BUDGET 2026-27 IS A UNIQUE YUVA SHAKTI-DRIVEN BUDGET: FINANCE MINISTER

Union Minister of Finance & Corporate Affairs, Smt. Nirmala Sitharaman while presenting the Union Budget 2026-2027 in Parliament today, proposed 3 kartavyas to speed-up the reform momentum towards Viksit Bharat. The Finance Minister said that the first Kartavya is to accelerate and sustain economic growth, by enhancing productivity and competitiveness, and building resilience to volatile global dynamics; second Kartavya is to fulfill aspirations of people and build their capacity, making them strong partners in India’s path to prosperity and third Kartavya, aligned with vision of Sabka Sath, Sabka Vikas, is to ensure that every family, community, region and sector has access to resources, amenities and opportunities for meaningful participation.

The Finance Minister said that the threefold approach requires a supportive ecosystem. The first requirement is to sustain the momentum of structural reforms— continuous, adaptive, and forward-looking. Second, a robust and resilient financial sector is central to mobilising savings, allocating capital efficiently and managing risks. Third, cutting-edge technologies, including AI applications, can serve as force multipliers for better governance.

Smt. Nirmala Sitharaman said that the first Budget prepared in Kartavya Bhawan is a unique Yuva Shakti-driven Budget inspired from several innovative ideas which were shared with Hon’ble Prime Minister in the Viksit Bharat Young Leaders Dialogue 2026.

The Finance Minister said that India’s economic trajectory has been marked by stability, fiscal discipline, sustained growth and moderate inflation in last 12 years. The Government has continuously pursued far reaching structural reforms, fiscal prudence and monetary stability whilst maintaining a strong thrust on public investment.  She said that keeping ‘self-reliance (Atamnirbharta) at core, Government has built domestic manufacturing capacity, energy security and reduced critical import dependencies along with ensuring citizens centric development and undertaking reforms to support employment generation, agricultural productivity, household purchasing power and universal services to people. These measures have delivered a high growth rate of around 7% and helped us make substantial strides in poverty reduction and improvement in the lives of people, she said.

Smt. Nirmala Sitharaman said that in an external environment in which trade and multilateralism are imperiled 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 by balancing ambition with inclusion and must remain deeply integrated with global markets, exporting more and attracting stable long-term investment.  The Finance Minister expressed the gratitude to the people for standing firmly with Government and forging the way together towards becoming one of the largest economies of the world.

Highlighting Government’s aim to transform aspiration into achievement and potential into performance, the Finance Minister said that Government is ensuring that dividends of growth reach every farmer, the scheduled caste, the scheduled tribes, the nomads, the youth, the poor and the women.

The Finance Minister said that the Government has undertaken comprehensive economic reforms towards creating employment, boosting productivity and accelerating growth. She said that after the Prime Minister’s announcement on Independence Day in 2025, over 350 reforms have been rolled out. These include GST simplification, notification of Labour Codes, and rationalisation of mandatory Quality Control Orders. High Level Committees have been formed and in parallel, the Central Government is working with the State Governments on deregulation and reducing compliance requirements. She said that this Reform Express is well on its way and will maintain its momentum to fulfil the Kartavya.

Smt. Nirmala Sitharaman proposed interventions in six areas under the first Kartavya to accelerate and sustain economic growth i) Scaling up manufacturing in 7 strategic and frontier sectors; ii) Rejuvenating legacy industrial sectors; iii) Creating “Champion MSMEs”; iv) Delivering a powerful push to Infrastructure; v) Ensuring long-term energy security and stability; and vi) Developing City Economic Regions.

The Finance Minister said that second Kartavya is to fulfil aspirations and build capacity. She said that close to 25 crore individuals have come out of multidimensional poverty through a decade of our Government’s sustained and reform-oriented efforts. She highlighted that Government has decided to place a renewed emphasis on the Services Sector to provide a pathway to fulfilling aspirations of a youthful India, with measures like setting 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. 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. This will make India a global leader in services, with a 10% global share by 2047, she said.

Smt. Nirmala Sitharaman proposed that the third Kartavya which aligns with vision of Sabka Sath, Sabka Vikas requires targeted efforts for a) Increasing farmer incomes through productivity enhancement and entrepreneurship, with special attention to small and marginal farmers; b) Empowering Divyangjan through access to livelihood opportunities, training and high-quality assistive devices; c) Empowering the vulnerable to access mental health and trauma care; d) Focus on the Purvodaya States and the North-East Region to accelerate development and employment opportunities.

YUVA SHAKTI-DRIVEN BUDGET EMPHASIZES ON GOVERNMENT’S ‘SANKALP’ TO FOCUS ON POOR, UNDERPRIVILEGED AND THE DISADVANTAGED

FIRST BUDGET PREPARED IN KARTAVYA BHAWAN INSPIRED BY 3 KARTAVYA

FIRST KARTAVYA IS TO ACCELERATE AND SUSTAIN ECONOMIC GROWTH

SECOND KARTAVYA IS TO FULFIL ASPIRATIONS OF PEOPLE AND BUILD THEIR CAPACITY

THIRD KARTAVYA, ALIGNED WITH VISION OF SABKA SATH, SABKA VIKAS

NEW INCOME TAX ACT, 2025 TO COME INTO EFFECT FROM APRIL 2026, SIMPLIFIED INCOME TAX RULES AND FORMS TO BE NOTIFIED SHORTLY

MULTIPLICITY OF PROCEEDINGS TO BE REDUCED TO RATIONALISE PENALTY AND PROSECUTION

DEDUCTION ALREADY AVAILABLE TO CERTAIN PRIMARY COOPERATIVE SOCIETIES TO BE EXTENDED TO CATTLE FEED AND COTTON SEED

SINGLE CATEGORY OFINFORMATION TECHNOLOGY SERVICES WITH COMMON SAFE HARBOUR MARGIN OF 15.5%

2000 CRORE THRESHOLD FOR AVAILING SAFE HARBOUR FOR IT SERVICES, UP FROM 300 CRORE RUPEES

FOREIGN CLOUD SERVICE PROVIDER TO BE GIVEN TAX HOLIDAY TILL 2047

EXEMPTION FROM MINIMUM ALTERNATE TAX TO ALL NON-RESIDENTS PAYING TAX ON PRESUMPTIVE BASIS

MINISTRY TO SET UP JOINT COMMITTEE TO MODIFY IndAS TO DO AWAY WITH SEPARATE ACCOUNTING REQUIREMENT BASED ON ICDS FROM TAX YEAR 2027-28

STT ON FUTURES TO BE RAISED TO 0.05% FROM PRESENT 0.02%

BASIC CUSTOMS DUTY EXEMPTION GIVEN TO CAPITAL GOODS USED FOR MANUFACTURING LITHIUM-ION CELLS FOR BATTERIES TO BE EXTENDED.

BASIC CUSTOMS DUTY TO THE IMPORT OF CAPITAL GOODS REQUIRED FOR PROCESSING OF CRITICAL MINERALS TO BE EXEMPTED

TARIFF RATE ON ALL DUTIABLE GOODS IMPORTED FOR PERSONAL USE TO BE REDUCED FROM 20% TO 10%

BASIC CUSTOMS DUTY ON 17 DRUGS OR MEDICINES TO BE EXEMPTED.

BIOPHARMA SHAKTI WITH AN OUTLAY OF ₹ 10,000 CRORES TO BUILD THE ECOSYSTEM FOR DOMESTIC PRODUCTION OF BIOLOGICS AND BIOSIMILARS

₹10,000 CRORE SME GROWTH FUND PROPOSED TO CREATE MSME’S AS FUTURE CHAMPIONS

PUBLIC CAPEX ENHANCED FROM ₹11.2 LAKH CRORE IN BE 2025-26 TO ₹12.2 LAKH CRORE IN FY 2026-27

SEVEN HIGH-SPEED RAIL CORRIDORS BETWEEN CITIES WILL BE DEVELOPED AS ‘GROWTH CONNECTORS’ TO PROMOTE ENVIRONMENTALLY SUSTAINABLE PASSENGER SYSTEMS

INDIAN INSTITUTE OF CREATIVE TECHNOLOGIES, MUMBAI TO SETUP AVGC CONTENT CREATOR LABS IN 15,000 SECONDARY SCHOOLS AND 500 COLLEGES

TO ADDRESS THE CHALLENGES FOR GIRL STUDENTS IN HIGHER EDUCATION STEM INSTITUTIONS, ONE GIRLS HOSTEL WILL BE ESTABLISHED IN EVERY DISTRICT

GOVERNMENT ANNOUNCES A SCHEME FOR UPSKILLING 10,000 GUIDES IN 20 TOURIST SITES THROUGH A STANDARDIZED, HIGH-QUALITY 12-WEEK TRAINING COURSE IN HYBRID MODE, IN COLLABORATION WITH AN IIM

KHELO INDIA MISSION TO TRANSFORM THE SPORTS SECTOR OVER THE NEXT DECADE

BHARAT-VISTAAR, A MULTILINGUAL AI TOOL TO INTEGRATE THE AGRISTACK PORTALS AND THE ICAR PACKAGE ON AGRICULTURAL PRACTICES WITH AI SYSTEMS

OVERSEAS TOUR PROGRAM PACKAGE REDUCED FROM THE CURRENT 5 PERCENT AND 20 PERCENT TO 2 PERCENT

CUSTOMS WAREHOUSING FRAMEWORK TO BE TRANSFORMED INTO A WAREHOUSE OPERATOR-CENTRIC SYSTEM WITH SELF-DECLARATIONS, ELECTRONIC TRACKING AND RISK-BASED AUDIT

CARGO CLEARANCE APPROVALS FROM VARIOUS GOVERNMENT AGENCIES TO BE SEAMLESSLY PROCESSED THROUGH A SINGLE AND INTERCONNECTED DIGITAL WINDOW BY END OF THE FINANCIAL YEAR

Union Minister for Finance and Corporate Affairs, Smt Nirmala Sitharaman presented the Union Budget 2026-2027 in Parliament today.

PART-A

On the sacred occasion of Magha Purnima and the birth anniversary of Guru Ravidas, the Finance Minister said, as this is the first Budget prepared in Kartavya Bhawan, it is inspired by 3 kartavya:

1. First kartavya is to accelerate and sustain economic growth, by enhancing productivity and competitiveness, and building resilience to volatile global dynamics.
2. Second kartavya is to fulfil aspirations of  people and build their capacity, making them strong partners in India’s path to prosperity
3. Third kartavya, aligned with vision of Sabka Sath, Sabka Vikas, is to ensure that every family, community, region and sector has access to resources, amenities and opportunities for meaningful participation.

Presenting the Yuva Shakti-driven Budget which emphasizes on Government’s ‘Sankalp’ to focus on poor, underprivileged and the disadvantaged, the Finance Minister said, 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.

She also mentioned that the country is facing an external environment in which trade and multilateralism are imperilled 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.

The Finance Minister said that after the Prime Minister’s announcement on Independence Day in 2025, over 350 reforms have been rolled out. These include GST simplification, notification of Labour Codes, and rationalisation of mandatory Quality Control Orders. High Level Committees have been formed and in parallel, the Central Government is working with the State Governments on deregulation and reducing compliance requirements.

Under the first kartavya to accelerate and sustain economic growth, interventions were proposed in six areas:

1. Scaling up manufacturing in 7 strategic and frontier sectors;
2. Rejuvenating legacy industrial sectors;
3. Creating “Champion MSMEs”;
4. Delivering a powerful push to Infrastructure;
5. Ensuring long-term energy security and stability; and
6. Developing City Economic Regions

To develop India as a global Biopharma manufacturing hub, the Biopharma SHAKTI with an outlay of ₹ 10,000 crores to build the ecosystem for domestic production of biologics and biosimilars will be set up  over the next 5 years. The Strategy will include a Biopharma-focused network with 3 new National Institutes of Pharmaceutical Education and Research (NIPER) and upgrading 7 existing ones. It will also create a network of over 1000 accredited India Clinical Trials sites. The Central Drugs Standard Control Organisation will be strengthened to meet global standards and approval timeframes through a dedicated scientific review cadre and specialists.

For the labour-intensive Textile Sector, an Integrated Programme with 5 sub-parts was proposed: The National Fibre Scheme for self-reliance in natural fibres such as silk, wool and jute, man-made fibres, and new-age fibres;  Textile Expansion and Employment Scheme to modernise traditional clusters with capital support for machinery, technology upgradation and common testing and certification centres; A National Handloom and Handicraft programme to integrate and strengthen existing schemes and ensure targeted support for weavers and artisans; Tex-Eco Initiative to promote globally competitive and sustainable textiles and apparels; Samarth 2.0 to modernize and upgrade the textile skilling ecosystem through collaboration with industry and academic institutions.

Recognising MSMEs as a vital engine of growth, a dedicated ₹10,000 crore SME Growth Fund was proposed to create future Champions, incentivizing enterprises based on select criteria.

The Finance Minister said, Public capex has increased manifold from ₹2 lakh crore in FY2014-15 to an allocation of ₹11.2 lakh crore in BE 2025-26. In FY2026-27, she proposed to increase it to ₹12.2 lakh crore to continue the momentum.

To promote environmentally sustainable movement of cargo, the Finance Minister proposed new Dedicated Freight Corridors connecting Dankuni in the East, to Surat in the West; b) operationalise 20 new National Waterways (NW) over next 5 years, starting with NW-5 in Odisha to connect mineral rich areas of Talcher and Angul and industrial centres like Kalinga Nagar to the Ports of Paradeep and Dhamra. Training Institutes will be set up as Regional Centres of Excellence for development of the required manpower.

The Budget aims to further amplify the potential of cities to deliver the economic power of agglomerations by mapping city economic regions (CER), based on their specific growth drivers. An allocation of ₹ 5000 crore per CER over 5 years is proposed for implementing their plans through a challenge mode with a reform-cum-results based financing mechanism.

To promote environmentally sustainable passenger systems, seven High-Speed Rail corridors between cities will be developed as ‘growth connectors’, namely i) Mumbai-Pune, ii) Pune-Hyderabad, iii) Hyderabad-Bengaluru, iv) Hyderabad-Chennai, v) Chennai-Bengaluru, vi) Delhi-Varanasi, vii) Varanasi-Siliguri.

The Finance Minister said that second kartavya is to fulfil aspirations and build capacity. Close to 25 crore individuals have come out of multidimensional poverty through a decade of Government’s sustained and reform-oriented efforts.

To promote India as a hub for medical tourism services, the Finance Minister proposed a Scheme to support States in establishing five Regional Medical Hubs, in partnership with the private sector. These Hubs will serve as integrated healthcare complexes that combine medical, educational and research facilities. They will have AYUSH Centres, Medical Value Tourism Facilitation Centres and infrastructure for diagnostics, post-care and rehabilitation. These Hubs will provide diverse job opportunities for health professionals including doctors and AHPs.

To scale up availability of veterinary professionals by more than 20,000, a loan-linked capital subsidy was proposed to support scheme for establishment of veterinary and para vet colleges, veterinary hospitals, diagnostic laboratories and breeding facilities in the private sector.

India’s Animation, Visual Effects, Gaming and Comics (AVGC) sector is a growing industry, projected to require 2 million professionals by 2030. The Finance Minister proposed to support the Indian Institute of Creative Technologies, Mumbai in setting up AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges.

In Higher Education STEM institutions, prolonged hours of study and laboratory work pose some challenges for girl students. Through VGF/capital support, 1 girls hostel will be established in every district.

The Finance Minister proposed to set up a National Institute of Hospitality by upgrading the existing National Council for Hotel Management and Catering Technology. It will function as a bridge between academia, industry and the Government. She further proposed a pilot scheme for upskilling 10,000 guides in 20 tourist sites through a standardized, high-quality 12-week training course in hybrid mode, in collaboration with an Indian Institute of Management.

Taking forward the systematic nurturing of sports talent which is set in motion through the Khelo India programme, the Finance Minister proposed to launch a Khelo India Mission to transform the Sports sector over the next decade. The Mission will facilitate: a) An integrated talent development pathway, supported by training centres b) systematic development of coaches and support staff; c) integration of sports science and technology; d) competitions and leagues to promote sports culture and provide platforms; and, e) development of sports infrastructure for training and competition.

The Finance Minister said that the Budget’s third kartavya aligns with the vision of Sabka Sath, Sabka Vikas towards a Viksit Bharat. This requires targeted efforts for increasing farmer incomes, empowering Divyangjan, empowering the vulnerable to access mental health and trauma care, focus on the Purvodaya States and the North-East Region to accelerate development and employment opportunities.

The Finance Minister proposed Bharat-VISTAAR (Virtually Integrated System to Access Agricultural Resources), a multilingual AI tool that shall integrate the AgriStack portals and the ICAR package on agricultural practices with AI systems. This will enhance farm productivity, enable better decisions for farmers and reduce risk by providing customised advisory support.

Building on the success of the Lakhpati Didi Programme, Self-Help Entrepreneur (SHE) Marts will be set up as community-owned retail outlets within the cluster level federations through enhanced and innovative financing instruments.

Reaffirming the commitment to Mental Health and Trauma Care, the Finance Minister announced to setup a NIMHANS-2 and also upgrade National Mental Health Institutes in Ranchi and Tezpur as Regional Apex Institutions.

She further proposed the development of an integrated East Coast Industrial Corridor with a well-connected node at Durgapur, creation of 5 tourism destinations in the 5 Purvodaya States, and the provision of 4,000 e-buses. She also proposed to launch a Scheme for Development of Buddhist Circuits in Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram and Tripura. The Scheme will cover preservation of temples and monasteries, pilgrimage interpretation centers, connectivity and pilgrim amenities.

Fiscal Consolidation

The debt-to-GDP ratio is estimated to be 55.6 percent of GDP in BE 2026-27, compared to 56.1 percent of GDP in RE 2025-26. A declining debt-to-GDP ratio will gradually free up resources for priority sector expenditure by reducing the outgo on interest payments. In RE 2025-26, the fiscal deficit has been estimated at par with BE of 2025-26 at 4.4 percent of GDP. In line with the new fiscal prudence path of debt consolidation, the fiscal deficit in BE 2026-27 is estimated to be 4.3 percent of GDP.

Revised Estimates 2025-26

The Revised Estimates of the non-debt receipts are ₹34 lakh crore of which the Centre’s net tax receipts are ₹26.7 lakh crore. The Revised Estimate of the total expenditure is ₹49.6 lakh crore, of which the capital expenditure is about ₹11 lakh crore.

Budget Estimates 2026-27

Coming to 2026-27, the non-debt receipts and the expenditure are estimated as ₹36.5 lakh croreand ₹53.5 lakh crore respectively. The Centre’s net tax receipts are estimated at ₹28.7 lakh crore.

To finance the fiscal deficit, the net market borrowings from dated securities are estimated at ₹11.7 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at ₹17.2 lakh crore.

PART-B

Direct Taxes:

In Direct Taxes, many new reforms are proposed in the Union Budget 2026-27. The New Income tax Act, 2025 will come into effect from April 2026. Also the simplified Income Tax Rules and Forms will be notified shortly. The forms for the purpose are redesigned for easy compliance of ordinary citizens.

There is also a proposed reduction in the TCS rates. The Overseas tour program package is reduced from the current 5 percent and 20 percent to 2 percent without any stipulation of amount. Further, TCS for pursuing education and for medical purposes under the Liberalized Remittance Scheme (LRS) reduced from 5 percent to 2 percent.

It is also proposed that the supply of manpower services to be brought within the ambit of payment to contractors for the purpose of TDS. TDS on these services will be at the rate of either 1 percent or 2 percent only. For small taxpayers, a rule-based automated process will enable obtaining a lower or nil deduction certificate instead of filing an application with the assessing officer. Also, the time available for revising returns is proposed to be extended from 31st December to up to 31st March with the payment of a nominal fee. Further, the timeline for filing of tax returns is to be staggered.

To address practical issues of small taxpayers, a One-time 6-month foreign asset disclosure scheme for students, young professionals, tech employees, relocated NRIs, and such others to be introduced to disclose income or assets below a certain size.

Rationalising Penalty and Prosecution

With a view to rationalizing penalty and prosecution, the Union Budget 2026-27 proposes to reduce the multiplicity of proceedings. Assessment & penalty proceedings will be integrated by way of a common order for both. Further, the quantum of pre-payment will be reduced from 20 percent to 10 percent, calculated only on core tax demand. In order to reduce litigations, taxpayers will be allowed to update their returns even after reassessment proceedings have been initiated, at an additional 10 percent tax rate over and above the rate applicable for the relevant year.

The Budget proposes to extend the provisions for immunity from penalty and prosecution in the cases of under reporting, to misreporting as well. Taxpayer will need to pay 100 percent of the tax amount as an additional income tax over and above the tax and interest due. In addition, prosecution framework under the Income Tax Act will be rationalized. Non-production of books of account and documents, and requirement of TDS payment, where payment is made in kind, will be decriminalised. Non-disclosure of non-immovable foreign assets with aggregate value less than 20 lakh rupees will be provided with immunity from prosecution with retrospective effect from 1.10.2024.

Cooperatives

In her Budget speech in the Parliament today, Smt. Nirmala Sitharaman stated that the deduction already available to a primary cooperative society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members, will be extended to also include supply of cattle feed and cotton seed produced by its members. Inter-cooperative society dividend income will be allowed as deduction under the new tax regime to the extent it is further distributed to its members. In addition, an exemption of three years is to be allowed to dividend income received by a notified national cooperative federation, on their investments made in companies up to 31.1.2026, for dividends further distributed to its member co-operatives.

Supporting IT sector as India’s growth engine

Underscoring the significance of the IT sector for India’s growth trajectory, the Budget proposes to club software development services, IT enabled services, knowledge process outsourcing services and contract R&D services relating to software development under a single category of Information Technology Services with a common safe harbour margin of 15.5 percent. Further, the threshold for availing safe harbour for IT services will be enhanced from 300 crore rupees to 2,000 crore rupees. Safe harbour for IT services shall be approved by an automated rule-driven process, and once applied by an IT Services company, the same safe harbour can be continued for a period of 5 years at a stretch.

Unilateral  Advanced Pricing Agreement (APA) process for IT services is proposed to be fast-tracked with an endeavour to conclude it within two years, which can be extended by 6 months on taxpayer’s request. Further, the facility of modified returns available to the entity entering APA is to be extended to its associated entities.

Attracting global business and investment

While presenting the Union Budget 2026-27 in the Parliament today, the Union Finance and Corporate Affairs Minister said that any foreign company that provides cloud services to customers globally by using data centre services from India will be provided tax holiday till 2047. She added that a safe harbour of 15 percent on cost is to be provided if the company providing data centre services from India is a related entity. Moreover, a safe harbour will be provided to non-residents for component warehousing in a bonded warehouse at a profit margin of 2 percent of the invoice value. The resultant tax of about 0.7 percent will be much lower than in competing jurisdictions, the Union Minister said.

The Budget proposes to provide exemption from income tax for 5 years to any non-resident who provides capital goods, equipment or tooling, to any toll manufacturer in a bonded zone. To encourage vast pool of global talent to work in India for a longer period of time, exemption will be provided to global (non-India sourced) income of a non-resident expert, for a stay period of 5 years under notified schemes. Further, all non-residents who pay tax on presumptive basis, will be exempted from Minimum Alternate Tax (MAT).

Tax Administration

In a significant step towards strengthening tax administration, the Budget proposes the constitution of a Joint Committee of Ministry of Corporate Affairs and Central Board of Direct Taxes for incorporating the requirements of Income Computation and Disclosure Standards (ICDS) in the Indian Accounting Standards (IndAS) itself. Separate accounting requirement based on ICDS will be done away with from the tax year 2027-28. The definition of accountant for the purposes of Safe Harbour Rules will also be rationalized.

Other Tax Proposals

In the interest of minority shareholders, the Union Budget 2026-27 proposes that buyback for all types of shareholders will be taxed as Capital Gains. It requires promoters to pay an additional buyback tax, making effective tax 22 percent for corporate promoters and 30 percent for non-corporate promoters.

Smt. Nirmala Sitharaman said that TCS rate for sellers of specific goods namely alcoholic liquor, scrap and minerals will be rationalized to 2 percent and that on tendu leaves will be reduced from 5 percent to 2 percent. Another notable tax proposal is the move to raise STT on Futures to 0.05 percent from present 0.02 percent. STT on options premium and exercise of options will also be raised to 0.15 percent from the present rate of 0.1 percent and 0.125 percent, respectively.

To encourage companies to shift to the new regime, the Budget proposes that the set-off of brought forward MAT credit is to be allowed to companies only in the new regime. Set-off using available MAT credit will be allowed to an extent of 1/4th of the tax liability in the new regime. Proposing to make MAT the final tax, Smt. Sitharaman said that there will be no further credit accumulation from 1st April 2026. The rate of final tax will be reduced to 14 percent from the current MAT rate of 15 percent. Further, the brought forward MAT credit of taxpayers accumulated till 31st March 2026, will continue to be available to them for set-off as above.

Indirect Taxes:

The Finance Minister stated that the proposals for Customs and Central Excise aim to further simplify the tariff structure, support domestic manufacturing, promote export competitiveness, and correct inversion in duty.

Rationalisation of Custom Duties:

In Marine, Leather, and Textile products, the limit for duty-free imports of specified inputs used for processing seafood products for export, is to be increased from the current 1 per cent to 3 per cent of the FOB value. The duty-free imports of specified inputs, which is currently available for exports of leather or synthetic footwear will be allowed.

In Energy sector, the basic customs duty exemption given to capital goods used for manufacturing Lithium-Ion Cells for batteries will be extended and the basic customs duty on import of sodium antimonate for use in manufacture of solar glass will be exempted.

The Finance Minister added that the existing basic customs duty exemption on imports of goods required for Nuclear Power Projects will be extended till the year 2035 and the basic customs duty on specified parts used in the manufacture of microwave ovens will be exempted.

The basic customs duty to the import of capital goods required for processing of critical minerals will be exempted and the entire value of biogas while calculating the Central Excise duty payable on biogas blended CNG will be excluded.

In the Civil and Defence Aviation sector, the basic customs duty on components and parts required for the manufacture of civilian, training and other aircrafts will be exempted and the basic custom duty on raw materials imported for manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by Units in the Defence sector will be exempted.

Further, a special one-time measure, to facilitate sales by eligible manufacturing units in Special Economic Zone to the Domestic Tariff Area (DTA) at concessional rates of duty is proposed.

To enhance the Ease of Living, the Finance Minister stated that the tariff rate on all dutiable goods imported for personal use will be reduced from 20 per cent to 10 per cent. The basic customs duty on 17 drugs or medicines will be exempted. 7 more rare diseases will be added for the purposes of exempting import duties on personal imports of drugs, medicines and Food for Special Medical Purposes (FSMP) used in their treatment.

Custom Processes:

The Custom processes to have minimal intervention for smoother and faster movement of goods. Further, Duty deferral period for Tier 2 and Tier 3 Authorised Economic Operators, known as AEOs, is to be enhanced from 15 days to 30 days. Same is extended to the eligible manufacturer-importers. The Validity period of advance ruling, binding on Customs, is proposed to be extended from the present 3 years to 5 years. The government agencies will be encouraged to leverage AEO accreditation for preferential treatment in clearing their cargo.

The Budget also proposes that the Customs warehousing framework is to be transformed into a warehouse operator-centric system with self-declarations, electronic tracking and risk-based audit.

Ease of Doing Business:

Multiple initiatives have been taken in the Ease of Doing Business sector. For instance, Cargo clearance approvals from various Government agencies to be seamlessly processed through a single and interconnected digital window by the end of the financial year. For goods not having any compliance requirement, clearance is to be done by Customs immediately after online registration is completed by the importer. The Customs Integrated System (CIS) is to be rolled out in 2 years as a single, integrated and scalable platform for all the customs processes.  Also, the Utilization of non-intrusive scanning with advanced imaging and AI technology for risk assessment is to be expanded in a phased manner with the objective to scan every container across all the major ports.

The Union Budget 2026-27 makes the Fish catch by an Indian fishing vessel in Exclusive Economic Zone (EEZ) or on the High Seas free of duty. Landing of such fish on foreign port will be treated as export of goods. The budget also proposes complete removal of the current value cap of ₹10 lakh per consignment on courier exports-supports aspirations of India’s small businesses, artisans and start-ups to access global markets through e-commerce

The Provisions governing baggage clearance are also to be revised during international travel. Revised rules to enhance duty-free allowances in line with the present day travel realities. Further, Honest taxpayers, willing to settle disputes will be able close cases by paying an additional amount in lieu of penalty.

PART-A

Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman tabled the Union Budget 2026-27 in the parliament today. The highlights of the budget are as follows:

The first Budget prepared in Kartavya Bhawan, is inspired by 3 kartavyas:

• First kartavya is to accelerate and sustain economic growth, by enhancing productivity and competitiveness, and building resilience to volatile global dynamics.
• Second kartavya is to fulfil aspirations of  people and build their capacity, making them strong partners in India’s path to prosperity
• Third kartavya, aligned with vision of Sabka Sath, Sabka Vikas, is to ensure that every family, community, region and sector has access to resources, amenities and opportunities for meaningful participation.

Budget Estimates

• The non-debt receipts and the total expenditure are estimated as ₹36.5 lakh crore and ₹53.5 lakh crore respectively. The Centre’s net tax receipts are estimated at ₹28.7 lakh crore.
• The gross market borrowings are estimated at ₹17.2 lakh crore and the net market borrowings from dated securities are estimated at ₹11.7 lakh crore.
  • The Revised Estimates of the non-debt receipts are ₹34 lakh crore of which the Centre’s net tax receipts are ₹26.7 lakh crore.
  • The Revised Estimate of the total expenditure is ₹49.6 lakh crore, of which the capital expenditure is about ₹11 lakh crore.
• The fiscal deficit in BE 2026-27 is estimated to be 4.3 percent of GDP.
• In RE 2025-26, the fiscal deficit has been estimated at par with BE of 2025-26 at 4.4 percent of GDP.
• The debt-to-GDP ratio is estimated to be 55.6 percent of GDP in BE 2026-27, compared to 56.1 percent of GDP in RE 2025-26.

 

First Kartavya is to accelerate and sustain economic growth and proposes 6 interventions

1. Scaling up manufacturing in 7 strategic and frontier sectors

1. Biopharma SHAKTI (Strategy for Healthcare Advancement through Knowledge, Technology and Innovation) announced, with an outlay of ₹ 10,000 crores over the next 5 years to develop India as a global Biopharma manufacturing hub.

6. A Biopharma-focused network to be created with 3 new National Institutes of Pharmaceutical Education and Research (NIPER) and upgrading 7 existing ones.
7. A network of over 1000 accredited India Clinical Trials sites to be created
8. India Semiconductor Mission (ISM) 2.0 to be launched to produce equipment and materials, design full-stack Indian IP, and fortify supply chains with focus on industry led research and training centres to develop technology and skilled workforce.
9. The Electronics Components Manufacturing Scheme outlay increased to ₹40,000 crore.
10. Dedicated Rare Earth Corridors to be established, to support the mineral-rich States of Odisha, Kerala, Andhra Pradesh and Tamil Nadu to promote mining, processing, research and manufacturing.
11. Government to launch a Scheme to support States in establishing 3 dedicated Chemical Parks, through challenge route, on a cluster-based plug-and-play model.
12. Strengthening Capital Goods Capability

• Hi-Tech Tool Rooms to be established by CPSEs at 2 locations as digitally enabled automated service bureaus that locally design, test, and manufacture high-precision components at scale and at lower cost.
• A Scheme for Enhancement of Construction and Infrastructure Equipment (CIE) to be introduced, to strengthen domestic manufacturing of high-value and technologically-advanced CIE.
• A Scheme for Container Manufacturing announced, to create a globally competitive container manufacturing ecosystem, with a budgetary allocation of over ₹10,000 crore over a 5 year period.

7. Integrated Programme for the Textile Sector announced

1. The National Fibre Scheme for self-reliance in natural fibres such as silk, wool and jute, man-made fibres, and new-age fibres.

2. Textile Expansion and Employment Scheme to modernize traditional clusters with capital support for machinery, technology upgradation and common testing and certification centres.

• Mega Textile Parks to be setup in challenge mode with focus on bringing value addition to technical textiles.
• Mahatma Gandhi Gram Swaraj initiative announced, to strengthen khadi, handloom and handicrafts.

1. Initiative to help in global market linkage, branding and will streamline and support training, skilling, quality of process and production.

2. Rejuvenating legacy industrial sectors

• A Scheme to revive 200 legacy industrial clusters announced, to improve their cost competitiveness and efficiency through infrastructure and technology upgradation.

3. Creating “Champion SMEs” and supporting micro enterprises

•  A dedicated ₹10,000 crore SME Growth Fund, to be introduced, to create future Champions, incentivizing enterprises based on select criteria.
• Self-Reliant India Fund to be allocated with additional ₹2,000 crore, to continue support to micro enterprises and maintain their access to risk capital.
• Government to facilitate Professional Institutions such as ICAI, ICSI, ICMAI to design short-term, modular courses and practical tools to develop a cadre of ‘Corporate Mitras’, especially in Tier-II and Tier-III towns.

4. Delivering a powerful push to Infrastructure

•  Public capital expenditure to be increased to ₹12.2 lakh crore in FY 2026-27.
• Government to set up an Infrastructure Risk Guarantee Fund to strengthen the confidence of private developers regarding risks during infrastructure development and construction phase.
• Government to accelerate recycling of significant real estate assets of CPSEs through the setting up of dedicated REITs.

• To promote environmentally sustainable movement of cargo, following measures are proposed:

3. New Dedicated Freight Corridors to be established connecting Dankuni in the East, to Surat in the West
4. 20 new National Waterways (NW) to be operationalised  over next 5 years, starting with NW-5 in Odisha to connect mineral rich areas of Talcher and Angul and industrial centres like Kalinga Nagar to the Ports of Paradeep and Dhamra.
   • Training Institutes to be set up as Regional Centres of Excellence for development of the required manpower.
   • Further, a ship repair ecosystem catering to inland waterways to be set up at Varanasi and Patna
5. A  Coastal Cargo Promotion Scheme to be launched for incentivising a modal shift from rail and road, to increase the share of inland waterways and coastal shipping from 6% to 12 % by 2047.

• Incentives to be provided to indigenize manufacturing of seaplanes and enhance last-mile and remote connectivity, and promote tourism.

1. Seaplane VGF Scheme to be introduced to provide support for operations.

5. Ensuring long term energy security and stability

• An outlay of ₹20,000 crore over the next 5 years, announced  for Carbon Capture Utilization and Storage (CCUS) technologies.

6. Developing City Economic Regions

An allocation of  ₹5000 crore over 5 years, per city economic regions (CER) announced, for implementing their plans through a challenge mode with a reform-cum-results based financing mechanism.

• Government to develop Seven High-Speed Rail corridors between cities as ‘growth connectors’ to promote environmentally sustainable passenger systems. These include:

1. Mumbai-Pune
2. Pune-Hyderabad,
3. Hyderabad-Bengaluru,
4. Hyderabad-Chennai
5. Chennai-Bengaluru,
6. Delhi-Varanasi,
7. Varanasi-Siliguri.

• Government to setup 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.
• Government to restructure the Power Finance Corporation and Rural Electrification Corporation to achieve scale and improve efficiency in the Public Sector NBFCs.
• A comprehensive review of the Foreign Exchange Management (Non-debt Instruments) Rules is proposed, to create a more contemporary, user-friendly framework for foreign investments, consistent with India’s evolving economic priorities.

Municipal Bonds

• An incentive of ₹100 crore for a single bond issuance of more than ₹1000 crore announced, to encourage the issuance of municipal bonds of higher value by large cities.

Second Kartavya is to fulfil aspirations and build capacity of people

• Government 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.

Creation of Professionals for Viksit Bharat

• Existing institutions for Allied Health Professionals (AHPs) to be upgraded and new AHP Institutions to be established in private and Government sectors

1. 100,000 Allied Health Professionals to be added over the next 5 years

• Five Regional Medical Hubs to be established, to promote India as a hub for medical tourism services.

AYUSH

• 3 new All India Institutes of Ayurveda to be established.

Animal Husbandry

• Government to scale up availability of veterinary professionals by more than 20,000

1. A loan-linked capital subsidy support scheme to be launched for establishment of veterinary and para vet colleges, veterinary hospitals, diagnostic laboratories and breeding facilities in the private sector.

Orange Economy

• Indian Institute of Creative Technologies, Mumbai  to be provided support in setting up , Visual Effects, Gaming and Comics (AVGC) Content Creator Labs in 15,000 secondary schools and 500 colleges.

Education

• 5 University Townships to be created in the vicinity of major industrial and logistic corridors through challenge route.

1. Through VGF/capital support, 1 girls’ hostel to be established in every district

Tourism

• National Council for Hotel Management and Catering Technology to be upgraded to National Institute of Hospitality

1. A pilot scheme for upskilling 10,000 guides in 20 tourist sites announced through a standardized, high-quality 12-week training course in hybrid mode In collaboration with an IIM.
2. A National Destination Digital Knowledge Grid to be established to digitally document all places of significance—cultural, spiritual andheritage.

Heritage and Culture Tourism

• 15 archeological sites including Lothal, Dholavira, Rakhigarhi, Adichanallur, Sarnath, Hastinapur, and Leh Palace to be developed into vibrant, experiential cultural destinations

Sports

• Khelo India Mission to be launched to transform the Sports sector over the next decade.

Third Kartavya is aligned with vision of Sabka Sath, Sabka Vikas and requires targeted efforts in the following four areas:

1. Increasing Farmer Incomes

• New Initiatives to be undertaken for

1. Integrated development of 500 reservoirs and Amrit Sarovars

 High Value Agriculture:

• Govt. to support high value crops such as :

1. coconut, sandalwood, cocoa and cashew in coastal areas
2. Coconut Promotion Scheme to be launched to increase production and enhance productivity.

Bharat-VISTAAR (Virtually Integrated System to Access Agricultural Resources)

• Government to launch Bharat-VISTAAR, a multilingual AI tool to integrate the AgriStack portals and the ICAR package on agricultural practices with AI systems.

2. Empowering Divyangjan

• Divyangjan Kaushal Yojana for Divyangjans to offer task-oriented and process-driven roles in IT, AVGC sectors, Hospitality and Food and Beverages sectors.

3. Commitment to Mental Health and Trauma Care

• Government to set up NIMHANS-2 in north India.

1. Government to upgrade National Mental Health Institutes in Ranchi and Tezpur as Regional Apex Institutions.

4. Focus on the Purvodaya States and the North-Eastern Region

• Government to develop an integrated East Coast Industrial Corridor with a well-connected node at Durgapur, creation of 5 tourism destinations in the 5 Purvodaya States, and the provision of 4,000 e-buses.

1. A scheme to be launched for the  development of Buddhist Circuits in Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram and Tripura.

16th Finance Commission

• Government provided ₹1.4 lakh crore to the States for the FY 2026-27 as Finance Commission Grants as recommended by the 16th Finance Commission.

PART –B

Direct Taxes

New Income Tax Act

·  New Income tax Act ,2025 to come into effect from April 2026

· The simplified Income Tax Rules and Forms will be notified shortly. The forms redesigned for easy compliance of ordinary citizens.

Ease of Living

• Interest awarded by the Motor Accident Claims Tribunal to a natural person will be exempt from Income Tax, and any TDS on this account will be done away with.
•  TCS Rationalization

• Reduce TCS rate on sale of overseas tour program package to 2 % (from current 2-20%).
• Reduce the TCS rate to 2% (from current 5%) for LRS remittances for education and medical.

• Simplified TDS provisions for manpower supply will benefit labour intensive business.
• Scheme for small taxpayers wherein a rule based automated process for obtaining Lower or nil deduction certificate instead of filing application with the assessor.
• Single window filing with depositories for Form 15G or 15 H for TDS on dividends, interests etc
• Extend time available for revising returns from 31^st December to upto 31^st March with payment of nominal fees
• The timeline for filing of tax returns to be staggered .
• TAN for property transactions involving NRIs will be replaced with resident buyers PAN based challan.
• A one time 6 month foreign asset disclosure scheme for small taxpayers to disclose their overseas income or asset.

Rationalizing Penalty and Prosecution

• IT assessment & penalty proceedings are proposed to be integrated by way of common order for both.
• Taxpayers allowed  to update their returns even after reassessment proceedings have been initiated to reduce litigations, at an additional 10 percent tax rate over and above the rate applicable for the relevant year.
• Penalty for misreporting of income also eligible for immunity with payment of additional income tax.

• Prosecution framework under the Income Tax Act to be rationalized.
• Non-production of books of account and documents, and requirement of TDS payment, where payment is made in kind, to be decriminalised.
• Non-disclosure of non-immovable foreign assets with aggregate value less than 20 lakh rupees to be provided with immunity from prosecution with retrospective effect from 1.10.2024.

Cooperatives

• Extend deduction already allowed to a primary cooperative society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members to those supplying cattle feed and cotton seed also.
• Allow the inter-cooperative society dividend income as deduction under the new tax regime to the extent it is further distributed to its members.
• Exemption for a period of 3 years allowed to dividend income received by a notified national cooperative federation, on their investments made in companies up to 31.1.2026, for dividends further distributed to its member co-operatives.

Supporting IT sector as India’s growth engine

• Software development services, IT enabled services, knowledge process outsourcing services and contract R&D services relating to software development to be clubbed under a single category of Information Technology Services with a common safe harbour margin of 15.5 percent.
• The threshold for availing safe harbour for IT services to be enhanced from 300 crore rupees to 2,000 crore rupees.
• Safe harbour for IT services shall be approved by an automated rule-driven process, can be continued for a period of 5 years at a stretch.
• Unilateral  Advanced Pricing Agreement (APA) process for IT services to be fast-tracked with the endeavour to conclude it within a period of 2 years, which can be extended by 6 months on taxpayer’s request.
• The facility of modified returns available to the entity entering APA to be extended to its associated entities.

Attracting global business and investment

• Any foreign company that provides cloud services to customers globally by using data centre services from India to be provided Tax holiday till 2047
• A safe harbour of 15 percent on cost to be provided if the company providing data centre services from India is a related entity.
• A safe harbour to non-residents for component warehousing in a bonded warehouse at a profit margin of 2 percent of the invoice value. The resultant tax of about 0.7 percent will be much lower than in competing jurisdictions.
• Exemption from income tax for 5 years to be provided to any non-resident who provides capital goods, equipment or tooling, to any toll manufacturer in a bonded zone.
• Exemption to global (non-India sourced) income of a non-resident expert, for a stay period of 5 years under notified schemes
• Exemption from Minimum Alternate Tax (MAT) to all non-residents who pay tax on presumptive basis.

Tax administration

• A Joint Committee of Ministry of Corporate Affairs and Central Board of Direct Taxes to be constituted for incorporating the requirements of Income Computation and Disclosure Standards (ICDS) in the Indian Accounting Standards (IndAS) itself. Separate accounting requirement based on ICDS will be done away with from the tax year 2027-28.
• Definition of accountant for the purposes of Safe Harbour Rules to be rationalized.

Other Tax proposals

• In the interest of minority shareholders, buyback for all types of shareholders to be taxed as Capital Gains. Promoters to pay an additional buyback tax, making effective tax 22 percent for corporate promoters and 30 percent for non-corporate promoters.
• TCS rate for sellers of specific goods namely alcoholic liquor, scrap and minerals will be rationalized to 2 percent and that on tendu leaves will be reduced from 5 percent to 2 percent.
• STT on Futures to be raised to 0.05 percent from present 0.02 percent. STT on options premium and exercise of options to be raised to 0.15 percent from the present rate of 0.1 percent and 0.125 percent respectively.
• To encourage companies to shift to the new regime, set-off of brought forward MAT credit to be allowed to companies only in the new regime. Set-off using available MAT credit to be allowed to an extent of 1/4th of the tax liability in the new regime.
• MAT is proposed to be made final tax. There will be no further credit accumulation from 1st April 2026. The rate of final tax to be reduced to 14 percent from the current MAT rate of 15 percent. The brought forward MAT credit of taxpayers accumulated till 31st March 2026, will continue to be available to them for set-off as above.

Indirect taxes:

Tariff Simplification

Marine, leather, and textile products:

• The limit for duty-free imports of specified inputs used for processing seafood products for export, to increase from the current 1 per cent to 3 per cent of the FOB value.
• The duty-free imports of specified inputs, which is currently available for exports of leather or synthetic footwear to be allowed.

Energy transition and security:

• The basic customs duty exemption given to capital goods used for manufacturing Lithium-Ion Cells for batteries to be extended.
• The basic customs duty on import of sodium antimonate for use in manufacture of solar glass to be exempted.

Nuclear Power:

• The existing basic customs duty exemption on imports of goods required for Nuclear Power Projects to be extended till the year 2035.

Critical Minerals:

• The basic customs duty to the import of capital goods required for processing of critical minerals to be exempted.

Biogas blended CNG:

• The entire value of biogas while calculating the Central Excise duty payable on biogas blended CNG to be excluded.

Civil and Defence Aviation:

• The basic customs duty on components and parts required for the manufacture of civilian, training and other aircrafts to be exempted.
• The basic custom duty on raw materials imported for manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by Units in the Defence sector to be exempted.

Electronics:

• The basic customs duty on specified parts used in the manufacture of microwave ovens to be exempted.

Special Economic Zone:

• A special one-time measure, to facilitate sales by eligible manufacturing units in SEZs to the Domestic Tariff Area (DTA) at concessional rates of duty is proposed. The quantity of such sales will be limited to a prescribed proportion of their exports.

Ease of Living:

• The tariff rate on all dutiable goods imported for personal use to be reduced from 20 per cent to 10 per cent.
• The basic customs duty on 17 drugs/ medicines is to be exempted.
• Duty free personal import of drugs/ medicines and food for 7 more rare diseases.

Customs Process simplification

• Custom processes to have minimal intervention for smoother and faster movement of goods.

Trust-based systems

• Duty deferral period for Tier 2 and Tier 3 Authorised Economic Operators, known as AEOs, to be enhanced from 15 days to 30 days. Same is extended to the eligible manufacturer-importers
• Validity period of advance ruling, binding on Customs, to be extended from the present 3 years to 5 years.
• Government agencies will be encouraged to leverage AEO accreditation for preferential treatment in clearing their cargo.
• Filing of bill of entry by a trusted importer, and arrival of goods will automatically notify Customs for completing their clearance formalities (for import of goods not needing any compliance).
• The Customs warehousing framework to be transformed into a warehouse operator-centric system with self-declarations, electronic tracking and risk-based audit.

Ease of Doing Business

• Cargo clearance approvals from various Government agencies to be seamlessly processed through a single and interconnected digital window by the end of the financial year.
• Processes involved in clearance of food, drugs, plant, animal & wild life products, accounting for around 70 percent of interdicted cargo, to be operationalised on this system by April 2026 itself.
• For goods not having any compliance requirement, clearance to be done by Customs immediately after online registration is completed by the importer.
• Customs Integrated System (CIS) to be rolled out in 2 years as a single, integrated and scalable platform for all the customs processes.
• Utilization of non-intrusive scanning with advanced imaging and AI technology for risk assessment to be expanded in a phased manner with the objective to scan every container across all the major ports.

New export opportunities

• Fish catch by an Indian fishing vessel in Exclusive Economic Zone (EEZ) or on the High Seas to be made free of duty, Landing of such fish on foreign port will be treated as export of goods.
• Complete removal of the current value cap of ₹10 lakh per consignment on courier exports-supports aspirations of India’s small businesses, artisans and start-ups to access global markets through e-commerce

Ease of Living

· Provisions governing baggage clearance to be revised during international travel. Revised rules to enhance duty-free allowances in line with the present day travel realities.

· Honest taxpayers, willing to settle disputes will be able close cases by paying an additional amount in lieu of penalty.

The Union Budget 2026-27 lays emphasis on Scaling up manufacturing in 7 strategic and frontier sectors. While presenting the Union Budget 2026-27 in Parliament today, Union Minister of Finance & Corporate Affairs Smt Nirmala Sitharaman said that the proposed interventions forms part of six areas under ‘First Kartavya’ in the Budget.

To develop India as a global Biopharma manufacturing hub, the Budget proposes Biopharma SHAKTI with an outlay of ₹ 10,000 crores over the next 5 years. This will build the ecosystem for domestic production of biologics and biosimilars. The Strategy as envisaged in the Budget will include a Biopharma-focused network with 3 new National Institutes of Pharmaceutical Education and Research (NIPER) and upgrading 7 existing ones. It will also create a network of over 1000 accredited India Clinical Trials sites. The Union Budget proposes to strengthen the Central Drugs Standard Control Organisation to meet global standards and approval timeframes through a dedicated scientific review cadre and specialists.

For expanding India’s semiconductor sector capabilities and building on India Semiconductor Mission (ISM) 1.0, the Union Budget proposes to launch ISM 2.0 to produce equipment and materials, design fullstack Indian IP, and fortify supply chains. Smt Sitharaman said that the focus will be on industry-led research and training centres to develop technology and skilled workforce.

The Electronics Components Manufacturing Scheme, launched in April 2025 has an outlay of ₹22,919 crore. The Union Budget 2026-27 proposes to increase the outlay to ₹40,000 crore to capitalise on the momentum.

On a Scheme for Rare Earth Permanent Magnets, the Union Budget proposes to support the mineral-rich States of Odisha, Kerala, Andhra Pradesh and Tamil Nadu for establishing dedicated Rare Earth Corridors to promote mining, processing, research and manufacturing.

To enhance domestic chemical production and reduce import-dependency, the Union Minister proposed to launch a Scheme to support States in establishing 3 dedicated Chemical Parks, through challenge route, on a cluster-based plug-and-play model.

In her Budget speech, Smt. Nirmala Sitharaman stated that Strong capital goods capability is a determinant of productivity and quality across different sectors. Towards building this capacity, the Union Budget proposes Hi-Tech Tool Rooms to be established by CPSEs at 2 locations as digitally enabled automated service bureaus that locally design, test, and manufacture high-precision components at scale and at lower cost. A Scheme for Enhancement of Construction and Infrastructure Equipment (CIE) will be introduced to strengthen domestic manufacturing of high-value and technologically-advanced CIE. This can range from lifts in a multi-story apartment, fire-fighting equipment, large and small, to tunnel-boring equipment for building metros and high-altitude roads. The Budget also proposes a Scheme for Container Manufacturing to create a globally competitive container manufacturing ecosystem, with a budgetary allocation of ₹10,000 crore over a 5 year period.

For the labour-intensive Textile Sector, it proposes that an Integrated Programme with 5 sub-parts; firstly, the National Fibre Scheme for self-reliance in natural fibres such as silk, wool and jute, man-made fibres, and new-age fibres; secondly, Textile Expansion and Employment Scheme to modernise traditional clusters with capital support for machinery, technology upgradation and common testing and certification centres; thirdly, a National Handloom and Handicraft programme to integrate and strengthen existing schemes and ensure targeted support for weavers and artisans; fourthly, Tex-Eco Initiative to promote globally competitive and sustainable textiles and apparels; fifthly, Samarth 2.0 to modernize and upgrade the textile skilling ecosystem through collaboration with industry and academic institutions.

With a focus on bringing value addition to technical textiles, the Union Budget proposes to set up Mega Textile Parks in challenge mode.

Further the Union Budget proposes to launch the Mahatma Gandhi Gram Swaraj initiative to strengthen khadi, handloom and handicrafts. This will help in global market linkage and branding. The budget specifies that it will streamline and support training, skilling, quality of process and production. This will benefit our weavers, village industries, One – District – One – Product initiative and rural youth, the Budget added.

During the presentation of the budget, Smt Sitharaman said that India has the potential to emerge as a global hub for high quality, affordable sports goods. In this endeavour, the Budget proposes a dedicated initiative for sports goods that will promote manufacturing, research and innovation in equipment design as well as material sciences.

The Budget proposals for Customs and Central Excise aim to further simplify the tariff structure, support domestic manufacturing, promote export competitiveness, and correct inversion in duty, said Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman while presenting the Union Budget 2026-27, in Parliament today.

Taking forward the weeding out of long continuing customs duty exemptions, the Budget proposes to remove certain exemptions on items which are being manufactured in India or where the imports are negligible. Similarly, to further simplify the process of ascertaining the rate of duty applicable on a particular item, the Budget proposes to incorporate certain effective rates in various customs notifications to the tariff schedule itself.

With an aim to promote exports, the Finance Minister Smt Nirmala Sitharaman recommended to increase the limit for duty-free imports of specified inputs used for processing seafood products for export, from the current 1 per cent to 3 per cent of the FOB value of the previous year’s export turnover. The Budget also proposes 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. Fianance Minister also proposed to extend the time period for export of final product from the existing 6 months to 1 year, for exporters of leather or textile garments, leather or synthetic footwear and other leather products.

The Budget carries several proposals to ensure energy transition and security. Firstly, the Budget proposes to extend the basic customs duty exemption given to capital goods used for manufacturing Lithium-Ion Cells for batteries, to those used for manufacturing Lithium-Ion Cells for battery energy storage systems too. With respect to solar energy, Finance Minister proposed to exempt basic customs duty on import of sodium antimonate for use in manufacture of solar glass.

Giving a push to the Nuclear Energy sector, Smt Nirmala Sitharaman recommended extension of the existing basic customs duty exemption on imports of goods required for Nuclear Power Projects till the year 2035 and expand it for all nuclear plants irrespective of their capacity. The Budget also proposes to provide basic customs duty exemption to the import of capital goods required for processing of critical minerals in India. To promote biogas blending in CNG, the Budget proposes to exclude the entire value of biogas while calculating the Central Excise duty payable on biogas blended CNG.

Finance Minister also proposed exemption of basic customs duty on components and parts required for the manufacture of civilian, training and other aircrafts. The Budget also proposes to exempt basic customs duty on raw materials imported for manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by Units in the Defence sector.

To deepen value addition in the consumer electronics sector, the Budget proposes to exempt basic customs duty on specified parts used in the manufacture of microwave ovens.

The Budget addresses the concerns arising about utilization of capacities by manufacturing units in the Special Economic Zones due to global trade disruptions. For this, the Finance Minister proposed to facilitate sales by eligible manufacturing units in SEZs to the Domestic Tariff Area (DTA) at concessional rates of duty as a special one-time measure. The quantity of such sales will be limited to a prescribed proportion of their exports. Smt Nirmala Sitharaman said that necessary regulatory changes will be undertaken to operationalise these measures while ensuring level-playing field for the units working in the DTA.

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, presented the Union Budget 2026-27 in Parliament today. In her speech, the Finance Minister said that the government is inspired by 3 Kartavyas: (1) to accelerate and sustain economic growth; (2) to fulfill aspirations and build the capacity of the population; (3) to ensure that every family, community, region and sector has access to resources. Health emerges as an important component of all the three Kartavyas in the Union Budget.

To develop India as a global Biopharma manufacturing hub, the Union Budget proposes the Biopharma SHAKTI (Strategy For Healthcare Advancement Through Knowledge, Technology And Innovation) with an outlay of ₹ 10,000 crores over the next 5 years. This will build the ecosystem for domestic production of biologics and biosimilars.

For the creation of a new range of skilled career pathways for the youth, the Finance Minister proposed interventions in multiple sectors including the Health sector. These are as follows:

(1)  Existing institutions for Allied Health Professionals (AHPs) will be upgraded and new AHP Institutions established in private and Government sectors. This will cover 10 selected disciplines, including optometry, radiology, anesthesia, OT Technology, Applied Psychology and Behavioural Health and the addition of 100,000 AHPs over the next 5 years.

(2) The Finance Minister in her speech stated that a strong Care Ecosystem, covering geriatric and allied care services will be built. A variety of NSQF-aligned programmes will be developed to train multi-skilled caregivers combining core care and allied skills, such as, wellness, yoga and operation of medical and assistive devices. Further, in the coming year, 1.5 lakh caregivers will be trained.

(3) To promote India as a hub for medical tourism services, the Union Budget proposes to launch a Scheme to support States in establishing five Regional Medical Hubs, in partnership with the private sector. These Hubs will serve as integrated healthcare complexes that combine medical, educational and research facilities. They will have AYUSH Centres, Medical Value Tourism Facilitation Centres and infrastructure for diagnostics, post-care and rehabilitation. These Hubs will provide diverse job opportunities for health professionals including doctors and AHPs.

The Finance Minister, in her speech noted that the Ancient Indian yoga, already respected in several parts of the world, was given mass global recognition when Hon’ble PM took it to the UN. Further, post-COVID, Ayurveda gained a similar global acceptance and recognition. To meet this growing global demand, a few more steps were announced.

The Finance Minister proposed to: (i) set up 3 new All India Institutes of Ayurveda; (ii) upgrade AYUSH pharmacies and Drug Testing Labs for higher standards of certification ecosystem, and make available more skilled personnel; (iii) upgrade the WHO Global Traditional Medicine Centre in Jamnagar to bolster evidence-based research, training and awareness for traditional medicine.

The Finance Minister also noted the lack of national institutes for mental healthcare in north India. Therefore, the Union Budget announced the setting up of a NIMHANS-2 and the upgrading of National Mental Health Institutes in Ranchi and Tezpur as Regional Apex Institutions. Further, the emergency capacities of District Hospitals will be strengthened and increased by 50% by establishing Emergency and Trauma Care Centres.

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, while presenting the Union Budget 2026-27 today in the Parliament,  announced that the proposals for Customs and Central Excise aim to further simplify the tariff structure, support domestic manufacturing, promote export competitiveness, and correct inversion in duty.

Ease of Living

The Union Budget proposes to reduce the tariff rate on all dutiable goods imported for personal use from 20 per cent to 10 per cent to rationalize the customs duty structure. To provide relief to patients, particularly those suffering from cancer, the Budget proposes to exempt basic customs duty on 17 drugs or medicines. The Budget also proposes to add 7 more rare diseases for the purposes of exempting import duties on personal imports of drugs, medicines and Food for Special Medical Purposes (FSMP) used in their treatment.

The Union Budget further proposes to revise provisions governing baggage clearance during international travel to address genuine concerns of passengers. The revised rules will enhance duty-free allowances and provide clarity in temporary carriage of goods brought in or taken out. Furthermore, the honest taxpayers will now be able to settle their dues and close cases by paying an additional amount in lieu of penalty, the Budget added.

Customs Process

The Budget proposes many measures for custom processes to have minimal  intervention  for  smoother  and  faster  movement of goods and greater certainty to the trade.

Trust-based systems

The Budget proposes  to  enhance  duty  deferral  period  for Tier 2 and Tier 3 Authorised Economic Operators, known as AEOs, from 15 days to 30 days. The Budget further proposes to provide eligible manufacturer-importers the same duty deferral facility, thereby encouraging them to get themselves accredited as a full-fledged Tier 3- AEO in due course.

The Union Budget also proposes to extend validity period of advance ruling, binding on Customs, from the present 3 years to 5 years. Government agencies will be encouraged to leverage AEO accreditation for preferential treatment in clearing their cargo, the Budget stated. Regular importers with trusted longstanding supply chains will be recognized in the risk system, so that the need for verification of their cargo every time can be minimized. Export cargo using electronic sealing will be provided through clearance from the factory premises to the ship, the Budget stated. For import of goods not needing any compliance, filing of bill of entry by a trusted importer, and arrival of goods will automatically notify Customs for completing their clearance formalities.

Smt. Nirmala Sitharaman further announced that the Customs warehousing framework will be transformed into a warehouse operator-centric system with self-declarations, electronic tracking and risk-based audit. These reforms will move away from the current system of officer-dependent approvals, and reduce transaction delays and compliance costs, she added.

Union Minister of Finance & Corporate Affairs, Smt. Nirmala Sitharaman said that the Government led by Prime Minister Narendra Modi, has decisively and consistently chosen action over ambivalence, reform over rhetoric and people over populism.

While presenting the Union Budget 2026-27 in Parliament today, she said that the Government is inspired by 3 kartavya, out of which the first kartavya is to accelerate and sustain economic growth, by enhancing productivity and competitiveness, and building resilience to volatile global dynamics.

Recognising MSMEs as a vital engine of growth, the Finance Minister proposed a three-pronged approach to help them grow as Champions under the first Kartavya.

First is the Equity support in which, she introduced a dedicated ₹10,000 crore SME Growth Fund, to create future Champions, incentivizing enterprises based on select criteria. She also proposed to top up the Self-Reliant India Fund set up in 2021, with ₹2,000 crore to continue support to micro enterprises and maintain their access to risk capital.

On the second approach of Liquidity support, the Finance Minister said that with TReDS, more than ₹7 lakh crore has been made available to MSMEs. To leverage its full potential, she  proposed 4 measures: (i) mandate TReDS as the transaction settlement platform for all purchases from MSMEs by CPSEs, serving as a benchmark for other corporates; (ii) introduce a credit guarantee support mechanism through CGTMSE for invoice discounting on TReDS platform; (iii) link GeM with TReDS for sharing information with financiers about government purchases from MSMEs, encouraging cheaper and quicker financing; (iv) introduce TReDS receivables as asset-backed securities, helping develop a secondary market, enhancing liquidity and settlement of transactions.

On the final approach of Professional support, Smt.Nirmala Sitharaman pointed out that the Government will facilitate Professional Institutions such as ICAI, ICSI, ICMAI to design short-term, modular courses and practical tools to develop a cadre of ‘Corporate Mitras’, especially in Tier-II and Tier-III towns. These accredited para-professionals will help MSMEs meet compliance requirements at affordable costs.

The Union Finance and Corporate Affairs Minister, Smt Nirmala Sitharaman presented the Union Budget 2026-27 in the Parliament today. The Budget cites Emerging technologies and AI as important components in realizing the second kartavya of fulfilling aspirations of common citizens and buisld their capacity to make them strong partners in India’s path to prosperity.

Acknowledging that the adoption of technology is for the benefit of all, i.e. the farmers, women in STEM, youth keen to upskill and Divyangjan to access newer opportunities, the Union Budget 2026-27 highlights key government initiatives to support new technologies through AI Mission, National Quantum Mission, Anusandhan National Research Fund, and Research, Development and Innovation Fund.

With the emerging technologies playing a pivotal role in India’s Orange Economy, the Budget underscores India’s Animation, Visual Effects, Gaming and Comics (AVGC) sector as a growing industry projected to require 2 million professionals by 2030.The Union Budget proposes to support the Indian Institute of Creative Technologies, Mumbai in setting up AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges in furtherance of India’s Orange economy.

Further, the Budget proposes a new National Institute of Design to boost design education and development in the eastern region of India, acknowledging the rapidly expanding Design Industry of India.

The Union budget proposes ‘Bharat-VISTAAR’(Virtually Integrated System to Access Agricultural Resources)—a multilingual AI tool that shall integrate the AgriStack portals and the ICAR package on agricultural practices with AI systems. This will enhance farm productivity, will lead to better farmer decision making and reduce risk through customized advisory support for the farmer

Furthermore, taking note of the impact of AI and emerging technologies on jobs and skill requirements, the Budget proposes a High-Powered ‘Education to Employment and Enterprise’ Standing Committee for assessment and propose measures thereof.

While presenting the Union Budget 2026-27 in Parliament today, Union Minister for Finance and Corporate Affairs, Smt Nirmala Sitharaman said; “Our first kartavya is to accelerate and sustain economic growth, by enhancing productivity and competitiveness, and building resilience to volatile global dynamics”.

The Finance Minister in her budget speech today said that the Public capex has increased manifold from ₹2 lakh crore in FY2014-15 to an allocation of ₹11.2 lakh crore in BE 2025-26, and in FY2026-27, the Minister proposed to increase it to ₹12.2 lakh crore to continue the momentum.  She further told the Parliament that during this past decade, the Government has undertaken several initiatives for large-scale enhancement of public infrastructure including through new financing instruments such as Infrastructure Investment Trusts (InVITs) and Real Estate Investment Trusts (REITs) and institutions like NIIF and NABFID.  Over the years, REITs have emerged as a successful instrument for asset monetisation. The Budget 2026-27 proposes to accelerate recycling of significant real estate assets of CPSEs through the setting up of dedicated REITs.

Infrastructure Risk Guarantee Fund

To strengthen the confidence of private developers regarding risks during infrastructure development and construction phase, the Finance Minister proposed to set up an Infrastructure Risk Guarantee Fund to provide prudently calibrated partial credit guarantees to lenders.

Environmentally Sustainable Movement of Cargo

To promote this objective, the Budget proposes to establish new Dedicated Freight Corridors connecting Dankuni in the East, to Surat in the West and it also proposes to operationalise 20 new National Waterways (NW) over next 5 years. This is envisaged to start with NW-5 in Odisha to connect mineral rich areas of Talcher and Angul and industrial centres like Kalinga Nagar to the Ports of Paradeep and Dhamra. To increase the share of inland waterways and coastal shipping from 6 % to 12 % by 2047, the Finance Minister proposed to launch a Coastal Cargo Promotion Scheme for incentivizing a modal shift from rail and road.

Smt. Nirmala Sitharaman said that Training Institutes will also be set up as Regional Centres of Excellence for development of the required manpower, which will benefit youth in the entire stretch of the waterways to train and acquire skills. Further, a ship repair ecosystem catering to inland waterways is also proposed to be set up at Varanasi and Patna.

7 High-Speed Rail corridors

In order to promote environmentally sustainable passenger systems, in her Budget speech, the Finance Minister  proposed to develop seven High-Speed Rail corridors between cities as ‘growth connectors’, namely     i) Mumbai-Pune, ii) Pune-Hyderabad, iii) Hyderabad-Bengaluru, iv) Hyderabad-Chennai, v) Chennai-Bengaluru, vi) Delhi-Varanasi, vii) Varanasi-Siliguri.

Seaplane VGF Scheme

To enhance last-mile and remote connectivity, and promote tourism, Smt. Nirmala Sitharaman proposed to give incentives to indigenize manufacturing of seaplanes and said that a Seaplane VGF Scheme will be introduced to provide support for operations.

Carbon Capture Utilization and Storage (CCUS)

Aligning with the roadmap launched in December 2025, CCUS technologies at scale will achieve higher readiness levels in end-use applications across five industrial sectors, including, power, steel, cement, refineries and chemicals, said the Finance Minister. The Budget proposes an outlay of ₹20,000 crore over the next 5 years for the same.

City Economic Regions

The Finance Minister said that the cities are India’s engines of growth, innovation and opportunities.  It proposes to now focus on Tier II and Tier III cities, and even temple-towns, which need modern infrastructure and basic amenities. In order to deliver the economic power of agglomerations, city economic regions (CER) will be mapped based on their specific growth drivers. The Finance Minister proposed an allocation of ₹ 5000 crore per CER over 5 years for implementing.