Union Budget 2026: Nirmala Sitharaman’s 9th Budget & Key Highlights

On 1 February, 2026, Union Finance Minister Nirmala Sitharaman created history by presenting her ninth consecutive Budget. With this, Sitharaman completed six years and eight months in office on 31 January, 2026, making Nirmala Sitharaman the longest-serving Finance Minister of the country.

• Union Finance Minister Nirmala Sitharaman created history by presenting her ninth consecutive Budget on 1 February, 2026. Sitharaman has set the record for presenting the highest number of consecutive Budgets — nine consecutive Budgets under Prime Minister Narendra Modi.
• In 2019, when Prime Minister Narendra Modi won a massive victory for the second time, she was made India’s first full-time woman Finance Minister. After Modi returned to power for the third time in 2024, Sitharaman retained her position as Finance Minister.
• Sitharaman assumed charge of the Finance Ministry on 31 May, 2019, and steered the economy during the COVID-19 pandemic and geopolitical upheavals, making India the world’s fastest-growing major economy.
• With this, Sitharaman has come close to the record of 10 Budgets presented by former Prime Minister Morarji Desai at different times.
• Desai presented six Budgets during his tenure as Finance Minister from 1959 to 1964 and four Budgets between 1967 and 1969.
• Former Finance Ministers P. Chidambaram and Pranab Mukherjee presented nine and eight Budgets respectively under different Prime Ministers.

Longest tenure

• Sitharaman completed six years and eight months in office on 31 January, 2026.
• The second person to serve the longest consecutively as Finance Minister was C. D. Deshmukh, who took charge of the ministry on 1 June, 1950 and remained in office for about six years and two months.
• Manmohan Singh, known for promoting economic liberalization, served as Finance Minister for nearly five years between 21 June, 1990 and 16 June, 1996. Later, as Prime Minister, Singh held additional charge of the Finance Ministry briefly once in 2008 and again in 2012.
• Independent India’s first Finance Minister was R. K. Shanmukham Chetty.

Some facts related to Budget presentation in independent India

• First Budget: Independent India’s first Union Budget was presented on 26 November, 1947 by the country’s first Finance Minister R. K. Shanmukham Chetty.
• Longest Budget speech: Sitharaman holds the record for the longest Budget speech, when on 1 February, 2020 her speech lasted two hours and 40 minutes. At that time, she cut short her speech while two pages were still remaining.
• Shortest Budget speech: In 1977, Hirubhai Muljibhai Patel’s interim Budget speech remains the shortest till date, with only 800 words.

Time:

• Traditionally, the Budget was presented at 5 pm on the last day of February. India is 4 hours and 30 minutes ahead of British Summer Time, so presenting the Budget at 5 pm in India ensured that it was daytime in the United Kingdom.
• In 1999, this time was changed when the then Finance Minister Yashwant Sinha in the Atal Bihari Vajpayee government presented the Budget at 11 am. Since then, the Budget has been presented at 11 am.

Date:

• The date of Budget presentation was changed to 1 February in 2017 so that the government could complete the parliamentary approval process by the end of March and implement the Budget from the start of the financial year on 1 April.
• Presenting the Budget on 28 February meant that after the parliamentary approval process of 2–3 months, it could not be implemented before May/June.
• The Government of India approved the merger of the Railway Budget with the General Budget on 21 September, 2016. At that time, the Finance Minister was Arun Jaitley. He presented independent India’s first combined Budget in Parliament on 1 February, 2017.

Summary of Union Budget 2026-27 – Part-A

• The Union Minister for Finance and Corporate Affairs, Mrs. Nirmala Sitharaman, presented the Union Budget 2026-27 in Parliament today. The main highlights of the Budget are as follows:

The first Budget prepared in Kartavya Bhavan is inspired by 3 duties:

• The first duty is to accelerate and sustain economic growth by increasing productivity and competitiveness, and by building resilience to unstable global dynamics.
• The second duty is to fulfill the aspirations of the people and build their capabilities, making them strong partners in India’s path to prosperity.
• The third duty, in line with the vision of Sabka Saath, Sabka Vikas, is to ensure that every family, community, region and sector gets access to resources, facilities and opportunities for meaningful participation.

Budget Estimates

• Non-debt receipts and total expenditure are estimated at ₹36.5 lakh crore and ₹53.5 lakh crore respectively. Net tax receipts of the Centre are estimated at ₹28.7 lakh crore.
• Gross market borrowings are estimated at ₹17.2 lakh crore and net market borrowings through dated securities are estimated at ₹11.7 lakh crore.
• The revised estimate of non-debt receipts is ₹34 lakh crore, of which net tax receipts of the Centre are ₹26.7 lakh crore.
• The revised estimate of total expenditure is ₹49.6 lakh crore, of which capital expenditure is about ₹11 lakh crore.
• In BE 2026-27, the fiscal deficit is estimated at 4.3 percent of GDP.
• In RE 2025-26, the fiscal deficit is estimated at 4.4 percent of GDP, equal to the BE of 2025-26.
• The debt-to-GDP ratio is estimated at 55.6 percent of GDP in BE 2026-27, while it was 56.1 percent of GDP in RE 2025-26. The first duty is to accelerate and sustain economic growth and for this, 6 interventions are proposed.

1. Boosting manufacturing in 7 strategic and frontier sectors

• BioPharma SHAKTI (Strategy for Health Advancement through Knowledge, Technology and Innovation) has been announced, with an outlay of ₹10,000 crore over the next 5 years to develop India as a global biopharma manufacturing hub.
• A biopharma-focused network will be created by establishing 3 new National Institute of Pharmaceutical Education and Research (NIPER) and upgrading 7 existing institutions.
• A network of more than 1000 accredited India clinical trial sites will be created.

India Semiconductor Mission (ISM) 2.0

• India Semiconductor Mission (ISM) 2.0 will be launched to manufacture equipment and materials, design full-stack Indian IP, and strengthen supply chains by focusing on industry-led research and training centres to develop technology and a skilled workforce.
• The outlay for the Electronics Components Manufacturing Scheme has been increased to ₹40,000 crore.
• Dedicated rare earth corridors will be established in mineral-rich states of Odisha, Kerala, Andhra Pradesh and Tamil Nadu to promote mining, processing, research and manufacturing.
• The government will launch a scheme to assist states, through the challenge route, in establishing 3 dedicated chemical parks on a cluster-based plug-and-play model.

Strengthening capital goods capacity

• High-tech tool rooms will be set up at 2 locations by CPSEs, which will digitally enable automated service bureaus to design, test and manufacture high-precision components locally at scale and low cost.
• A Manufacturing and Infrastructure Equipment (CIE) Promotion Scheme will be launched to strengthen domestic manufacturing of high-value and technologically advanced CIE.
• A container manufacturing scheme has been announced to create a globally competitive container manufacturing ecosystem with a budgetary allocation of more than ₹10,000 crore over a period of 5 years.

Announcement of an integrated programme for the textile sector

• National Fibre Mission for self-reliance in natural fibres such as silk, wool and jute, man-made fibres and next-generation fibres.
• 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 will be set up in challenge mode with a focus on value addition in technical textiles.
• The Mahatma Gandhi Gram Swaraj initiative has been announced to strengthen khadi, handloom and handicrafts.
• This initiative will help in global market linkage, branding and will streamline and support training, skilling, process and production quality.

2 Reviving old industrial sectors

• A scheme has been announced to revive 200 old industrial clusters 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 will be introduced to create future champions, which will incentivize enterprises based on selected criteria.
• An additional ₹2,000 crore will be allocated to the Atmanirbhar Bharat Fund to continue support to micro enterprises and ensure their access to risk capital.
• The government will work with professional institutions like ICAI, ICSI, ICMAI to design short-term, modular courses and develop a cadre of ‘Corporate Mitra’ with practical tools, especially in Tier-II and Tier-III cities.

4 Giving a strong push to infrastructure

• Public capital expenditure will be increased to ₹12.2 lakh crore in FY 2026-27.
• The government will set up an Infrastructure Risk Guarantee Fund to strengthen the confidence of private developers about risks during infrastructure development and construction phases.
• The government will accelerate recycling of critical real estate assets of CPSEs through the establishment of dedicated REITs.

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

• New dedicated freight corridors will be established connecting Dankuni in the east to Surat in the west.
• Over the next 5 years, 20 new National Waterways (NW) will be made operational, starting with NW-5 in Odisha, which will connect the mineral-rich regions of Talcher and Angul and industrial hubs like Kalinga Nagar to the ports of Paradip and Dhamra.
• Training institutes will be established as regional centres of excellence to develop the required manpower.
• In addition, a ship repair ecosystem for inland waterways will be established in Varanasi and Patna.
• A coastal cargo promotion scheme will be launched to encourage modal shift from rail and road, to increase the share of inland waterways and coastal shipping from 6% to 12% by 2047.
• Incentives will be provided to promote indigenous manufacturing of seaplanes and to enhance last-mile and remote area connectivity and boost tourism.
• A seaplane VGF scheme will be launched to provide support for operations.

Ensuring long-term energy security and sustainability

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

Developing City Economic Regions

• An allocation of ₹5000 crore over 5 years has been announced for each City Economic Region (CER) to implement their plans through a challenge mode with a reform-cum-outcome-based financing mechanism.
• The government will develop seven high-speed rail corridors between cities as ‘growth connectors’ to promote environmentally sustainable passenger systems. These include:
• Mumbai–Pune
• Pune–Hyderabad,
• Hyderabad–Bengaluru,
• Hyderabad–Chennai
• Chennai–Bengaluru,
• Delhi–Varanasi,
• Varanasi–Siliguri.
• The government will constitute a “High-Level Committee on Banking for Viksit Bharat” to undertake a comprehensive review of the sector and align it with the next phase of India’s development, while also safeguarding financial stability, inclusion and consumer protection.
• To achieve scale and improve efficiency in public sector NBFCs, the government will restructure Power Finance Corporation and Rural Electrification Corporation.
• To create a more contemporary, user-friendly framework for foreign investment, aligned with India’s changing economic priorities, a comprehensive review of the Foreign Exchange Management (Non-debt Instruments) Rules is proposed.

Municipal Bonds

• To encourage large cities to issue high-value municipal bonds, an incentive of ₹100 crore has been announced for a single bond issuance of more than ₹1000 crore.

The second duty is to fulfill the aspirations of the people and build their capabilities

• The government will constitute a high-powered ‘Education to Employment and Enterprise’ Standing Committee which will recommend measures focusing on the services sector as a key driver of Viksit Bharat.

Building professionals for Viksit Bharat

• Existing institutions for Allied Health Professionals (AHPs) will be upgraded and new AHP institutions will be established in the private and public sectors.
• 100,000 allied health professionals will be added over the next 5 years.
• Five regional medical hubs will be established to promote India as a hub for medical tourism services.

AYUSH

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

Animal Husbandry

• The government will increase the availability of more than 20,000 veterinarians.
• A loan-linked capital subsidy assistance scheme will be launched to set up veterinary and para-vet colleges, veterinary hospitals, diagnostic laboratories and breeding facilities in the private sector.

Orange Economy

• The Indian Institute of Creative Technologies, Mumbai will be supported to establish Visual Effects, Gaming and Comics (AVGC) content creator labs in 15,000 secondary schools and 500 colleges.

Education

• Five university townships will be developed around major industrial and logistic corridors through the challenge route. Through VGF/capital support, one girls’ hostel will be built in every district.

Tourism

• The National Council for Hotel Management and Catering Technology will be upgraded to the National Institute of Hospitality.
• A pilot scheme has been announced to upskill 10,000 guides at 20 tourist destinations through a standard, high-quality 12-week training course in hybrid mode in collaboration with an IIM.
• A National Destination Digital Knowledge Grid will be established to digitally document all important places—cultural, spiritual and heritage.

Heritage and Culture Tourism

• 15 archaeological sites including Lothal, Dholavira, Rakhigarhi, Adichanallur, Sarnath, Hastinapur and Leh Palace will be developed as vibrant, experiential cultural destinations.

Sports

• The Khelo India Mission will be launched to transform the sports sector over the next decade.
• The third duty is linked with the vision of Sabka Saath, Sabka Vikas and requires targeted efforts in the following four areas:

1. Increasing farmers’ income

• Integrated development of 500 reservoirs and Amrit Sarovars

High-value agriculture:

• The government will support high-value crops such as the following:
• Coconut, sandalwood, cocoa and cashew in coastal areas
• A coconut promotion scheme will be launched to increase production and productivity.
• Bharat-Vistar (virtually integrated system for access to agricultural resources)
• The government will launch Bharat-Vistar, a multilingual AI tool that will integrate AgriStack portals and ICAR packages on agricultural practices with AI systems.

2 Empowering persons with disabilities

• The Divyangjan Skill Scheme for persons with disabilities will provide work-oriented and process-driven roles in IT, AVGC sectors, hospitality and food and beverage sectors.

3 Commitment to mental health and trauma care

• The government will establish NIMHANS-2 in North India.
• The government will upgrade national mental health institutes in Ranchi and Tezpur as regional apex institutions.

4 Focus on Purvodaya states and the North-Eastern region

• The government will develop an integrated eastern coastal industrial corridor with a well-connected node in Durgapur, build 5 tourist destinations in 5 Purvodaya states, and provide 4,000 e-buses.
• A scheme will be launched for the development of the Buddhist circuit in Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram and Tripura.

16th Finance Commission

• As per the recommendations of the 16th Finance Commission, the government has provided ₹1.4 lakh crore to states as Finance Commission grants for FY 2026-27.

Part –B

Direct Tax

New Income Tax Act

• The new Income Tax Act, 2025 will come into force from 1 April, 2026.
• Simplified income tax rules and forms will be notified shortly. Forms have been redesigned for the convenience of common citizens.

Ease of living

• Interest given to an individual by the Motor Accident Claims Tribunal will be exempt from income tax, and any TDS on this account will be removed.

TCS rationalisation

• The TCS rate on sale of foreign tour programme packages will be reduced to 2% (from the current 2–20%).
• The TCS rate for LRS remittances for education and medical purposes will be reduced to 2% (from the current 5%).
• Simplified TDS provisions for manpower supply will benefit labour-intensive businesses.
• A scheme for small taxpayers with a rule-based automated process to obtain a lower or nil deduction certificate instead of filing an application before the assessing officer.
• Single window filing with the depository for Form 15G or 15H for TDS on dividend, interest, etc.
• The available time to revise returns with payment of a nominal fee will be extended from 31 December to 31 March.
• The time limit for filing tax returns will be differentiated.
• For property transactions involving NRIs, TAN will be replaced with PAN-based challan of the resident buyer.
• A one-time 6-month foreign asset disclosure scheme for small taxpayers to disclose their foreign income or assets.

Rationalisation of penalties and prosecution

• It is proposed to integrate IT assessment and penalty proceedings through a common order for both.
• Taxpayers will be allowed to update their returns even after initiation of reassessment proceedings to reduce litigation, at an additional tax rate of 10 percent over the applicable rate for the relevant year.
• Penalty for misreporting of income will also be eligible for waiver upon payment of additional income tax.
• The prosecution framework under the Income Tax Act will be rationalised.
• Non-production of books of accounts and documents, and the requirement of TDS payment where payment is made in kind, will be decriminalised.
• Prosecution exemption will be provided retrospectively from 1.10.2024 for non-disclosure of non-immovable foreign assets with a total value of less than ₹20 lakh.

Co-operatives

• The existing deduction given to primary co-operative societies engaged in supplying milk, oilseeds, fruits or vegetables grown by their members will be extended to those supplying animal feed and cotton seeds.
• Under the new tax regime, inter-co-operative society dividend income will be allowed as a deduction to the extent it is further distributed to its members. A notified National Co-operative Federation has been granted exemption for a period of 3 years on dividend income received on its investments in companies made up to 31.1.2026, so that it can further distribute the dividend to its member co-operatives.

Supporting the IT sector as India’s growth engine

• Software development services, IT-enabled services, knowledge process outsourcing services and contract R&D services related to software development will be placed in a single category, with a common safe harbour margin of 15.5 percent for formation technology services.
• The threshold to avail safe harbour benefits for IT services will be increased from ₹300 crore to ₹2,000 crore.
• Safe harbour for IT services will be approved through an automated rule-based process, which can be continued for a period of 5 years at a time.
• The unilateral Advanced Pricing Agreement (APA) process for IT services will be fast-tracked, with the aim of completing it within a period of 2 years, extendable by up to 6 months at the taxpayer’s request.
• The facility of revised returns available to the entity entering into an APA will be extended to its associated entities.

Attracting global trade and investment

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

Tax administration

• A joint committee of the Ministry of Corporate Affairs and the Central Board of Direct Taxes will be constituted to incorporate the requirements of Income Computation and Disclosure Standards (ICDS) within Indian Accounting Standards (IndAS). The separate accounting requirement based on ICDS will be discontinued from tax year 2027-28.
• The definition of accountant for the purposes of safe harbour rules will be rationalised.

Other tax proposals

• In the interest of minority shareholders, buyback will be taxed as capital gains for all categories of shareholders. Promoters will have to pay additional buyback tax, making the effective tax 22 percent for corporate promoters and 30 percent for non-corporate promoters.
• The TCS rate for sellers of certain items such as alcoholic liquor, scrap and minerals will be rationalised to 2 percent, and for tendu leaves it will be reduced from 5 percent to 2 percent.
• STT on futures will be increased from the current 0.02 percent to 0.05 percent. STT on options premium and exercise will be increased from the current rates of 0.1 percent and 0.125 percent to 0.15 percent respectively.
• To encourage companies to move to the new regime, the set-off of brought forward MAT credit will be allowed only in the new regime. Set-off using available MAT credit will be limited to 1/4 of the tax liability under the new regime.
• It is proposed to make MAT a final tax. No credit will accrue from 1 April, 2026 onwards. The rate of final tax will be reduced from the current MAT rate of 15 percent to 14 percent. MAT credit brought forward by taxpayers up to 31 March, 2026 will remain available for set-off as mentioned above.

Indirect tax: Tariff simplification

Marine, leather and textile products:

• The limit for duty-free import of specified inputs used for processing of marine food products for export will be increased from the current 1 percent to 3 percent of FOB value.
• Duty-free import of specified inputs currently available for export of leather or synthetic footwear will be continued.

Energy transition and security:

• The basic customs duty exemption granted on capital goods used for manufacture of lithium-ion cells for batteries will be extended.
• Basic customs duty exemption will be provided on import of sodium antimonate for use in manufacture of solar glass.

Nuclear energy:

• The existing basic customs duty exemption on import of goods required for nuclear power projects will be extended till the year 2035.

Critical minerals:

• Basic customs duty exemption will be provided on import of capital goods required for processing of critical minerals. Biogas blended CNG:
• While calculating the central excise duty payable on biogas blended CNG, the entire value of biogas will be excluded.

Civil and defence aviation:

• Basic customs duty exemption will be provided on components and parts required for manufacture of civil, training and other aircraft.
• Basic customs duty exemption will be provided on imported raw materials used for manufacture of aircraft parts required for maintenance, repair or overhaul by units in the defence sector.

Electronics:

• Basic customs duty exemption will be provided on specified parts used in manufacture of microwave ovens.

Ease of living:

• The tariff rate on all dutiable goods imported for personal use will be reduced from 20 percent to 10 percent.
• Basic customs duty exemption will be provided on 17 drugs/medicines.
• Duty-free personal import of drugs/medicines and food for 7 more rare diseases.

Trust-based systems

• The duty deferment period for Tier 2 and Tier 3 Authorized Economic Operators, known as AEOs, will be increased from 15 days to 30 days. The same facility has been extended to eligible manufacturer-importers as well.
• The validity period of binding advance rulings on customs will be increased from the current 3 years to 5 years.
• Government agencies will be encouraged to avail AEO accreditation for preferential treatment in clearance of their cargo.
• A trusted importer filing the bill of entry will automatically notify customs upon arrival of goods to complete clearance formalities (for imports of goods that do not require any compliance).
• The customs warehousing framework will be transformed into a warehouse-operator-centric system with self-declaration, electronic tracking and risk-based audit.

Ease of doing business

• Cargo clearance approvals from various government agencies will be seamlessly processed through a single and interconnected digital window by the end of the financial year.
• Processes related to clearance of food, drugs, plants, animals and wildlife products, which account for about 70 percent of seized cargo, will be made operational on this system by April, 2026.
• For goods that do not require any compliance, clearance will be done immediately after completion of online registration by the importer.
• The Customs Integrated System (CIS) will be launched over 2 years as a single, integrated and scalable platform for all customs processes.
• The use of non-intrusive scanning with advanced imaging and AI technology for risk assessment will be progressively increased at all major ports with the objective of scanning every container. New export opportunities
• Fish caught by Indian fishing vessels in the Exclusive Economic Zone (EEZ) or high seas will be made duty-free, and landing such fish at a foreign port will be treated as export of goods.
• Complete removal of the existing value cap of ₹10 lakh per consignment on courier exports – supports the aspirations of India’s small businesses, artisans and start-ups to access global markets through e-commerce.

Ease of living

• Rules related to baggage clearance during international travel will be changed. Revised rules will enhance duty-free allowances in line with today’s travel realities.
• Honest taxpayers who wish to settle disputes will be able to close cases by paying an additional amount in lieu of penalty.