of having a Union budget?
  • Economic Stability: The Union Budget sets the financial agenda for the government, helping ensure the country’s economic stability by managing national revenues, expenditures, and debt.
  • Resource Allocation: It facilitates the effective allocation of resources to various sectors like healthcare, education, infrastructure, and defense, ensuring balanced development across regions.
  • Policy Implementation: The budget outlines the government’s priorities for the upcoming fiscal year, including tax policies, subsidies, and reforms, which drive the nation’s development agenda.
  • Investor Confidence: A well-presented Union Budget can boost investor confidence by providing clarity on government spending, fiscal policies, and growth strategies, which can stimulate economic growth and investment.
  • Social Welfare:The budget plays a key role in ensuring funding for social welfare programs like poverty alleviation, healthcare, and employment generation, helping improve the standard of living for the general population.

Q- Is the Union Budget released every year?

Yes, the Union Budget is released every year. It is typically presented by the Finance Minister of India in the Parliament on February 1. The budget outlines the government's financial plan for the upcoming fiscal year (April to March), detailing how the government's revenue will be raised and how it will be spent across various sectors.