The Union Budget 2026 Highlights

The Union Budget 2026 highlights include higher infrastructure spending, manufacturing support, MSME financing measures, agriculture programmes, skill development initiatives, and changes to direct and indirect taxes.

• The government’s total expenditure is estimated at ₹53.47 lakh crore.
• Capital expenditure is set at ₹12.22 lakh crore.
• The fiscal deficit is estimated at 4.3% of GDP.
• The Income Tax Act, 2025, came into effect on 1 April 2026.
• The deadline for filing a revised return has been extended to 31 March, subject to the applicable fee.
• TCS on overseas tour packages has been reduced to 2%.
• STT on futures has increased from 0.02% to 0.05%.
• STT on the options premium has increased from 0.10% to 0.15%.

The Income Tax Act, 2025 will take effect from 1 April 2026. The budget primarily focuses on filing procedures, TCS, TDS, share buybacks, dispute resolution, and tax administration rather than major changes to individual tax slabs.

Has the return filing deadline been extended?

Individuals filing ITR-1 or ITR-2 will continue to have a deadline of 31 July.

The proposed deadline for non-audit business cases and certain trusts is 31 August. Therefore, the extension does not apply to every non-audit taxpayer.

What is the revised return deadline?

The deadline for filing a revised income-tax return is proposed to be extended from 31 December to 31 March.

A nominal fee may apply when taxpayers use the extended period. This gives taxpayers more time to correct mistakes or omissions in an earlier return.

How will TCS rates change?

TCS on education and medical remittances under the Liberalised Remittance Scheme is proposed to decrease from 5% to 2% for amounts above the applicable ₹10 lakh threshold.

TCS on overseas tour programme packages is also proposed at 2%. TCS on tendu leaves is proposed to decrease from 5% to 2%.

What changes apply to Forms 15G and 15H?

Eligible investors will be able to submit Form 15G or Form 15H directly to a depository.

The depository can then forward the declaration to relevant companies. This may reduce repeated submissions for investors holding securities in multiple companies.

How will share buybacks be taxed?

Money received by shareholders through a share buyback is proposed to be taxed as capital gains instead of dividend income.

Additional tax provisions will apply to promoters to discourage tax arbitrage. The effective proposed rate is 22% for corporate promoters and 30% for non-corporate promoters.

What are the TDS procedural changes?

Payments for manpower supply are proposed to be specifically covered under contractor-payment provisions. Depending on the recipient, the applicable TDS rate may be 1% or 2%.

A rule-based automated process is also proposed for small taxpayers seeking lower or nil TDS certificates.

What is the foreign asset disclosure scheme?

A one-time, six-month disclosure scheme is proposed for small taxpayers who did not report certain foreign income or assets.

The proposed limit is ₹1 crore for undisclosed foreign income or assets. For assets purchased using disclosed income but not reported, the proposed limit is ₹5 crore, subject to the scheme’s conditions.

Which tax holidays have been proposed?

A tax holiday until 2047 is proposed for eligible foreign companies providing global cloud services through data centres located in India.

A five-year exemption is also proposed for certain non-residents providing equipment or tooling to toll manufacturers operating in bonded zones.

How will STT rates change?

The Securities Transaction Tax on Futures and Options trading is proposed to increase.

Higher STT can increase transaction costs for investors and traders dealing in stock options and futures.

What IFSC exemptions have been announced?

The budget proposes extending selected tax benefits for eligible entities operating in the International Financial Services Centre.

These include longer deduction periods and exemptions for specified treasury and financial activities. Eligibility will depend on the entity and transaction involved.

What are the other important amendments?

Other proposals include:

• Exempting certain Motor Accident Claims Tribunal interest from income tax and TDS
• Combining assessment and penalty proceedings
• Reducing the pre-payment required for specified appeals
• Allowing updated returns in certain reassessment cases
• Revising the Minimum Alternate Tax rate from 15% to 14%

The indirect tax proposals mainly cover customs duties, tariff simplification, export competitiveness, domestic manufacturing, and cargo clearance.

No broad change to GST rates was announced in the Budget speech. GST rate changes generally require recommendations from the GST Council.

Will GST rules become stricter?

The Budget speech did not announce major GST rate revisions or a new structural compliance framework.

Businesses must continue following the applicable rules for registration, invoicing, return filing, and input tax credit. Any subsequent changes would be introduced through GST Council decisions or separate notifications.

How do customs changes support manufacturing?

The budget proposes simplifying customs tariffs and removing selected outdated exemptions.

A Customs Integrated System is planned within two years. A single digital window has also been proposed to coordinate cargo clearance approvals and reduce repeated processes.

The customs proposals may reduce costs for selected medicines, manufacturing inputs, export-related materials, and technology components. The actual retail impact will depend on the applicable duty, supply chain, taxes, and seller pricing.

Items that may become cheaper include:

• 17 specified cancer drugs and medicines
• Food and medicines for seven additional rare diseases
• Selected leather and textile manufacturing inputs
• Seafood processing inputs
• Lithium-ion cell manufacturing inputs
• Solar glass and critical minerals
• Aircraft manufacturing components

The Budget does not establish that alcohol, cigarettes, coal, iron ore, stock options, or Futures and Options will automatically become more expensive for consumers. However, higher duties or transaction taxes may increase costs in specific cases.

Banking and financial sector

The budget proposes measures relating to financial-sector regulation, digital infrastructure, foreign investment, IFSC activities, and tax administration.

Its focus is on improving capital access, regulatory efficiency, and the financial system’s ability to support economic growth.

MSMEs and enterprises

MSMEs are expected to receive greater access to credit, equity support, technology, and simplified compliance.

These measures are intended to help smaller enterprises expand operations, improve productivity, and participate in domestic and global supply chains.

Manufacturing and industry

The budget supports electronics, semiconductors, critical minerals, chemicals, textiles, leather, and other strategic industries.

It also proposes measures for advanced manufacturing, AI, robotics, and domestic supply-chain development.

Infrastructure and connectivity

Capital expenditure of ₹12.22 lakh crore has been proposed for 2026–27.

The allocation covers infrastructure areas such as roads, railways, urban transport, logistics, and public assets.

Services, skills, and employment

The budget includes programmes for vocational education, apprenticeships, industry-linked training, and workforce development.

These initiatives aim to prepare workers for manufacturing, technology, services, and emerging employment opportunities.

Agriculture and rural economy

The budget supports agriculture through measures related to productivity, irrigation, research, value addition, rural enterprises, and market access.

The Ministry of Agriculture and Farmers Welfare has been allocated approximately ₹1.41 lakh crore for 2026–27.

Social infrastructure and inclusion

Allocations and policy measures cover healthcare, education, affordable housing, social welfare, and support for vulnerable groups.

The aim is to improve access to essential services while increasing participation in economic growth.

Tourism, culture, and sports

The budget proposes measures to develop tourism destinations, strengthen cultural and heritage sites, and improve related skills and infrastructure.

Support for sports development and creative industries also forms part of the broader employment and services strategy.

The Union Budget 2026–27 combines capital expenditure, fiscal consolidation, tax administration changes, and sector-specific measures. Its main priorities include infrastructure, manufacturing, MSMEs, agriculture, skills, healthcare, and emerging technologies. Taxpayers and investors should review the final legislation and official notifications before acting, as several announcements are proposals that may be subject to conditions or changes during implementation.