Union Budget 2026-27: Key Highlights, Tax Changes, STT Updates & Budget Numbers Explained

Union Budget 2026-27: Key Highlights, Numbers & Tax Changes Explained
The Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman on 1st February 2026, focuses on sustaining economic growth while maintaining fiscal discipline. The budget lays strong emphasis on infrastructure development, tax reforms, capital markets, MSME growth, manufacturing, and long-term nation building.
Below is a detailed and complete breakdown.

1. Key Budget Numbers at a Glance

• Total Government Expenditure: ₹53.47 lakh crore
• Total Non-Debt Receipts: ₹36.51 lakh crore
• Fiscal Deficit Target: 4.3% of GDP
• Gross Tax Revenue: ₹28.7 lakh crore
• Capital Expenditure (CapEx): ₹12.2 lakh crore (highest ever)
• Central Government Debt: Approx. 55.6% of GDP

These numbers reflect a balanced approach between growth-oriented spending and fiscal consolidation.

 2. Infrastructure & Capital Expenditure Push
Record capital expenditure of ₹12.2 lakh crore, aimed at boosting long-term economic growth.
Strong focus on:

• Roads, highways, and logistics corridors
• Railways modernization and freight corridors
• Ports, waterways, and urban transport
• Announcement of 7 high-speed rail corridors connecting major economic hubs.
• Introduction of 20 new National Waterways to reduce logistics costs.
• Deployment of 4,000 electric buses to support green and sustainable transport.
• Infrastructure remains the backbone of India’s growth strategy.

3. Railways & Transport Highlights
High-speed rail corridors proposed on key routes such as:

• Mumbai – Pune
• Delhi – Varanasi
• Chennai – Bengaluru
• Hyderabad – Chennai

Increased budgetary support for railway safety, station redevelopment, and freight efficiency.

4. Income Tax Changes – Individuals
No change in income tax slabs for FY 2026-27 (AY 2027-28).
New Income Tax Act to replace the 1961 Act from 1 April 2026, aimed at:

• Simpler language
• Fewer sections
• Reduced litigation

Interest received from Motor Accident Claims Tribunal (MACT) made it completely tax-free.
Special tax incentives announced to attract global professionals and skilled talent.

 5. TDS & TCS Changes

• TCS on overseas tour packages: Reduced to 2%.
• TCS on foreign education and medical remittances under LRS: Flat 2%.
• Rationalisation of TDS on manpower and contractual services to reduce ambiguity.
• Relief measures introduced to ease cash flow for individuals and businesses.

 6. STT (Securities Transaction Tax) Changes
To curb excessive speculative trading and increase market stability, STT rates were revised:

• STT on Futures: Increased from 0.02% to 0.05%.
• STT on Options Premium: Increased from 0.10% to 0.15%.
• STT on Options Exercise: Standardised at 0.15%.

These changes mainly impact derivative traders, while long-term investors remain largely unaffected.

7. Corporate Tax & Business Measures

• Share buybacks to be taxed as capital gains, bringing clarity and parity in taxation.
• Minimum Alternate Tax (MAT): Reduced from 15% to 14% in specific cases.
• Tax incentives extended to companies operating data centres and cloud services in India.
• Continued push for ease of compliance and reduction of litigation.

 8. MSME & Startup Boost

• Launch of a ₹10,000 crore SME Growth Fund to help scale high-potential MSMEs.
• Additional funding support for micro and small enterprises.
• Easier access to credit, risk capital, and compliance support.
• Focus on employment generation and local entrepreneurship.

9. Manufacturing & Industrial Growth
Strong push under Make in India with focus on:

• Semiconductors and electronics
• Biopharma and chemicals
• Rare earth minerals
• Expansion of industrial corridors and manufacturing clusters.
• Objective to reduce import dependency and strengthen exports.

 10. Agriculture & Rural Development

• Use of technology and AI-based advisory tools for farmers.
• Support for high-value crops and agricultural value chains.
• Focus on improving farmer income and rural employment opportunities.

11. Education, Health & Social Sector
Higher education allocation: Approx. ₹1.39 lakh crore.
Increased funding for:

• Research and innovation
• Skill development aligned with industry needs
• Healthcare infrastructure and medical education
• Continued focus on women empowerment and social inclusion.

12. Vision for Viksit Bharat 2047
The Union Budget 2026-27 aligns with India’s long-term goal of becoming a developed nation by 2047, supported by:

• Strong infrastructure
• Stable fiscal policy
• Manufacturing and innovation growth
• Capital market development
• Human capital investment

Final Summary
The Union Budget 2026-27 strikes a balance between growth and discipline. While there is no major tax slab relief for individuals, the budget delivers:

• Record infrastructure spending
• Clear reforms in taxation and capital markets
• Strong support for MSMEs and manufacturing
• Measures to deepen and stabilise financial markets

Overall, the budget sets a steady and forward-looking path for India’s economic growth.