Finance Minister Nirmala Sitharaman presented the Union Budget 2026 in Parliament on February 1. The Union Budget 2026 lays out the government’s financial priorities for the upcoming financial year and also proposes tax changes and policy measures. It also outlines spending plans and major announcements across key sectors for the upcoming financial year. Here are the top highlights that you must know.
Union Budget 2026 Inspired by Three Core Kartavya
On the occasion of Magha Purnima and Guru Ravidas Jayanti, the Finance Minister stated that this is the first Union Budget 2026 prepared at Kartavya Bhawan and it is guided by three fundamental duties.
First Kartavya – Growth and Resilience:
The Union Budget 2026 aims to accelerate and sustain economic growth by improving productivity, increasing competitiveness, and building resilience against global uncertainties.
Second Kartavya – People-Centric Development:
A key focus of the Union Budget 2026 is to fulfil the aspirations of citizens and strengthen their capabilities so they become active partners in India’s economic progress.
Third Kartavya – Inclusive Growth:
Through the Union Budget 2026, the government seeks to ensure that development reaches every family, community and region under the vision of Sabka Saath, Sabka Vikas, providing equal access to resources and opportunities.
Focus on Viksit Bharat and Global Integration
While presenting the Union Budget 2026, the Finance Minister emphasized a youth-driven and inclusive approach. The Budget underlines the government’s commitment to support the poor and underprivileged while steadily moving toward the goal of Viksit Bharat. It also highlights the need for India to remain deeply integrated with global markets, increase exports and attract long-term stable investments, despite global trade challenges and supply chain disruptions.
Major Reforms Backing Union Budget 2026
The foundation of the Union Budget 2026 is built on more than 350 reforms. These include GST simplification, implementation of labour codes, and rationalisation of mandatory quality control orders. The Central Government is also working closely with State Governments to reduce regulations and ease compliance requirements for businesses.
Six Key Priorities for Economic Growth in Union Budget 2026
Under the first kartavya of accelerating growth, the Union Budget 2026 focuses on six strategic areas:
- Scaling up manufacturing in seven strategic sectors
- Reviving traditional and legacy industries
- Creating “Champion MSMEs”
- Delivering a strong push to infrastructure
- Ensuring long-term energy security
- Developing City Economic Regions
These priorities form the core growth strategy of the Union Budget 2026.
Union Budget 2026 Boost to the Biopharma Sector
To develop India as a global biopharma manufacturing hub, the Union Budget 2026 announced Biopharma SHAKTI with an allocation of ₹10,000 crore over five years. The initiative includes:
- Setting up 3 new National Institutes of Pharmaceutical Education and Research (NIPER)
- Upgrading 7 existing NIPERs
- Creating a network of over 1,000 clinical trial sites
- Strengthening drug regulatory systems to meet global standards
As a result, this move positions India strongly in the global pharmaceutical ecosystem.
Support for the Textile Industry
The Union Budget 2026 gives major attention to the labour-intensive textile sector through an Integrated Programme with five components:
- National Fibre Scheme for self-reliance in natural and man-made fibres
- Textile Expansion and Employment Scheme for cluster modernization
- National Handloom and Handicraft Programme
- Tex-Eco Initiative for sustainable and globally competitive textiles
- Samarth 2.0 for upgrading textile skilling
These measures aim to create jobs and improve global competitiveness.
Strong Push for MSMEs in Union Budget 2026
Recognizing MSMEs as a key engine of growth, the Union Budget 2026 proposed a ₹10,000 crore SME Growth Fund. As a consequence, supporting high-potential enterprises and help build future industry champions.
Record Infrastructure Investment
One of the biggest highlights of the Union Budget 2026 is the massive push to infrastructure. Public capital expenditure has risen from ₹2 lakh crore in 2014-15 to ₹11.2 lakh crore in 2025-26. To continue this momentum, the allocation for FY 2026-27 has been further increased to ₹12.2 lakh crore, signaling a strong commitment to long-term economic growth.
Green Logistics Push in Union Budget 2026
To encourage environmentally sustainable movement of cargo, the Union Budget 2026 announced major infrastructure initiatives. A new Dedicated Freight Corridor will be developed connecting Dankuni in the East to Surat in the West. In addition, 20 new National Waterways will be operationalised over the next five years.
The first priority will be National Waterway-5 in Odisha, connecting mineral-rich regions like Talcher and Angul with industrial hubs such as Kalinga Nagar and linking them to the ports of Paradeep and Dhamra. To support these projects, specialized training institutes will be established as Regional Centres of Excellence to develop skilled manpower.
City Economic Regions for Balanced Growth
Furthermore, a key focus area of the Union Budget 2026 is to unlock the economic potential of Indian cities. The government plans to map City Economic Regions (CERs) based on their unique growth drivers.
To implement this vision, an allocation of ₹5,000 crore per CER over five years has been proposed. Funding will be provided through a challenge-based model linked to reforms and measurable performance outcomes.
High-Speed Rail Corridors for Sustainable Travel
To promote eco-friendly passenger transportation, the Union Budget 2026 announced the development of seven High-Speed Rail corridors as “growth connectors.” These include:
- Mumbai – Pune
- Pune – Hyderabad
- Hyderabad – Bengaluru
- Hyderabad – Chennai
- Chennai – Bengaluru
- Delhi – Varanasi
- Varanasi – Siliguri
These corridors are expected to improve connectivity, reduce travel time, and drive regional economic growth.
Focus on Aspirations and Capacity Building
Highlighting the second kartavya of the Union Budget 2026, the Finance Minister emphasized the government’s commitment to fulfilling people’s aspirations and building their capabilities. Moreover, She pointed out that due to sustained reforms and welfare initiatives over the last decade, nearly 25 crore Indians have been lifted out of multidimensional poverty, marking a major achievement in inclusive development.
Medical Tourism Boost in Union Budget 2026
To position India as a global hub for medical tourism, the Union Budget 2026 announced a new scheme to help States establish five Regional Medical Hubs in partnership with the private sector.
Later, these hubs will function as integrated healthcare complexes combining medical treatment, education, and research facilities. They will include AYUSH Centres, Medical Value Tourism Facilitation Centres, and advanced infrastructure for diagnostics, post-care, and rehabilitation.
The initiative is expected to generate large-scale employment opportunities for doctors, allied health professionals, and other medical staff.
Strengthening Veterinary Infrastructure
In short, recognizing the need for more veterinary professionals, the Union Budget 2026 proposed a loan-linked capital subsidy scheme to increase the availability of trained personnel by over 20,000.
This scheme will support the private sector in setting up veterinary and para-vet colleges, veterinary hospitals, diagnostic laboratories, and breeding facilities. Lastly, the goal is to strengthen animal healthcare services across the country.
Big Push to AVGC and Creative Industries
Firstly, India’s Animation, Visual Effects, Gaming and Comics (AVGC) sector is expanding rapidly and is expected to require nearly 2 million professionals by 2030.
To support this growth, the Union Budget 2026 proposed assistance to the Indian Institute of Creative Technologies, Mumbai, to establish AVGC Content Creator Labs in:
- 15,000 secondary schools
- 500 colleges
This move aims to build future-ready talent and create new career opportunities in the creative economy.
Support for Girls in STEM Education
Acknowledging the challenges faced by girl students in STEM institutions, the Union Budget 2026 proposed the establishment of one girls’ hostel in every district through viability gap funding and capital support.
This initiative is designed to encourage greater female participation in science and technology education.
National Institute of Hospitality
In order to upgrade skill development in the hospitality sector, the Union Budget 2026 proposed setting up a National Institute of Hospitality by upgrading the existing National Council for Hotel Management and Catering Technology.
This institute will act as a bridge between academia, industry, and the government, improving training standards and job readiness in the tourism and hospitality sector.
Upskilling Tourist Guides
The Union Budget 2026 also introduced a pilot programme to upskill 10,000 tourist guides at 20 major tourist destinations.
The programme will offer a standardized, high-quality 12-week hybrid training course in collaboration with an Indian Institute of Management, raising the overall quality of tourism services in India.
Khelo India Mission for Sports Transformation
Taking forward the success of the Khelo India programme, the Union Budget 2026 announced the launch of a comprehensive Khelo India Mission to transform the sports ecosystem over the next decade.
The Mission will focus on:
- Building an integrated talent development pathway
- Training and development of coaches and support staff
- Use of sports science and technology
- Organizing leagues and competitions to promote sports culture
- Creating world-class sports infrastructure
This initiative aims to strengthen India’s sporting future and nurture talent at every level.
Inclusive Development – The Third Kartavya of Union Budget 2026
The Finance Minister stated that the third kartavya of the Union Budget 2026 is aligned with the vision of Sabka Saath, Sabka Vikas to achieve the goal of Viksit Bharat. This approach focuses on inclusive and balanced development through:
- Increasing farmer incomes
- Empowering Divyangjan
- Expanding access to mental health and trauma care
- Accelerating growth in Purvodaya States and the North-East
- Creating new employment opportunities in underdeveloped regions
Bharat-VISTAAR: AI-Powered Support for Farmers
To strengthen the agriculture sector, the Union Budget 2026 announced Bharat-VISTAAR (Virtually Integrated System to Access Agricultural Resources), a multilingual AI-driven platform.
This tool will integrate AgriStack portals and ICAR agricultural practices with advanced AI systems to:
- Improve farm productivity
- Help farmers take better decisions
- Provide customized advisory services
- Reduce agricultural risks
The initiative aims to bring modern technology directly to Indian farmers.
Support for Women Entrepreneurs
Building on the success of the Lakhpati Didi Programme, the Union Budget 2026 proposed setting up Self-Help Entrepreneur (SHE) Marts.
In other words, these will function as community-owned retail outlets managed by cluster-level federations of women self-help groups. Enhanced and innovative financing models will be used to expand market access and income opportunities for rural women entrepreneurs.
Major Boost to Mental Health Infrastructure
Reaffirming its commitment to mental health care, the Union Budget 2026 announced the establishment of NIMHANS-2.
In addition, existing National Mental Health Institutes in Ranchi and Tezpur will be upgraded as Regional Apex Institutions. This move is aimed at improving access to high-quality mental health and trauma care services across the country.
Focus on Eastern India and Purvodaya States
At first, The Union Budget 2026 places strong emphasis on the development of Eastern India through several targeted initiatives:
- Development of an integrated East Coast Industrial Corridor with a key node at Durgapur
- Creation of five major tourism destinations across the five Purvodaya States
- Introduction of 4,000 electric buses to improve sustainable public transport
Additionally, these measures are designed to accelerate economic activity and job creation in the region.
Development of Buddhist Circuits
Considering the promotion of tourism and cultural heritage in the North-East, the Union Budget 2026 proposed a special scheme for the development of Buddhist Circuits in:
- Arunachal Pradesh
- Sikkim
- Assam
- Manipur
- Mizoram
- Tripura
The scheme will focus on:
- Preservation of temples and monasteries
- Creation of pilgrimage interpretation centers
- Improved connectivity
- Better amenities for pilgrims
Trade and Customs Reforms – Union Budget 2026
The Union Budget 2026 introduced measures to streamline trade, promote exports, and support domestic manufacturing. Key highlights include:
- Duty-free Fish Exports:
Fish caught by Indian vessels in the EEZ and on the high seas will now be duty-free. Landing fish at foreign ports will be treated as exports. - Automated Bill of Entry:
Besides, for goods with no compliance requirements, the Bill of Entry process will be fully automated, reducing paperwork and delays.
Customs Duty Relief for Strategic Sectors
| Sector / Item | Key Measures in Union Budget 2026 |
| Lithium-ion & Battery Storage | Capital goods exemption extended to battery energy storage systems |
| Nuclear Power | Duty exemption extended until 2035 for all plants, regardless of capacity |
| Critical Minerals | Exemption on capital goods for processing within India |
| Biogas | Full value excluded while calculating central excise on biogas-blended CNG |
| Civilian Aircraft | Duty exemption on components and parts |
| Defence Aircraft MRO | Exemption on raw materials for maintenance, repair, overhaul |
| Electronics | Exemption on specific parts used in microwave ovens |
| Solar Manufacturing | Customs duty exempted on sodium antimonate |
Pro Tip: These measures are designed to boost manufacturing, reduce costs, and attract investment in high-growth sectors.
Simplifying Tariffs and Supporting Exports
Union Budget 2026 simplifies the customs tariff structure and improves export competitiveness:
- Firstly, Withdraw exemptions where domestic manufacturing exists or imports are negligible
- Secondly, Incorporate effective duty rates directly into the tariff schedule
- Likewise, Increase duty-free import limit for seafood export inputs from 1% → 3% of previous year’s FOB value
- Extend export time limit for leather, garments, and footwear from 6 months → 1 year
- At last, expand duty-free benefits for leather and synthetic footwear exports
Relief Measures for Individuals and SEZs
- Personal Imports: Tariff on personal dutiable goods reduced from 20% → 10%
- SEZ Manufacturing Units: Sales into Domestic Tariff Area allowed at concessional rates for better capacity utilization
Taxation Reforms – MAT and STT
Minimum Alternate Tax (MAT)
- Set-off of brought-forward MAT credit allowed only under new tax regime
- MAT credit accumulation stops from 1 April 2026 (MAT becomes final tax)
- MAT rate reduced: 15% → 14%
- Existing brought-forward MAT credit fully allowed for set-off
Securities Transaction Tax (STT)
|
Transaction Type
|
Old STT
|
New STT (Union Budget 2026)
|
| Equity Futures | 0.02% | 0.05% |
| Equity Options (Buy) | 0.10% | 0.15% |
| Equity Options (Sell) | 0.125% | 0.15% |
| Equity Delivery | 0.15% | 0.15% |
| Intraday (Cash) | 0.025% | 0.025% |
Above all. these changes aim to rationalize taxation and improve market efficiency while balancing revenue needs.
Overall Impact of Union Budget 2026 on Trade & Taxation
- Promotes domestic manufacturing and high-value exports
- Simplifies customs and import procedures
- Provides targeted duty exemptions for strategic sectors
- Enhances ease of doing business and global competitiveness
Corporate and Shareholder Tax Updates – What You Need to Know
- Rationalisation of Accountant Definition:
If you are a business or professional relying on safe harbour rules, the government has now clarified what counts as an “accountant.” This makes it easier for you to claim safe harbour without disputes or audits. - Buyback of Shares Taxation:
If you hold shares in a company, any buyback will now be taxed as capital gains, no matter who you are.
Promoters should note: an additional tax applies – 22% for corporate promoters and 30% for non-corporate promoters.
What this means for you: Shareholders need to plan for tax when companies buy back shares, and promoters should factor in the extra liability.
MAT Exemption for NRIs
- If you are an NRI earning under the presumptive taxation scheme, you no longer have to pay Minimum Alternate Tax (MAT).
- Benefit: Reduces your tax liability and makes it easier to comply with Indian tax laws, encouraging more NRIs to invest or report income in India.
Advance Pricing Agreements and Cloud Companies
- Businesses involved in cross-border transactions can now secure Advance Pricing Agreements (APAs) in 2 years (extendable 6 months).
- If you’re a foreign company providing cloud services, the tax holiday now lasts until 2047.
- Impact on you: This provides certainty on international taxation and incentives to invest or expand your cloud services business in India.
Simplified IT Services Taxation
- All IT services are now in a single category, with turnover threshold increased from ₹300 crore to ₹2,000 crore.
- A safe harbour margin of 15.5% ensures IT companies know in advance how much profit will be accepted for taxation.
- For IT professionals and companies: Less time spent on tax disputes and more clarity on profitability expectations.
Cooperative Societies – Tax Benefits
- Cooperatives supplying cattle feed or cotton seeds now get tax deductions.
- Dividend income of eligible cooperatives is exempt for 3 years.
- If you’re part of a cooperative: You can reinvest profits more efficiently and reduce the tax burden on earnings.
Compliance Made Easier
- You can update tax returns even after reassessment has been completed.
- For small business owners: Less stress, simpler compliance, and a more predictable tax process.
Foreign Asset Disclosure Scheme – One-Time Opportunity
- A six-month scheme lets small taxpayers, students, young professionals, and relocated NRIs declare overseas income or assets.
Who it’s for:
- Those who didn’t disclose overseas income/assets before.
- Those who paid taxes but didn’t report acquired assets.
How it works:
- Assets/income up to ₹1 crore can be disclosed.
- Pay 30% of asset value as tax, plus 30% as income tax instead of penalties.
- You get immunity from prosecution.
Why it matters for you: It’s a safe way to comply with the law, avoid penalties, and clear any past overseas tax issues.
Updated ITR Filing Deadlines
- Individuals (ITR-1 & ITR-2): 31 July
- Business/Professionals (ITR-3 & ITR-4): 31 August
- Audit Cases: 31 August
|
ITR Type |
Old Deadline (FY26) | New Deadline (FY26) |
|
ITR 1 |
31 July 2026 |
31 July 2026 (No change) |
|
ITR 2 |
31 July 2026 |
31 July 2026 (No change) |
|
ITR 3 |
31 July 2026 |
31 August 2026 |
|
ITR 4 |
31 July 2026 |
31 August 2026 |
|
Audit Cases |
31 October 2026 |
31 October 2026 |
| Revised Filing | 31 December 2026 |
31 March 2027 |
Takeaway: Planning your filings around these dates helps you avoid late fees and penalties.
GST Updates in Union Budget 2026–27
The Union Budget 2026–27 introduced key GST-related changes aimed at simplifying compliance and improving cash flow for businesses, especially small taxpayers.
1. Post-Sale Discounts (Sections 15 & 34)
- Old Rule: A written agreement was required before a sale to claim a tax deduction on discounts given later.
- New Rule: No pre-existing agreement is needed anymore.
2. Middlemen & Agents (Section 13)
- Old Rule: Indian agents serving foreign clients were often taxed in India because the “Place of Supply” was considered the agent’s location.
- New Rule: This special rule is eliminated. The “Place of Supply” is now determined by the location of the foreign client.
3. Faster Refunds (Section 54(6))
- Old Rule: Only exporters could receive a “provisional” (90% upfront) refund. Others had to wait for a full check.
- New Rule: Provisional refunds are now extended to the Inverted Duty Structure, where you pay more tax on raw materials than you collect on finished goods.
4. Small Export Refunds (Section 54(14))
- Previously, a refund couldn’t be claimed if the amount was less than ₹1,000.
- This minimum limit is now removed for exports where GST has been paid.
TDS on Services
- Manpower services: TDS will now be deducted under Section 194C at rates of 1% or 2%, as applicable.
- Small taxpayers relief: A new automated scheme allows issuance of nil deduction certificates without filing an application, reducing paperwork and compliance hassle.
TCS Adjustments
- Overseas tour packages: Tax Collection at Source (TCS) has been reduced from 5% to 2%.
- Liberalised Remittance Scheme (LRS): TCS has been lowered from 5% to 2% for educational, medical, and other approved purposes.
Compliance Deadlines
- The deadline for filing a revised return has been extended up to 31 December 2026, with applicable penalties. It is done in the hope that it will provide flexibility and reduce administrative burdens on small and medium businesses.
Implementation
- All GST-related changes, including TDS/TCS updates, will be effective from 1 April 2026, alongside the New Income Tax Act, 2025.
Practical Impact
- Businesses can expect easier compliance, fewer manual filings, and improved liquidity due to lower TCS rates.
- Small taxpayers benefit from the automated nil deduction certificate, saving time and reducing errors in GST reporting.
Conclusion
In conclusion, The Union Budget 2026–27 aims to balance growth, social welfare, and fiscal discipline, with measures to simplify taxes, boost infrastructure, support agriculture, and promote technology and employment. However, some initiatives lack detailed implementation plans, regional disparities may persist. Besides, certain benefits, like reduced TCS, favor specific sectors over smaller businesses. While progressive and business-friendly, the budget’s success will depend on effective execution.
Moreover, if you want any other guidance relating to the Union Budget 2026, please feel free to talk to our business advisors at 8881-069-069.
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