Budget 2026 Highlights
All key points for covered for budget 2026
Here are all the key updates related to the budget 2026:
For content around Finance, investing, IPOs, quarterly results, and everything else, subscribe to the newsletter.
I publish 15+ blogs on my Substack every week. But starting next week (Feb) only one will be delivered to your inbox. Keep visiting to read more. Join Whatsapp Community to get all posts.
FM Sitharaman proposes ‘Orange Economy’
Finance minister Nirmala Sitharaman on Sunday announced measures to boost India’s creative industries, or the “orange economy,” in her Union Budget 2026-27 speech, aiming to create future-ready creative jobs.
Highlighting the rapidly growing Animation, Visual Effects, Gaming, and Comics (AVGC) sector, which is expected to require two million professionals by 2030, Sitharaman said, “I propose to support the Indian Institute of Creative Technologies, Mumbai, in setting up AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges.” This initiative is expected to develop India’s next-generation creator workforce, supporting jobs, startups, and innovation.
The Economic Survey 2025-26 had noted that creativity-driven sectors—including culture, media, entertainment, and intellectual property—can become major drivers of employment, urban services, and tourism. These activities, collectively termed the “orange economy,” derive value primarily from ideas, artistic expression, and cultural capital. The Survey also highlighted bottlenecks such as venue shortages and regulatory hurdles that need addressing for the sector to scale.
Sitharaman further announced plans to strengthen design education by establishing a new National Institute of Design in eastern India. She emphasized that while India’s design industry is expanding rapidly, the country continues to face a shortage of trained designers, underscoring the need for targeted skill development in this sector.
FM proposes one-time measure to facilitate sales from SEZs to domestic market at concessional duty
Sitharaman on Sunday proposed a special one-time measure to help manufacturing units in special economic zones (SEZs) sell to the domestic tariff area (DTA) at concessional duty rates.
Addressing concerns over underutilization of SEZ capacities due to global trade disruptions and high tariffs in the US, she said, “To address the concerns arising about utilization of capacities by manufacturing units in the SEZs due to global trade disruptions, I propose, as a special one-time measure, to facilitate sales by eligible manufacturing units in SEZs to the DTA at concessional rates of duty.”
Union Budget 2026: FM Sitharaman flags health challenges; unveils Rs 10,000 crore Biopharma Shakti
Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2026–27 unveiled a Rs 10,000 crore biopharma initiative and announced the expansion of Ayurveda institutions to meet growing global demand for traditional medicine.
To strengthen India’s position as a global biopharma hub, the Budget proposed Biopharma Shakti, a new initiative with an outlay of Rs 10,000 crore over five years aimed at boosting research, manufacturing, and innovation in the biotechnology and pharmaceutical sectors.
Crisil’s view on Capex increase in this year’s budget
“Capex to GDP at Rs 12.2 lakh crore is at 3.1% of Crisil’s GDP estimate for next fiscal. The budget estimate for this fiscal was also 3.1%. Grants in aid for capital creation typically should add another 1% points to this,” it said.
Three chemical parks to cut imports
The government announces support for states to establish three dedicated chemical parks using a cluster-based plug-and-play model to enhance domestic chemical production. This initiative reduces import dependency and strengthens industrial supply chains, benefiting manufacturing-focused states and lowering external vulnerability.
Budget Live: FM proposes customs duty exemption on 17 medicines and adds 7 rare diseases for relief
Union FM Nirmala Sitharaman said, “To provide relief to patients, particularly those suffering from cancer, I propose to exempt basic customs duty on 17 drugs or medicines. I propose also to add 7 more rare diseases for the purposes of exempting import duties on personal import of drugs, medicines and food for special medical purposes used in their treatment.”
FM Sitharaman announces buyback tax, higher STT on commodity futures, MAT rate reduced to 14%
Finance minister Nirmala Sitharaman on Sunday announced that buyback proceeds for all shareholders will be taxed as capital gains.
Presenting the Union Budget for 2026–27, she also proposed increasing the Securities Transaction Tax on commodity futures from 0.02 per cent to 0.05 per cent. Additionally, she said the Minimum Alternate Tax (MAT) will be treated as the final tax, with the rate reduced from 15 per cent to 14 per cent.
Electronics outlay increased to 40,000 crores
The budget proposes increasing the Electronics Components Manufacturing Scheme outlay from Rs 22,999 crore to Rs 40,000 crore, alongside new initiatives such as ISM 2.0, rare earth corridors, and dedicated chemical parks. These measures aim to strengthen India’s semiconductor ecosystem, reduce import dependency, and support states in developing advanced industrial corridors that boost domestic manufacturing competitiveness.
Proposal to increase the limit for duty-free imports of specified inputs
“I propose to increase the limit for duty-free imports of specified inputs used for processing sea foods for export from the current 1% to 3% of FOB value of the previous year’s export turnover. I also propose to allow duty-free imports of specified inputs which is currently available for exports of leather or synthetic footwear to exports of shoe uppers as well.”
Customs duty to be waived on aircraft parts for defence units
Union FM Nirmala Sitharaman said, “It is proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair or overall requirements by units in the defence sector.”
Proposal to increase the limit for duty-free imports of specified inputs
“I propose to increase the limit for duty-free imports of specified inputs used for processing sea foods for export from the current 1% to 3% of FOB value of the previous year’s export turnover. I also propose to allow duty-free imports of specified inputs which is currently available for exports of leather or synthetic footwear to exports of shoe uppers as well.”
FM announces Income Tax Act 2025 implementation from April 1, simplified forms soon
Finance minister Nirmala Sitharaman on Sunday announced that the Income Tax Act, 2025 will come into effect from April 1, 2026, with rules and tax return forms to be notified shortly.
Presenting the Budget in the Lok Sabha, she said, “This direct tax code was completed in record time. The Income Tax Act, 2025, will come into force from 1 April 2026. The simplified income tax rules and forms will be notified soon, giving taxpayers adequate time to familiarise themselves with the requirements.”
The redesigned forms are aimed at making compliance easier for ordinary citizens. The new law is revenue neutral, with no change in tax rates, and focuses on simplifying direct tax provisions, removing ambiguities, and reducing litigation risks. Compared with the 1961 Income Tax Act, the 2025 law cuts the text and sections by about 50 per cent.
The legislation also introduces a single “tax year” framework, eliminating the distinction between the assessment year and previous year. Additionally, it allows taxpayers to claim TDS refunds even if ITRs are filed after the deadline, without any penal charges.
Fiscal deficit pegged at 4.3% of GDP, Rs 1.4 lakh crore tax devolution to states
Finance minister Nirmala Sitharaman on Sunday projected the fiscal deficit for 2026–27 at 4.3 per cent of GDP, slightly lower than the 4.4 per cent estimated for the current financial year.
In her Budget speech for 2026–27, Sitharaman said the government will devolve Rs 1.4 lakh crore in tax revenues to the states, while net tax receipts are estimated at Rs 28.7 lakh crore. The total size of the Budget is pegged at Rs 53.5 lakh crore.
The finance minister emphasized that the government is following a path of fiscal prudence and debt consolidation. The fiscal deficit, which represents the gap between government expenditure and revenue, was estimated at 4.4 per cent of GDP for FY26.
Union Budget 2026 Live: Big push for future-ready infrastructure across India
Sitharaman outlined a series of major infrastructure initiatives aimed at building a future-ready Bharat and strengthening growth centres, especially in Tier II and Tier III cities with populations above 5 lakh.
Public capital expenditure has been increased to Rs 12.2 lakh crore for FY 2026–27. The government will set up dedicated REITs to accelerate the recycling of significant real estate assets of CPSEs, and an Infrastructure Risk Guarantee Fund will provide prudently calibrated partial credit guarantees to lenders.
Government to set up 1,000 clinical trial sites, launches Bharat Vistar and She Marts
Finance minister Nirmala Sitharaman on Sunday announced that the government will establish a network of over 1,000 accredited clinical trial sites across India, expanding beyond major centres such as Mumbai, Delhi, Bengaluru, Chennai, and Hyderabad.
She also proposed a credit-linked subsidy programme to support livestock farmer producer organisations, aimed at generating employment opportunities.
In her Budget speech, Sitharaman unveiled the launch of Bharat Vistar, a multilingual AI tool designed to integrate the agri-stack, and announced the creation of She Marts, community-owned retail outlets to empower local entrepreneurs.
Rs 20,000 crore push for carbon capture technologies
Union Finance Minister Nirmala Sitharaman proposed an outlay of Rs 20,000 crore over the next five years to support Carbon Capture, Utilization and Storage (CCUS) technologies. The funding aims to help scale up projects and improve technology readiness for wider end-use applications across sectors.
Income Tax Act 2025 to come into effect from April 1, 2026
The Income Tax Act, 2025, is set to come into effect from 1 April 2026, featuring simplified rules, redesigned forms, and multiple direct tax relief measures, including lower TCS rates and new exemptions. These reforms aim to ease compliance for taxpayers, reduce tax burdens on specific transactions, and eliminate ambiguities impacting individuals and service providers.
Income Tax Act 2025: New income tax framework to take effect from 1 April 2026 with simplified rules and redesigned forms.
Motor Accident Compensation: Interest awarded by the Motor Accident Claims Tribunal to natural persons exempted from income tax.
TCS Rates: Reduction of TCS on overseas tour program packages and on LRS remittances for education and medical purposes to 2%.
Manpower Services: Supply of manpower services brought under contractor payments for TDS purposes to eliminate ambiguity.
Changes in ITR filing dates
The government has proposed a staggered timeline for filing income tax returns. Individuals filing ITR-1 and ITR-2 will continue to have the July 31 deadline, while non-audit business entities and trusts will be allowed to file their returns up to August 31.
‘I have allocated Rs 1.4 lakh crores for states for FY2026-27,’ says FM
Union Budget 2026-27 | Union finance minister Nirmala Sitharaman said, “The Government has accepted 16th Finance Commission recommendations to retain the vertical share of devolution at 41%. I have allocated Rs 1.4 lakh crores for states for FY2026-27.”
Fiscal Consolidation and Budget Estimates
Presenting the Budget Estimates for 2026–27, the Finance Minister highlighted the government’s continued focus on fiscal consolidation alongside growth.
The debt-to-GDP ratio is estimated at 55.6 per cent in BE 2026–27, improving from 56.1 per cent in the Revised Estimates (RE) for 2025–26.
The fiscal deficit for BE 2026–27 is projected at 4.3 per cent of GDP, lower than the 4.4 per cent of GDP estimated in BE 2025–26.
On the receipts side, non-debt receipts are estimated at Rs 36.5 lakh crore in BE 2026–27, while the Centre’s net tax receipts are pegged at Rs 28.7 lakh crore.
The government has projected total expenditure at Rs 53.5 lakh crore for 2026–27, reflecting continued support for key programmes while adhering to the fiscal consolidation path.
Finance minister brings up country’s gaming and animation sector
FM Sitharaman said, “India’s Animation, Visual Effects, Gaming and Comics AVGC sector is a growing industry, projected to require 2 million professionals by 2030. I propose to support the Indian Institute of Creative Technologies, Mumbai in setting up AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges.”
FM proposes launching three new All India Institutes of Ayurveda
“I propose to set up three new All India Institutes of Ayurveda; Upgrade Ayush pharmacies and drug testing labs and make available more skilled persons; Upgrade the WHO global Traditional Medicine Centre in Jamnagar,” said Sitharaman.
Capacity Building AI Missions proposed for 25 Crore
During her Budget speech, the Finance Minister said the government is placing strong emphasis on emerging technologies, particularly artificial intelligence, as a driver of inclusive growth and national progress. She highlighted that multiple national missions have been launched to strengthen innovation and research across the country.
FM proposes to launch ‘Khelo India Mission’
“The Sports Sector provides multiple means of employment, skilling and job opportunities. Taking forward the systematic nurturing of sports talent which is set in motion through the Khelo India programme, I propose to launch a Khelo India Mission to transform the Sports sector over the next decade.”
FM Sitharaman on banking
Union Budget 2026: Union finance minister Nirmala Sitharaman said, “I propose setting up a high-level committee on banking for Viksit Bharat to comprehensively review the sector and align it with India’s next phase of growth, while safeguarding financial stability, inclusion and consumer protection. The vision for NBFCs for Viksit Bharat has been outlined with clear targets for credit disbursement and technology adoption. In order to achieve scale and improve efficiency in the public sector NBFCs, as a first step, it is proposed to restructure the Power Finance Corporation and Rural Electrification Corporation.”
Additional Rs 2,000 crore for micro‑enterprise risk capital access
FM announced,” I also propose to top up the Self Reliant India Fund set up in 2021 with 2000 crores to continue supporting micro enterprises and maintain their access to risk capital. Liquidity support with trends, more than seven lakh crore has been made available to MSMEs. To leverage its full potential, I propose four measures. One: : Mandate TREDZ as the transaction settlement platform for all purchases from MSMEs by CPSEs, serving as a benchmark for other corporates.
Proposal to set up high-powered ‘Education to Employment and Enterprise’
FM Sitharaman said, “I propose to set up a High-Powered ‘Education to Employment and Enterprise’ Standing Committee to recommend measures that focus on the Services Sector as a core driver of Viksit Bharat. This will make us a global leader in services, with a 10% global share by 2047. The Committee will prioritise areas to optimise the potential for growth, employment and exports. They will also assess the impact of emerging technologies, including AI, on jobs and skill requirements and propose measures thereof.”
FM Sitharaman launches ‘India Semiconductor Mission 2.0’
Presenting the Union Budget 2026, Finance Minister Nirmala Sitharaman announced the launch of the India Semiconductor Mission (ISM) 2.0, with an outlay of Rs 40,000 crore, aimed at building on the gains of the earlier phase and accelerating growth in the semiconductor sector.
She said the first phase of the mission had strengthened India’s semiconductor capabilities, and ISM 2.0 would now focus on manufacturing equipment and materials, enabling full-stack chip design, developing domestic intellectual property, and reinforcing supply chains.
The programme will also support industry-led research and training centres to drive technological advancement and create a skilled talent pipeline for the sector.
In addition, Sitharaman unveiled the ‘Shakti’ initiative, allocating Rs 10,000 crore over five years to further deepen and support the broader semiconductor ecosystem in the country.
Rs 10,000 crore announcement for MSMEs
It includes the creation of a Rs 10,000 crore SME Growth Fund to support future job-creating enterprises and a Rs 2,000 crore top-up to the Self Reliant India Fund for micro-enterprise risk capital. A major liquidity package is reinforced with four measures, including mandatory use of TReDS for CPSE purchases, credit guarantee backing for invoice discounting, integration of GeM and TReDS to ease financing, and development of a secondary market for trade receivables. Professional institutions will also train ‘corporate mitras’ to help MSMEs meet compliance needs affordably, especially in Tier 2 and Tier 3 cities.
‘I propose to set up mega textile parks in challenge mode,’ says FM
Union Budget 2026–27: Finance minister Nirmala Sitharaman says, “For the labour-intensive textile sector, I propose an integrated programme with five sub-parts. One, the National Fibre Scheme for self-reliance in natural fibres such as silk, wool and jute, man-made fibres, and new-age fibres. Two, the Textile Expansion and Employment Scheme to modernise traditional clusters with capital support for machinery, technology upgradation, and common testing and certification centres. Three, the National Handloom and Handicraft Programme to integrate and strengthen existing schemes and ensure targeted support for weavers and artisans. Four, the Text-ECON initiative to promote globally competitive and sustainable textiles and apparel. Five, SAMARTH 2.0 to modernise and upgrade the textile skilling ecosystem through collaboration with industry and academic institutions. Further, I propose to set up mega textile parks in challenge mode. They can also focus on bringing value addition to technical textiles. I also propose to launch the Mahatma Gandhi Gram Swaraj initiative to strengthen handloom and handicrafts. This will help in global market linkages and branding. It will streamline and support training, skilling, and quality processes in production. These measures will benefit our weavers, village industries, the One District, One Product (ODOP) initiative, and our rural youth.
FM propose a scheme for ‘container manufacturing,’
In the Union Budget 2026–27, Finance Minister Nirmala Sitharaman said she is proposing a new scheme to promote container manufacturing, aimed at building a globally competitive ecosystem for the sector, with a budgetary allocation of Rs 10,000 crore spread over five years.
Capex proposed at Rs 12.2 lakh crore for FY 2026-27
FM said, “Public capital expenditure has increased manifold from 2 lakh crore in 2014-15 to an all-occupation of 11.2 lakh crore in BE 25-26. In this coming year, that is, financial year 2026-27, I propose to increase it to 12.2 lakh crores to continue the momentum. To strengthen the confidence of private developers regarding risks during infrastructure development, and construction phase, I propose to set up an infrastructure risk guarantee fund to provide prudentially calibrated public credit guarantee to lenders. Over the years, rights have emerged as a successful instrument for asset monetization. I propose to accelerate recycling of significant real estate assets of the CPSEs through the setting up of dedicated rights. To promote environmentally sustainable movement of cargo, I propose two. One, establish new dedicated freight corridors connecting Dangkuni in the east to Surat in the Infrastructure Risk Guarantee Fund: New prudentially calibrated public credit guarantee mechanism to support lenders during infrastructure development.”
‘India will continue to take confident steps towards Viksit Bharat,’ says FM
Union FM Nirmala Sitharaman says, “Today, we face an external environment in which trade and multilateralism are in imperent and access to resources and supply chains are disrupted. New technologies are transforming production systems while sharply increasing demands on water, energy and critical minerals. India will continue to take confident steps towards Viksit Bharat, balancing ambition with inclusion. As a growing economy with expanding trade and capital needs, India must also remain deeply integrated with global markets, exporting more and attracting stable long term investment.”
‘I propose interventions in six areas-scaling up manufacturing in 7 strategic sectors,’ says FM
Presenting Union Budget 2026-27, Union finance minister Nirmala Sitharaman said, “To accelerate and sustain economic growth, I propose interventions in six areas-Scaling up manufacturing in 7 strategic sectors; Rejuvenating legacy industrial sectors; Creating champion MSMEs; Delivering a push for infra; Ensuring long-term security and stability; Developing city economic regions.”
Four states to establish dedicated rare earth corridors, says FM
Scheme for rare earth permanent magnets was launched in 2025 November. We now propose to support the mineral rich states of Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated rare earth corridors to promote mining, processing, research and manufacturing. To enhance domestic chemical production and reduction in import dependency, we will launch a scheme to support states in establishing three dedicated chemical arks through challenge route on a cluster-based plug-and-play model.
‘India’s semiconductor mission, 1.0 expanded India’s semiconductor sector capabilities’
Further continuing her speech, the FM added, “Building on this, we will launch ISM 2.0 to produce equipment and materials, design full stack, Indian IP and fortify supply chains. We will also focus on industry led research and training centers to develop technology and skilled workforce.”
"To develop India as a global biopharma manufacturing hub, I proposed the Biopharma Shakti with an outlay of 10,000 crores over the next five years. This will build the ecosystem," she said. "For domestic production of biologics and biosimilars, the strategy will include a biopharma focused network with three new national institutes of pharmaceutical education and research, popularly known as NIPERS, and upgrading seven existing ones. It will also create a network of 1,000 accredited India clinical trials sites. We propose to strengthen the Central Drug Standard Control Organisation to meet global standards and approve timeframes through a dedicated scientific review and specialists," she added
Page to be updated with the latest updates on 1 Feb 2026.