Finance minister Nirmala Sitharaman presented her ninth consecutive Union Budget 2026-27 On Sunday(February 1, 2026) in a row.The document she unveiled is the clearest expression yet of the Narendra Modi government’s economic intent in its third term that India will grow its way to fiscal stability, spend its way to productivity and innovate its way to global relevance.
Sitharaman said, that the Budget for the next fiscal year is driven by Yuvashakti and based on three kartavyas. Here are the highlights of the Union Budget 2026-27
For Taxpayers
- No change in Income Tax rates
- New Income Tax Act, 2025, to be implemented from April 1; rules, forms to come soon
- ITR filing date for non-audit businesses extended by a month till August 31
- For filing of tax returns, individuals with ITR 1 and ITR 2 returns will continue to file till 31 July and non-audit business cases or trusts are proposed to be allowed time till 31 August.
- Revised returns: Deadline extended to March 31, with a nominal fee.
On Taxes
- TCSon sale of overseas tour packages slashed to 2 pc
- TCS on overseas education, medical expenses under LRS (Liberalised Remittance Scheme) cut to 2 pc
- Interest awarded by Motor Accident Claims Tribunal to be fully exempt from income tax.
- Rationalisation of TCS on goods: Alcoholic liquor, scrap, and mineral products: 2%; Tendu leaves: reduced from 5% to 2%
For markets
- Securities Transaction Tax (STT) on futures hiked to 0.05% from 0.02%
- STT on Options Premium to be increased from 0.10% to 0.15%
- No change in Short term capital gain STCG & LTCG capital gains tax.
For NRIs
- (TDS) on the sale of immovable property by the NRI to be deducted
- Foreign investment disclosure scheme announced
- Person of Indian Origin (PIO) permitted to invest in equity instruments, listed indian companies through Portfolio Investment Scheme
For Railways
- FM proposes seven high-speed, one dedicated freight corridors in Union Budget
- High-speed rail corridors will link India’s financial hubs, technology centres, manufacturing clusters, and emerging cities namely – 1. Mumbai-Pune, Pune- Hyderabad, Hyderabad- Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi, and Varanasi -Siliguri.
For Infrastructure
- New freight corridor in Dankuni, West Bengal.
- 20 new waterways to be operationalised
- Coastal Cargo Promotion Scheme to double modal share by 2047.
Education
- Govt announces setting up of one girls’ hostel in every district
- Budget proposes to support of Indian Institute of Creative Technologies Mumbai for setting up content labs in 15,000 secondary schools
- Sitharaman also announced that a new National Institute of Design will be established in Eastern India through a challenge-based route.
- Budget outlined plans to support states in developing five university townships near major industrial and logistics corridors.
For Healthcare
- Finance Minister announced the exemption of basic customs duty on 17 cancer-related drugs and medicines
- Govt to strengthen emergency and trauma care facilities nationwide by establishing emergency and trauma care centres at district hospitals
- Govt plans to establish NIMHANS 2.0, a premier mental health institute in North India, to address gaps in mental health infrastructure.
- Seven additional rare diseases would be added to the
list of diseases eligible for exemption from import duty on personal imports of drugs, medicines, and food intended for special medical purposes.
Semiconductors & Critical Minerals
- ISM 2.0 semiconductor mission launched with ?40,000 crore outlay.
- Rare earth corridors announced for Kerala, Tamil Nadu, Odisha, Andhra Pradesh.
For Industry:
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- Govt to provide tax holiday for foreign cos offering cloud services using India data centres
- Foreign digital firms to serve Indian customers through Indian reseller entities.
- Budget proposes Rs 10,000 cr investment in biopharma over next 5 years
- Outlay on electronics manufacturing to be increased to Rs 40,000 crore in FY27
- Proposes Rs 10,000 crore SME Growth fund to create future champions
- Trust-based systems for Customs, advance ruling validity period extended to 5 years
- High-level committee to increase the services sector contribution to 10 pc by 2047.
- Advanced Pricing Agreements (APA): Timeline reduced to two years, with a possible six-month extension.
- Minimum Alternate Tax (MAT): Rate cut to 14% and made the final tax.
- Rs 10,000 crore MSME Growth Fund
- Safe harbour threshold for IT services raised to Rs 2,000 crore.
On Economy
- Total Budget size at Rs 53.5 lakh crore
- FM pegs fiscal deficit lower at 4.3 pc of GDP for 2026-27
- Govt proposes to lower debt-to-GDP ratio to 55.6 pc in FY27
- Capex target will be raised to Rs 12.2 lakh crore for FY27
- Rs 1.4 lakh crore to be devolved to states as tax share.
- Net tax receipts estimated at Rs 28.7 lakh crore
- Gross market borrowings estimated at Rs 17.2 lakh crore
- Budget focuses on 3 Kartavyas — accelerating growth, fulfilling aspirations, and Sabka Sath, Sabka Vikas
- Reform express on track, over 350 reforms rolled out
For Agriculture
- Coconut and cashew promotion schemes announced.
- Rejuvenation of old orchards; high-density cultivation of walnuts, almonds, and pine nuts.
- Fisheries: Integrated development of 500 reservoirs and Amrit Sarovars.
- Fish caught in India’s EEZ or high seas made duty-free, even if landed at foreign ports.
- Sandalwood cultivation and processing to be strengthened.
- Dividend income exemption for notified national
cooperative federations (three years).
For Tourism
- Trekking and hiking promotion in J&K, Uttarakhand, Araku Valley, and Pudigai Malai.
- Wildlife, birdwatching, turtle nesting, and Buddhist heritage trails.
- India to host the first Global Big Cat Summit.
- 15 archaeological sites, including Sarnath and Hastinapur, to be developed.
- National Institute of Hospitality to be established.
- Training of 10,000 tourist guides through a 12-week hybrid programme.
Jobs & Skill Development
- Digital Knowledge Grid to create jobs for researchers and historians.
- She-Mark scheme to support women entrepreneurs.
- Education-to-Employment-and-Enterprises (E2E) Standard Committee announced.
Defence
- ₹7.85 lakh crore allocated for defence in 2026–27, up from ₹6.81 lakh crore in the previous year.
- Capital outlay pegged at ₹2.19 lakh crore.
- Revenue expenditure estimated at ₹5.54 lakh crore, including ₹1.71 lakh crore for pensions.
- Under capital expenditure:₹63,733 crore allocated for aircraft and aero engines
- ₹25,023 crore earmarked for strengthening the naval fleet
Customs duty relief:
- Basic Customs Duty (BCD) exempted on components and parts required for manufacturing civilian, training, and other aircraft.
- BCD waived on raw materials imported for manufacturing aircraft parts used in maintenance, repair, and overhaul (MRO) by defence sector units.
For aviation
- Rs 4,699.92 cr allocated for civil aviation for FY27
- UDAN scheme allocation increased by 27% to Rs 550 cr