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