Budget 2026-2027 Speech Highlights

Posted On - 3 February, 2026 • By - Jidesh Kumar

Presented by: Nirmala Sitharaman, Minister of Finance
Date: February 1, 2026

Introduction

The budget 2026-2027 was presented on the sacred occasion of Magha Purnima and the birth anniversary of Guru Ravidas. Since assuming office 12 years ago, the government’s economic trajectory has been marked by stability, fiscal discipline, sustained growth, and moderate inflation.

This budget, the first prepared in Kartavya Bhawan, is inspired by 3 Kartavya (Duties):

  1. Accelerate and sustain economic growth by enhancing productivity and resilience.
  2. Fulfil aspirations and build capacity of the people.
  3. Sabka Sath, Sabka Vikas: Ensure every family and region has access to resources and opportunities.

PART A: Economic Growth and Development

Reform Express

  • Over 350 reforms have been rolled out since Independence Day 2025, including GST simplification, Labour Codes notification, and rationalization of Quality Control Orders.

Kartavya 1: Accelerate and Sustain Economic Growth

Interventions are proposed in six key areas:

1. Scaling up Manufacturing in Strategic Sectors

  • Biopharma SHAKTI: An outlay of ₹10,000 crores over 5 years to develop India as a global Biopharma manufacturing hub. This includes 3 new National Institutes of Pharmaceutical Education and Research (NIPER) and upgrading 7 existing ones.
  • India Semiconductor Mission (ISM) 2.0: Launched to produce equipment, materials, and design full-stack Indian IP.
  • Electronics Components Manufacturing Scheme: Outlay increased to ₹40,000 crore.
  • Rare Earth Permanent Magnets: Dedicated corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to promote mining and processing.
  • Chemical Parks: 3 dedicated parks to be established to reduce import dependency.
  • Capital Goods:
  1. Hi-Tech Tool Rooms: Established by CPSEs at 2 locations.
  2. Construction & Infrastructure Equipment (CIE): Scheme to strengthen domestic manufacturing of high-value equipment.
  3. Container Manufacturing: Budgetary allocation of ₹10,000 crore over 5 years.
  • Textile Sector: “Integrated Programme” with 5 sub-parts, including the National Fibre Scheme and Samarth 2.0.
  • Sports Goods: Dedicated initiative for manufacturing and innovation in sports equipment.

2. Creating “Champion MSMEs”

  • SME Growth Fund: ₹10,000 crore fund to create future champions.
  • Self-Reliant India Fund: Top-up of ₹2,000 crore to support micro enterprises.
  • TReDS Expansion: Mandating TReDS for all CPSE purchases from MSMEs and allowing TReDS receivables as asset-backed securities.
  • Corporate Mitras: A cadre of accredited para-professionals to help MSMEs with compliance.

3. Infrastructure Push

  • Public Capex: Increased to ₹12.2 lakh crore for FY 2026-27.
  • Infrastructure Risk Guarantee Fund: To provide partial credit guarantees to lenders.
  • Asset Monetisation: Dedicated REITs to recycle real estate assets of CPSEs.
  • Logistics:
  1. New Dedicated Freight Corridors connecting Dankuni to Surat
  2. Operationalise 20 new National Waterways over 5 years.
  3. Coastal Cargo Promotion Scheme: To increase share of inland waterways/coastal shipping to 12% by 2047.
  4. Seaplanes: VGF Scheme to support operations and indigenization.
  • Carbon Capture (CCUS): Outlay of ₹20,000 crore over 5 years.

4. City Economic Regions

  • Allocation of ₹5,000 crore per City Economic Region (CER) over 5 years for Tier II and Tier III cities.
  • High-Speed Rail: 7 corridors proposed, including Mumbai-Pune, Hyderabad-Bengaluru, and Delhi-Varanasi.

5. Financial Sector

  • High Level Committee on Banking: To review the sector for the next phase of growth.
  • NBFC Restructuring: Restructuring of Power Finance Corporation and Rural Electrification Corporation.
  • Corporate Bond Market: Introduction of market making framework and total return swaps.
  • Municipal Bonds: Incentive of ₹100 crore for bond issuances over ₹1,000 crore by large cities.

Kartavya 2: Fulfil Aspirations and Build Capacity

1. Services Sector & Employment

  • High-Powered Committee: ‘Education to Employment and Enterprise’ committee to focus on the services sector.
  • Health: 100,000 Allied Health Professionals (AHPs) to be added over 5 years.
  • Care Economy: 1.5 lakh caregivers to be trained in the coming year.
  • Medical Tourism: 5 Regional Medical Hubs to be established in partnership with the private sector.
  • AYUSH: 3 new All India Institutes of Ayurveda to be set up.
  • AVGC: AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges.
  • Education: 5 University Townships to be created near industrial corridors.
  • Tourism:
  1. National Institute of Hospitality: Upgrading the existing National Council.
  2. Pilot Scheme: Upskilling 10,000 guides in 20 iconic sites.
  3. National Destination Digital Knowledge Grid: To document places of cultural significance.

2. Sports

  • Khelo India Mission: To transform the sports sector over the next decade with integrated talent pathways and infrastructure.

Kartavya 3: Sabka Sath, Sabka Vikas

1. Agriculture and Rural Development

  • Fisheries: Integrated development of 500 reservoirs.
  • High Value Agriculture: Support for coconut, sandalwood, cocoa, cashew, and agar trees.
  • Coconut Promotion Scheme: To replace old trees and enhance productivity.
  • Bharat-VISTAAR: A multilingual AI tool integrating AgriStack and ICAR data for customized farmer advisory.
  • SHE-Marts: Community-owned retail outlets to support rural women-led enterprises.

2. Empowering Vulnerable Groups

  • Divyangjan: Divyangjan Kaushal Yojana for skills training and Divyang Sahara Yojana for assistive devices.
  • Mental Health: Setting up NIMHANS-2 and upgrading institutes in Ranchi and Tezpur.
  • Emergency Care: Increasing trauma care capacity in District Hospitals by 50%.

3. Purvodaya (Eastern Region)

  • Integrated East Coast Industrial Corridor with a node at Durgapur.
  • Development of Buddhist Circuits in North-Eastern states.

Fiscal Management

  • Devolution: Vertical share of devolution to states retained at 41%.
  • Fiscal Deficit: Target of 4.5% reached in 2025-26. Estimated at 4.3% of GDP for BE 2026-27.
  • Debt-to-GDP: Estimated at 55.6% for BE 2026-27.

PART B: Direct Taxes

New Income Tax Act

  • New Act: The Income Tax Act, 2025 will come into effect from 1st April, 2026.
  • Simplified Forms: Redesigned for easier compliance.

Ease of Living & Compliance

  • MACT Interest: Interest awarded by Motor Accident Claims Tribunal is exempt from tax and TDS.
  • TCS Reduction: TCS on overseas tour packages and LRS (education/medical) reduced to 2%.
  • Manpower Services: TDS specifically set at 1% or 2%.
  • Tax Filing:
  1. Time for revising returns extended to 31st March.
  2. Staggered filing: Non-audit business/trusts due date moved to 31st August.
  • Foreign Asset Disclosure Scheme: One-time 6-month window for small taxpayers to disclose assets.
  1. Category A (Undisclosed up to ₹1 crore): 30% tax + 30% penalty.
  2. Category B (Disclosed income but asset undeclared up to ₹5 crore): Fixed fee of ₹1 lakh.

Rationalization and Penalties

  • Common Order: Assessment and penalty proceedings integrated into a single order.
  • Updated Returns: Can be filed even after reassessment initiation at an additional 10% tax rate.
  • Decriminalization: Non-production of books and TDS payment defaults (in kind) decriminalized.
  • Foreign Assets: Immunity from prosecution for non-disclosure of foreign assets under ₹20 lakh (retrospective from 1.10.2024).

Sector Specifics

  • Cooperatives: Deduction extended to supply of cattle feed and cotton seed.
  • IT Sector: Safe harbour margin of 15.5% with threshold enhanced to ₹2,000 crore.
  • Global Business: Tax holiday till 2047 for foreign companies providing cloud services via Indian data centers.

Capital Gains & Corporate Tax

  • Buyback: Taxed as Capital Gains for shareholders. Promoters pay additional tax (effective 22% for corporate promoters).
  • STT Increase:
  1. Futures: Increased to 0.05%.
  2. Options: Increased to 0.15%.
  • MAT:
  1. Rate reduced from 15% to 14%.
  2. MAT made final tax; no further credit accumulation from April 2026.

PART C: Indirect Taxes

Customs Duty Changes

  • Reductions:
  1. Critical minerals, Sodium antimonate (solar glass), and Capital goods for Lithium-Ion cells.
  2. Nuclear Power project goods (irrespective of capacity).
  3. Civil Aviation: Parts for aircraft manufacture and MRO activities.
  4. Cancer Drugs: 17 drugs/medicines exempted from basic customs duty.
  5. Personal Imports: Tariff rate reduced from 20% to 10%.
  • Increases/Rationalization:
  1. Potassium hydroxide: 7.5%.
  2. Umbrellas: 20% or ₹60 per piece.

Trade Facilitation

  • AEO Benefits: Duty deferral period extended to 30 days for Tier 2/3 AEOs.
  • Advance Ruling: Validity extended from 3 years to 5 years.
  • Courier Exports: Value cap of ₹10 lakh per consignment removed.
  • Marine Products: Duty-free import limit for inputs increased to 3% of export turnover.

GST Amendments

  • Section 15: Amendment regarding post-sale discounts.
  • Refunds: Threshold for refund claims below ₹1000 removed for exports.
  • Tribunal: Empowerment of existing tribunals pending National Appellate Authority constitution.