New Delhi – On February 1, 2026, Finance Minister Nirmala Sitharaman stood in the Lok Sabha to present the Union Budget for 2026-27. This was her ninth budget in a row, a record for any finance minister in India. The budget comes at a time when the country is pushing hard to become a developed nation by 2047, under the vision of Viksit Bharat. The government has kept its eye on growth, jobs, and keeping money matters in check. With a total spend of Rs 53.5 lakh crore, the focus is on building roads, trains, factories, and helping small businesses. Sitharaman said the budget is built on three main duties: speeding up growth, building strong infrastructure, and making sure everyone benefits. She spoke for about 85 minutes, laying out plans that touch every part of the economy, from farms to high-tech factories.
The economy is doing well, with growth expected at 7.4 percent this year. But challenges like job needs for young people and high costs for everyday things are still there. The minister promised to tackle these head-on. “Our goal is to make India a global leader in manufacturing and services,” she said in her speech. Experts say this budget strikes a balance between spending big on projects and not borrowing too much. The fiscal deficit, which is how much the government borrows, is set at 4.3 percent of GDP for the next year, down from 4.4 percent this year. This shows the government is careful with money while pushing for progress.
Key Highlights of the Budget
The budget has many big announcements. The biggest is the jump in capital spending to Rs 12.2 lakh crore for the financial year 2026-27. This is up from Rs 11.2 lakh crore last year. This money will go into building roads, railways, ports, and other big projects that create jobs and help the economy grow faster. The government expects this to keep the growth rate high and bring in more private money too.
On taxes, there are no big changes in the slabs for income tax, which will stay the same under the new system. But seniors get a boost – their deduction on interest income is now Rs 1 lakh, double what it was. Also, the tax collected at source on overseas tour packages is cut to 2 percent, making trips abroad cheaper for families. A new Income Tax Act is coming in 2025 to make things simpler, with fewer sections and easier rules. This will help people file returns faster and get refunds quicker.
For businesses, especially small ones, there’s good news. A Rs 10,000 crore growth fund for MSMEs will help them expand and create more jobs. The Self-Reliant India Fund gets an extra Rs 2,000 crore. Big companies buying from small ones must now settle bills through TReDS, a platform that makes payments faster. This will help small businesses get their money on time and grow.
In manufacturing, the government is betting big on seven key areas like semiconductors, rare earth magnets, textiles, and containers. The India Semiconductor Mission 2.0 gets Rs 40,000 crore to make India a chip-making hub. Rare earth corridors will come up in states like Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to mine and process these important minerals at home. This reduces dependence on other countries and boosts self-reliance.
Tourism gets a special push because it creates lots of jobs. The government will set up a National Institute of Hospitality to train people better. Schemes for medical, heritage, and cultural tourism will bring more visitors and money to local areas. “Tourism can play a big role in jobs, foreign earnings, and local growth,” Sitharaman said. To make flying easier, incentives for making seaplanes in India and lower duties on aviation parts are announced.
Green energy and the environment are big focuses too. A Rs 20,000 crore scheme for carbon capture and storage will help cut pollution in power, steel, and cement factories. Duty exemptions on goods for making lithium-ion batteries and storage systems will help renewable energy. The goal is 100 GW of nuclear power by 2047. For farmers, support for high-value crops like coconuts, cashews, walnuts, and pine nuts in coastal and hilly areas.
Health gets attention with duty cuts on 17 cancer drugs, making treatment cheaper. Three new All India Institutes of Ayurveda and upgrades to AYUSH pharmacies. For people with disabilities, new schemes like Divyangjan Skill and Divyang Sahara for training and aids using AI.
In transport, seven new high-speed rail corridors that are good for the environment, and a new east-west freight corridor from Dankuni to Surat. Twenty national waterways will start working in five years. For tech, AI missions, quantum computing, and creator labs in schools and colleges for animation and gaming.
The budget also talks about banking changes. A high-level committee will suggest reforms for banks and NBFCs to make them better for Viksit Bharat. Duty on personal imports cut from 20 percent to 10 percent.
Tax Reforms and Reliefs
Taxes are always a hot topic in any budget. This time, the government kept things steady but added some reliefs. The new tax regime stays the same, with no tax up to Rs 12 lakh after deductions. But for older people, the limit on interest from savings is now Rs 1 lakh. This helps retirees who depend on bank interest.
A big change is the new Income Tax Act. The old one from 1961 has too many complicated parts. The new one will have only about 536 sections, making it easier to understand. “We want to make tax simple and fair,” the minister said. Returns will be processed faster, and disputes settled quicker.
For stock market traders, there’s a hike in securities transaction tax. On futures, it’s up to 0.05 percent, and on options to 0.15 percent. This might make trading a bit costlier, but the government says it’s to curb too much speculation.
Overseas spending gets easier with TCS on tour packages down to 2 percent. Families planning holidays abroad will save money. No changes in crypto taxes, so 30 percent tax and 1 percent TDS stay.
What Gets Cheaper and What Gets Costlier
Every budget changes prices of some things by cutting or raising duties and taxes. This year, the government has made some items cheaper to help people, especially in health, travel, and green energy. But a few things will cost more to protect local makers or cut down on bad habits. Here is a detailed table of what gets cheaper, with reasons and impacts.
Items That Get Cheaper
| Item | Change | Details | Impact |
|---|---|---|---|
| Cancer Drugs | Basic Customs Duty fully exempted for 17 specific drugs | The exemption covers life-saving medicines for cancer treatment, including chemotherapy drugs. This was announced to make healthcare affordable. | Patients and families will save a lot on treatment costs, making cancer care easier for many Indians. Experts say this could lower prices by 10-20 percent. |
| Personal Imported Goods | Duty cut from 20% to 10% | This applies to goods brought for personal use, like gifts or small imports from abroad. | Makes buying things from foreign trips or online cheaper, helping middle-class families save on small luxuries. |
| Overseas Tour Packages | Tax Collected at Source (TCS) reduced to 2% | Lower TCS on payments for foreign travel packages. | Holidays abroad become more affordable, boosting tourism spending by Indians and helping travel companies. |
| Lithium-Ion Batteries and Storage Systems | Duty exemptions on key parts | Exemptions for materials used in making batteries for solar and wind power. | Helps green energy grow, making electric vehicles and home solar setups cheaper over time. |
| Microwave Ovens and Parts | Duty exemptions | Reduced tariffs on components for making microwaves. | Home appliances like microwaves will cost less in shops, good for urban homes. |
| Mobile Phones and Electronics | Reduced tariff on components | Lower duties on parts for smartphones and other gadgets. | Phones and TVs might drop in price, making tech more accessible for everyone. |
| Leather Goods and Footwear | Policy support and duty-free imports | Extended help for makers, cutting input costs. | Bags, shoes, and belts from local makers get cheaper, supporting small industries. |
| Seafood | Customs exemptions | Lower duties on certain imported seafood. | Fresh fish and prawns in markets could be affordable, helping coastal areas and consumers. |
| Specialised Nutrition for Rare Diseases | Duty cuts on food for medical use | Covers nutrition for seven rare diseases. | Helps families with sick members save on special diets, improving health support. |
| Aircraft Parts | Reduced tariffs | Lower duties to boost local making. | Could make air travel cheaper in the long run by cutting airline costs. |
| Solar Panels | Duty exemptions | On key materials for solar energy. | Pushes clean power, making solar setups for homes and farms less costly. |
Items That Get Costlier
| Item | Change | Details | Impact |
|---|---|---|---|
| Umbrellas and Parts | Specific minimum duty imposed | New duty on cheap imports to protect local makers. | Imported umbrellas will cost more, encouraging buy from Indian companies. |
| Cigarettes and Pan Masala | Higher taxes | Increased duties on tobacco products. | Aims to cut smoking, but smokers will pay more for packs. |
| Luxury Imports | Raised tariffs | On high-end goods like watches or cars. | Rich buyers will spend more, while money goes to government. |
| Alcohol (Certain Types) | TCS rate increased | From 1% to 2% on some alcohol for human use, but some imported wines cheaper due to tariff cuts. | Mixed impact; local spirits might cost more, European wines less. |
| Chewing Tobacco and Jarda | Tax rate up to 60% | Big hike on scented tobacco. | Discourages use, but users face higher prices. |
| Stock Trading | Securities Transaction Tax (STT) hiked | Futures to 0.05%, options to 0.15%. | Trading costs rise, might slow down quick trades. |
| Certain Fertilisers | Higher costs | Duties on some imports. | Farmers might pay more for specific types, but overall support stays. |
| Minerals like Iron Ore and Coal | Increased duties | To boost local mining. | Industries using these might see input costs up, affecting steel prices. |
These changes aim to help key areas like health and green growth while protecting local jobs. “The duty cuts will bring relief to common people,” said Finance Minister Sitharaman in her speech.
Infrastructure Boost: Building for the Future
Infrastructure is the backbone of this budget. With Rs 12.2 lakh crore for capital works, it’s the highest ever, at 4.4 percent of GDP. This will build more roads, bridges, and ports. The seven new rail corridors will connect cities better and reduce pollution. The freight corridor will help move goods faster from east to west.
Aviation gets a lift with lower costs for parts and push for local seaplane making. This links to tourism, as better flights mean more visitors to remote places. Waterways expansion will help trade and cut road traffic.
Urban areas will see real estate assets of government companies recycled through REITs. An infrastructure risk guarantee fund will help lenders give loans for big projects.
Employment and Support for Small Businesses
Jobs are a big worry for young Indians. The budget aims to create more through MSME help and skill programs. The Rs 10,000 crore fund for small businesses is a game-changer, say industry groups. It will give loans and support to grow. Linking GeM and TReDS means faster payments and credit.
For youth, Khelo India Mission will promote sports and jobs in that field. Creator labs in 15,000 schools and 500 colleges will teach animation, video games, and content making. This taps into India’s young talent.
Biopharma gets Rs 10,000 crore under Biopharma Shakti to make medicines at home. This creates high-skill jobs in science.
Tourism and Cultural Push
Tourism is seen as a job machine. The new institute for hospitality will train guides and workers. Focus on medical tourism with five regional hubs. Heritage sites and cultural spots will get funds to attract tourists.
“The sector can bring forex and help local economies,” Sitharaman noted. Linking aviation and tourism will open up islands and coasts.
Green Initiatives and Sustainability
India wants to be green. The budget has plans for storage batteries to make solar and wind power reliable. Carbon capture gets Rs 20,000 crore over five years. Duty cuts on critical minerals and solar glass.
Nuclear power push to 100 GW by 2047 shows long-term thinking. Farmers get help for diverse crops to adapt to climate changes.
Fiscal Outlook and Economy
The economy looks strong. Growth at 7.4 percent, inflation under control. Deficit at 4.3 percent means less borrowing, more room for private firms. Total receipts Rs 28.7 lakh crore from taxes.
Experts like Union Minister Jitendra Singh call it a “futuristic blueprint.” Industry bodies say the MSME fund is a winner.
Prime Minister Narendra Modi praised the budget, saying, “This budget will empower every section of society and lay the foundation for a developed India.”
Challenges and Criticisms
Some say more could be done for farmers or job schemes. Stock markets dipped a bit after STT hike. But overall, it’s seen as balanced.
FAQs
What is the total size of Union Budget 2026-27?
The total expenditure is Rs 53.5 lakh crore, with capital spending at Rs 12.2 lakh crore. This includes money for schemes, salaries, and projects. The government expects to collect Rs 28.7 lakh crore from taxes. This size shows growth from last year and focuses on building assets like roads and factories that last long.
Are there any changes in income tax slabs?
No, the slabs stay the same in the new regime. Income up to Rs 12 lakh is effectively tax-free after deductions. But seniors get double deduction on interest to Rs 1 lakh. A new tax act will simplify rules from next year, making filing easier for everyone.
How does the budget help small businesses?
There’s a Rs 10,000 crore growth fund for MSMEs. Mandatory fast payments through TReDS for big buyers. Extra Rs 2,000 crore for Self-Reliant Fund. These steps help small firms get credit, pay bills on time, and expand, creating more jobs in towns and villages.
What about infrastructure spending?
Capital outlay is Rs 12.2 lakh crore, highest ever. Seven new rail corridors, freight line, 20 waterways. This will connect places better, reduce costs for businesses, and create construction jobs. It’s part of making India a logistics hub.
Any relief for health and medicine?
Duty cut on 17 cancer drugs makes them cheaper. New Ayurveda institutes and AYUSH upgrades. For disabled, skill training and AI aids. This helps families save on medical costs and improves care across the country.
How is the budget green?
Rs 20,000 crore for carbon capture. Duty exemptions for battery storage and critical minerals. Nuclear goal of 100 GW. These reduce pollution and make energy secure, aligning with India’s climate promises.
What about tourism?
New hospitality institute, schemes for medical and heritage tourism. Seaplane push. This creates jobs in hotels, guides, and local crafts, boosting rural incomes.