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On Saturday, 1 February 2026, Hon’ble Finance Minister Nirmala Sitharaman presented the Union Budget 2026 in the Lok Sabha. This was her ninth budget in a row. this, the last time the Union Budget was presented on a Sunday was on 28 FebruaBefore ry 1999, when it was presented by then Finance Minister Yashwant Sinha.
The Union Budget 2026-27 was presented during a period of global economic uncertainty. However, it aims to strengthen the country’s economic stability and support structural growth in the long run.
Supported by strong GDP growth, low inflation and varied trade partnerships, the Budget was announced with a focus on development of key sectors in India. In this blog post, we shall discuss Union Budget 2026 highlights.
The Union Budget 2026 gave prime focus to taxation, railways, agriculture and the development of Micro, Small, and Medium Enterprises (MSMEs) among others. Here are the key announcements from Budget 2026 that you should know about:
Some important updates regarding taxation in Union Budget of 2026 include the following:
During her Budget address in Parliament, Finance Minister Smt. Nirmala Sitharaman announced that a new income tax law will take effect from 1 April 2026 onwards. According to her, all the accompanying rules as well as the updated return forms will be notified soon to ensure the transition to the new regime happens smoothly.
In the Budget 2026, the Finance Minister also introduced a reform that allows taxpayers to revise their returns until 31 March 2026 upon payment of a nominal fee. Additionally, she outlined a staggered filing calendar designed to better manage the return-filing process.
Under the proposed schedule, individuals filing simpler returns, i.e., individuals using ITR-1 and ITR-2 forms, will still have a due date of July 31. However, as far as non audit business cases and trusts are concerned, they will be given additional time as their filing deadline will extend to August 31.
The proposed changes in TCS rates are as follows:
|
Specified Goods |
Prevailing Rate |
Proposed Rate |
|
Alcoholic liquor (meant for human consumption) |
1% |
2% |
|
Tendu Leaves |
1% |
2% |
|
Scrap |
1% |
2% |
|
Education and medical remittances exceeding Rs. 10 lakh under LRS |
5% |
2% |
|
Remittance for overseas tour packages |
5% up to Rs. 10 lakh, 20% above Rs. 10 lakh |
2% for all remittances |
Now, taxpayers can resolve disputes by paying an additional amount rather than penalties. The Finance Minister said, “There are honest taxpayers who are willing to settle disputes by paying all their dues. But they get deterred due to negative connotation associated with penalty. They will now be able close cases by paying an additional amount in lieu of penalty.”
During her Union Budget Speech 2026, the Finance Minister made a proposal to tax buybacks for all types of shareholders as capital gains. This proposal is aimed at protecting the minority shareholders.
However, to disincentivize misuse of tax arbitrage, promoters of companies will need to pay an additional buyback tax. This would result in an effective tax rate of 22% for corporate promoters and 30% for non-corporate promoters.
Smt. Sitharaman, the FM, announced a surge in STT on futures from current 0.02% to 0.05%. The STT on options will witness an increase to 0.15% from 0.1%, and the STT on the exercise of options will change to 0.15% from 0.125%.
To encourage investment in data centers, the government in the Budget 2026 proposed to grant a tax holiday until 2047 to any foreign company that provides cloud services to customers globally from data centers located within India. However, according to the Finance Minister, these companies must provide services to Indian customers through Indian resellers.
Banking and investment updates in the latest Budget include the following:
In order to strengthen the banking system of the country, the FM made a proposal regarding a high level committee’s constitution. This committee would review the banking sector in a detailed manner and ensure alignment with India’s next phase of growth.
During the Union Budget announcement, she said, “At this juncture, we are well placed to futuristically evaluate the measures needed to continue on the path of reform-led growth of this sector. I propose setting up 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.”
The budget has made a proposal regarding a hike in overall investment limit for persons resident outside India (PROIs) to 24% from current 10% rate and individual investment limit from current 5% rate to 10%.
Persons outside India can participate in India’s growth story via listed equity under Portfolio Investment Scheme. Furthermore, there will be a detailed review of Foreign Exchange Management Act to create a more modern and user friendly framework for foreign investors.
During the Budget, the government proposed that the exemption from capital gains tax for Sovereign Gold Bonds will only apply if the bonds are subscribed to by an individual at the time of the original issue and are held continuously until they are redeemed at maturity. Also, it was said that this exemption will uniformly apply to all issuances of Sovereign Gold Bonds by the Reserve Bank of India.
In the Budget for 2026, the Indian Railways has received a funding allocation of Rs 2.78 lakh crore. Finance Minister Nirmala Sitharaman mentioned that seven additional high-speed rail corridors will be developed as "growth connectors" in all four directions of the country.
She said, “For an environmentally sustainable system, we will develop seven high-speed rail corridors between cities as growth connectors, namely Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Siliguri.” At present, India is building its first high-speed rail corridor, the bullet train project, between Mumbai and Ahmedabad.
Here are the Budget highlights 2025 pertaining to MSMEs and Enterprises:
To support the high potential MSME and create “Champion SMEs”, the Budget proposed a Rs. 10,000 crore SME Growth Fund.
The Self-Reliant India Fund, which was set up in 2021, is proposed to be increased by Rs. 2,000 crore to continue providing risk capital support to micro enterprises.
Reforms to TReDS are proposed with the aim to improve MSME liquidity. This includes making its usage mandatory for CPSEs and offering credit guarantee support for invoice discounting.
The government has proposed raising the budget for the Telecom Ministry to Rs 73,990 crore. This increase aims to increase capital investment in BNSL, which is a state-run telecom company.
The additional funding will support various projects, including BharatNet, BSNL's capital requirements, the cost of spectrum, network rollout and other internal needs.
To boost domestic production as well as reduce dependence on importing goods, the government has proposed certain inventions across strategic manufacturing sectors like biopharma, electronic components, rare earths, etc. Here are the Union Budget updates 2026 pertaining to manufacturing and other key industries :-
The government has proposed to increase outlay for the electronics components manufacturing scheme by Rs. 40,000 crore.
In the Budget, Finance Minister Smt. Nirmala Sitharaman announced the Biopharma SHAKTI scheme. This initiative aims to make India a global manufacturing hub when it comes to biopharmaceuticals.
She said that India’s disease burden is shifting towards non-communicable diseases like diabetes, cancer and autoimmune disorders. Sitharaman placed emphasis on the fact that biological medicines are important for improving longevity and enhancing quality of life at affordable costs.
FM proposed the dedicated earth corridors’ establishment in coastal states, namely, Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. She stated that this proposal aligns with the recently announced scheme aimed at promoting the manufacturing of Sintered Rare Earth Permanent Magnets (REPM) having a financial outlay of Rs 7,280 crore.
In order to strengthen education, research and skill development, several measures were announced as part of the Budget 2026:
The budget proposed setting up a high-powered ‘education to employment and enterprise standing committee’. This would help to strengthen service sector jobs, skills and exports.
The government will offer assistance to states in establishing five university townships near industrial corridors to better align higher education with industry needs. In each district, there will be a hostel, exclusively meant for women, to enhance access to education for women.
Four new telescope facilities will be created to support research in astrophysics and astronomy. In addition to this, a new National Institute of Design will be set up in the North-East.
A loan-linked subsidy will be introduced for veterinary colleges. Lastly, a pilot scheme will be launched to train 10,000 tourist guides across 20 major tourism destinations, aiming to boost employment within the tourism sector.
Here are the highlights of Union Budget 2026 related to agriculture and rural economy:
To improve farmer incomes, the government will support high value crops cultivation. These include coconut, sandalwood, cocoa and cashew, especially in coastal areas. Through this move, the government aims to make India self reliant in terms of production and trade of such crops. Measures will also be implemented to support incomes of farmers engaged in production of walnut, almond and pine nut.
Finance Minister Sitharaman proposed to launch Bharat VISTAAR - an AI enabled agricultural advisory platform. This platform would integrate the Agri Stack portals and the ICAR package on agricultural practices with AI systems. It will allow for improvement in farm productivity, enable better decisions for farmers and reduce risk by providing customized advisory.
To further strengthen the Indian economy and achieve the vision of Viksit Bharat by 2047, the Union Budget 2026 introduced several reforms for various sectors like MSME, telecommunications, agriculture and banking among others. These reforms focus on creating jobs, improving productivity and supporting overall economic growth of the nation.
Also Read: Difference Between Union Budget and Interim Budget
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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