Union Budget 2026-27: A Vision for ‘Yuva Shakti’ and ‘Viksit Bharat’
February 1, 2026 — Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 today, the first-ever budget prepared in the newly named Kartavya Bhawan. Grounded in three "Kartavyas" (duties)—sustaining growth, fulfilling aspirations, and inclusive development—the budget emphasizes a massive push for infrastructure, strategic manufacturing, and tax simplification through the new Income Tax Act, 2025.
1. Personal Finance & Taxation
The cornerstone of this year’s fiscal policy is the transition to the Income Tax Act, 2025, effective April 1, 2026. While the act modernizes the framework, it keeps personal tax rates steady to ensure predictability.
Income Tax Slabs (New Regime)
| Income Range | Tax Rate |
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Major Tax Relief & Compliance Measures
Foreign Asset Disclosure: A one-time, 6-month window for small taxpayers (students, techies, NRIs) to disclose foreign assets under ₹20 lakh without prosecution.
Lower TCS Rates: Tax Collected at Source (TCS) for overseas education, medical treatment, and tour packages has been reduced to a flat 2% (down from 5% and 20%).
Buyback Taxation: Income from share buybacks will now be taxed as Capital Gains for shareholders, rather than dividend income.
STT Hike: To curb speculative trading, Securities Transaction Tax (STT) on Futures rises to 0.05% and on Options to 0.15%.
MAT Rationalization: Minimum Alternate Tax (MAT) is reduced from 15% to 14% and made a final tax, with no new credit accumulation allowed.
2. Infrastructure: The "Growth Connectors"
The government has raised the Capital Expenditure (Capex) target to ₹12.2 lakh crore, a significant 9% jump from the previous year.
High-Speed Rail: Seven new corridors announced, including Mumbai-Pune, Delhi-Varanasi, and Hyderabad-Bengaluru.
Waterways: 20 new national waterways to be operationalized to lower logistics costs.
City Economic Regions (CER): Mapping of major cities as economic hubs with an allocation of ₹5,000 crore per CER for reform-based development.
Freight Corridors: A dedicated corridor will connect Surat (West) to Dankuni (East).
3. Strategic Sectors & Manufacturing
The budget identifies seven frontier sectors for global leadership:
Biopharma SHAKTI: A ₹10,000 crore mission to turn India into a global biologics and biosimilars manufacturing hub.
Semiconductors: Launch of Semiconductor Mission 2.0 with a focus on full-stack Indian IP and equipment design.
Rare Earth Corridors: Establishment of corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to secure supply chains for critical minerals.
Textiles: An integrated program featuring the "National Fibre Scheme" and "Samarth 2.0" to boost natural and man-made fibers.
4. Key Figures at a Glance
| Metric | Budget Estimate (FY 2026-27) |
| Total Expenditure | ₹53,47,315 crore |
| Fiscal Deficit | 4.3% of GDP |
| Capex Outlay | ₹12,21,821 crore |
| Nominal GDP Growth | 10% |
| Defence Budget | ₹7.85 lakh crore (15% increase) |
| Home Ministry | ₹2.55 lakh crore |
5. Empowering the Next Generation
Education: One girls' hostel to be established in every district through VGF/Capital support.
Creative Arts: The Indian Institute of Creative Technologies (Mumbai) will set up AVGC labs in 15,000 schools and 500 colleges.
MSMEs: A ₹10,000 crore SME Growth Fund introduced to scale up small businesses into "Champion SMEs."
Quick Quote: "This budget is the first step in our journey from Kartavya Bhawan, balancing the ambition of a 10% nominal growth with the fiscal discipline of a 4.3% deficit." — Nirmala Sitharaman