HIGHLIGHTS OF UNION BUDGET 2026-27

Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman tabled the Union Budget 2026-27 in Parliament. This first Budget prepared in Kartavya Bhawan is inspired by three core principles that aim to drive India’s economic growth, empower citizens, and ensure inclusive development.

Budget Estimates at a Glance

Non-debt receipts: ₹36.5 lakh crore
Total expenditure: ₹53.5 lakh crore
Centre’s net tax receipts: ₹28.7 lakh crore
Gross market borrowings: ₹17.2 lakh crore
Fiscal deficit: 4.3% of GDP (BE 2026-27)
Debt-to-GDP ratio: 55.6% of GDP
Public capital expenditure: ₹12.2 lakh crore

THREE KARTAVYAS: The Foundation

The budget is structured around three key principles designed to steer India’s development:

First Kartavya: Accelerate and sustain economic growth by enhancing productivity, competitiveness, and building resilience to global dynamics.
Second Kartavya: Fulfil people’s aspirations and build their capacity to become strong partners in India’s prosperity.
Third Kartavya: Aligned with “Sabka Saath, Sabka Vikas,” ensuring every family, community, region, and sector has equitable access to resources and opportunities.

FIRST KARTAVYA: ACCELERATING ECONOMIC GROWTH

1. Scaling Up Manufacturing in Strategic Sectors

Biopharma SHAKTI Initiative

₹10,000 crore outlay over 5 years to develop India as a global biopharma manufacturing hub
Three new National Institutes of Pharmaceutical Education and Research (NIPER) to be established
Seven existing NIPERs to be upgraded
Network of 1,000+ accredited clinical trial sites to be created

India Semiconductor Mission (ISM) 2.0

Focus on producing equipment, materials, and designing full-stack Indian intellectual property
Industry-led research and training centers to develop skilled workforce

Other Manufacturing Initiatives

Electronics Components Manufacturing Scheme outlay increased to ₹40,000 crore
Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu
Three dedicated Chemical Parks through challenge route
Hi-Tech Tool Rooms by CPSEs at two locations for precision manufacturing
Scheme for Enhancement of Construction and Infrastructure Equipment
Container Manufacturing Scheme with ₹10,000+ crore allocation over 5 years

Integrated Textile Sector Programme

National Fibre Scheme for self-reliance in natural and man-made fibres
Textile Expansion and Employment Scheme to modernize traditional clusters
Mega Textile Parks to enhance value addition
Mahatma Gandhi Gram Swaraj initiative for khadi, handloom, and handicrafts

2. Rejuvenating Legacy Industrial Sectors

Scheme to revive 200 legacy industrial clusters through infrastructure and technology upgradation to improve cost competitiveness and efficiency

3. Creating “Champion SMEs” and Supporting Micro Enterprises

₹10,000 crore SME Growth Fund to create future Champions
Self-Reliant India Fund supplemented with additional ₹2,000 crore
Professional Institutions (ICAI, ICSI, ICMAI) to design short-term courses for ‘Corporate Mitras’ in Tier-II and Tier-III towns

4. Delivering Powerful Infrastructure Push

Capital Expenditure

Public capital expenditure increased to ₹12.2 lakh crore in FY 2026-27
Infrastructure Risk Guarantee Fund to strengthen private developer confidence
REITs for recycling significant real estate assets of CPSEs

Transportation & Logistics

New Dedicated Freight Corridors connecting Dankuni (East) to Surat (West)
20 new National Waterways to be operationalised over 5 years
Training institutes as Regional Centres of Excellence for manpower development
Ship repair ecosystem at Varanasi and Patna for inland waterways
Coastal Cargo Promotion Scheme to increase inland waterways and coastal shipping share from 6% to 12% by 2047
Seaplane VGF Scheme for incentivising seaplane manufacturing and operations

5. Ensuring Long-Term Energy Security

₹20,000 crore outlay over 5 years for Carbon Capture Utilization and Storage (CCUS) technologies

6. Developing City Economic Regions

₹5,000 crore allocation per city economic region over 5 years through challenge mode
Seven High-Speed Rail corridors as growth connectors:

Mumbai-Pune
Pune-Hyderabad
Hyderabad-Bengaluru
Hyderabad-Chennai
Chennai-Bengaluru
Delhi-Varanasi
Varanasi-Siliguri

Financial Sector Reforms

High Level Committee on Banking for Viksit Bharat to review and align banking sector
Restructuring of Power Finance Corporation and Rural Electrification Corporation
Comprehensive review of Foreign Exchange Management (Non-debt Instruments) Rules
Municipal Bond incentives of ₹100 crore for single issuances exceeding ₹1,000 crore

SECOND KARTAVYA: FULFILLING ASPIRATIONS & BUILDING CAPACITY

Creating Professionals for Viksit Bharat

Allied Health Professionals

Upgrade existing Allied Health Professional (AHP) institutions
Establish new AHP institutions in private and government sectors
Target: 100,000 additional Allied Health Professionals over 5 years

Medical Hubs & AYUSH

Five Regional Medical Hubs to promote India as a medical tourism hub
Three new All India Institutes of Ayurveda

Animal Husbandry

Scale up veterinary professionals by 20,000+
Loan-linked capital subsidy scheme for veterinary colleges, hospitals, diagnostic labs, and breeding facilities

Orange Economy (Creative Technologies)

Indian Institute of Creative Technologies, Mumbai to establish Visual Effects, Gaming, and Comics (AVGC) Content Creator Labs in 15,000 secondary schools and 500 colleges

Education

Five University Townships in major industrial and logistic corridors through challenge route
One girls’ hostel per district through VGF/capital support
High-Powered ‘Education to Employment and Enterprise’ Standing Committee

Tourism & Heritage

National Council for Hotel Management upgraded to National Institute of Hospitality
Pilot scheme for upskilling 10,000 guides in 20 tourist sites
National Destination Digital Knowledge Grid for documenting cultural and heritage sites
15 archaeological sites (including Lothal, Dholavira, Rakhigarhi, Adichanallur, Sarnath, Hastinapur, and Leh Palace) to be developed into cultural destinations

Sports

Khelo India Mission to transform the Sports sector over the next decade

THIRD KARTAVYA: INCLUSIVE DEVELOPMENT (SABKA SAATH, SABKA VIKAS)

1. Increasing Farmer Incomes

Integrated development of 500 reservoirs and Amrit Sarovars
High Value Agriculture support for coconut, sandalwood, cocoa, and cashew in coastal areas
Coconut Promotion Scheme to increase production and productivity
Bharat-VISTAAR: Multilingual AI tool integrating AgriStack portals with ICAR agricultural practices

2. Empowering Divyangjan

Divyangjan Kaushal Yojana offering task-oriented roles in IT, AVGC, Hospitality, and Food & Beverage sectors

3. Mental Health & Trauma Care Commitment

NIMHANS-2 to be established in North India
National Mental Health Institutes in Ranchi and Tezpur to be upgraded as Regional Apex Institutions

4. Focus on Purvodaya States & North-East Region

Integrated East Coast Industrial Corridor with node at Durgapur
Five tourism destinations in Purvodaya States
4,000 e-buses deployment
Buddhist Circuits development in Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram, and Tripura

5. Finance Commission Grants

₹1.4 lakh crore provided to States for FY 2026-27 as recommended by 16th Finance Commission

DIRECT TAX REFORMS

New Income Tax Act

New Income Tax Act, 2025 to come into effect from April 2026
Simplified forms redesigned for easy compliance by ordinary citizens

Ease of Living Measures

Interest awarded by Motor Accident Claims Tribunal exempt from Income Tax
TCS rate on overseas tour packages reduced to 2% (from 2-20%)
TCS rate on LRS remittances for education and medical reduced to 2% (from 5%)
Simplified TDS provisions for manpower supply
Single window filing with depositories for Form 15G/15H
Tax return filing timeline extended from December 31 to March 31 with nominal fees
Staggered tax return filing timeline
6-month foreign asset disclosure scheme for small taxpayers

Penalty & Prosecution Rationalization

IT assessment and penalty proceedings integrated
Taxpayers allowed to update returns even after reassessment (at 10% additional tax)
Immunity for income misreporting with additional tax payment
Decriminalization of non-production of books and TDS non-payment in kind
Immunity from prosecution for non-disclosure of foreign assets below ₹20 lakh (retrospective from October 1, 2024)

Support for IT Sector

Software development, IT-enabled services, and contract R&D services clubbed under single “Information Technology Services” category with 15.5% safe harbour margin
Safe harbour threshold enhanced from ₹300 crore to ₹2,000 crore
5-year continuation of safe harbour through automated process
Fast-tracked Unilateral Advanced Pricing Agreement (APA) process within 2 years

Attracting Global Business & Investment

Tax holiday till 2047 for foreign cloud service companies using Indian data centers
15% safe harbour for related entity data center services
2% safe harbour for non-resident component warehousing in bonded warehouses
5-year exemption for non-residents providing capital goods to toll manufacturers
5-year exemption for non-resident experts’ global income
MAT exemption for non-residents paying presumptive tax

Cooperatives

Extended deductions for cooperative societies supplying cattle feed and cotton seed
Inter-cooperative dividend income deductible in new tax regime
3-year dividend exemption for notified national cooperative federations

Other Direct Tax Proposals

Buyback taxation as capital gains for all shareholders; additional tax for promoters (22% corporate, 30% non-corporate)
TCS rationalization on alcoholic liquor, scrap, minerals (2%), and tendu leaves (2%)
STT on Futures raised to 0.05% (from 0.02%)
STT on options raised to 0.15% (from 0.1-0.125%)
MAT made final tax at 14% (from 15%) with no further credit accumulation from April 1, 2026

INDIRECT TAX REFORMS

Tariff Simplification

Marine, Leather & Textile Products

Duty-free import limit for seafood processing inputs increased from 1% to 3% of FOB value
Duty-free imports permitted for leather/synthetic footwear exports

Energy Transition & Security

Extended basic customs duty exemption for Lithium-Ion Cell manufacturing
Exemption on sodium antimonate for solar glass manufacture

Nuclear Power & Critical Minerals

Existing exemptions on nuclear power project imports extended till 2035
Exemption on capital goods for critical mineral processing

Biogas & Aviation

Biogas value excluded from Central Excise on biogas-blended CNG
Basic customs duty exempted on civilian, training aircraft components and defence sector aircraft parts

Electronics

Exemption on microwave oven components

Special Economic Zones

One-time concessional duty rates for DTA sales by eligible manufacturing units

Ease of Living (Customs)

Tariff rate on dutiable goods for personal use reduced from 20% to 10%
17 drugs/medicines exempted from basic customs duty
Duty-free personal import for drugs/medicines and food for 7 rare diseases
Revised baggage clearance provisions during international travel

Customs Process Simplification

Trust-Based Systems

AEO duty deferral enhanced from 15 to 30 days for Tier 2-3
Advance ruling validity extended from 3 to 5 years
Auto-notification of goods arrival for clearance completion
Warehouse framework transformed to operator-centric system with self-declarations

Ease of Doing Business

Single digital window for seamless cargo clearance approvals by end of FY
Food, drugs, and wildlife product clearance operationalized by April 2026
Immediate Customs clearance for compliance-free goods
Customs Integrated System (CIS) rollout in 2 years
Non-intrusive scanning with AI technology expansion for container inspection

New Export Opportunities

Fish catch in Exclusive Economic Zone/High Seas made duty-free; foreign port landing treated as export
Complete removal of ₹10 lakh value cap on courier exports

Dispute Settlement

Honest taxpayers can settle disputes by paying additional amount in lieu of penalty