The Union Budget 2026 Highlights

The Union Budget 2026 has introduced significant reforms and policy changes aimed at fostering economic growth, enhancing infrastructure, and streamlining taxation. With a focus on empowering various sectors and promoting inclusivity, the budget outlines transformative measures for both direct and indirect taxes. This article delves into the major highlights, tax changes, and sector-wise announcements that define Budget 2026.

The Union Budget 2026, presented by the Ministry of Finance, has been widely anticipated as a roadmap for economic growth and stability. It addresses key areas such as infrastructure, taxation, social welfare, and industrial development. With a strong emphasis on fiscal prudence and inclusive growth, the government has proposed several measures to boost investment and streamline tax processes.

Key takeaways from Budget 2026

• A significant increase in capital expenditure allocation to boost infrastructure development.
• Introduction of tax reforms aimed at simplifying compliance for individuals and businesses.
• Special focus on MSMEs, agriculture, and rural development.
• Enhanced incentives for green energy projects and sustainable development.
• Comprehensive measures to promote the manufacturing sector under the ‘Make in India’ initiative.

Extension of due date for non-audit taxpayers

The government has extended the due date for filing income tax returns for non-audit taxpayers. This decision aims to provide taxpayers with additional time to ensure compliance and avoid penalties. The new deadline is now set at 31st August 2026, offering relief to salaried individuals and small businesses.

Extension of revised return due date

Taxpayers now have an extended window to file revised returns. The due date for filing revised income tax returns has been pushed to 31st December 2026, enabling individuals and businesses to rectify errors and omissions in their original filings.

TCS rate changes

The Tax Collected at Source (TCS) rates have been revised for certain categories. For overseas remittances under the Liberalised Remittance Scheme (LRS), the TCS rate has been reduced to 5% for amounts up to Rs. 7 lakh annually. This move aims to alleviate the financial burden on taxpayers.

Form 15G and 15H changes

Updates to Forms 15G and 15H now allow senior citizens and individuals with low taxable income to claim exemptions more easily. The revised thresholds ensure that individuals with minimal income are not subjected to unnecessary deductions.

Buyback provisions

The government has introduced changes to the taxation of share buybacks. The revised provisions aim to reduce the tax burden on shareholders while encouraging companies to adopt transparent buyback practices.

TDS procedural changes

Procedural changes in Tax Deducted at Source (TDS) have been implemented to simplify compliance for businesses. These changes include the introduction of a single-window system for filing TDS returns, reducing administrative burdens.

Foreign asset disclosure scheme for small taxpayers

A new scheme has been launched to enable small taxpayers to disclose foreign assets without facing stringent penalties. This initiative is expected to encourage transparency and compliance with tax regulations.

Tax holiday for non-residents and foreign companies

The budget has extended tax holidays for non-residents and foreign companies investing in specific sectors, such as renewable energy and infrastructure. This move aims to attract foreign investment and boost economic growth.

STT changes

The Securities Transaction Tax (STT) has undergone minor adjustments. For equity derivatives, the STT rate has been revised to 0.05%, while for options, it is now fixed at 0.0125%. These changes are expected to enhance market liquidity.

IFSC exemptions

To encourage international financial activities, the government has announced additional tax exemptions for entities operating within the International Financial Services Centre (IFSC). These include exemptions on income earned from specified financial services.

Other important amendments

Other amendments include measures to curb tax evasion, simplify tax compliance, and provide relief to start-ups. The government has also introduced incentives for digital payments and e-commerce platforms to promote a cashless economy.

GST – Structural tightening without rate noise

The Goods and Services Tax (GST) framework has been tightened to improve compliance without altering tax rates. Key measures include stricter e-invoicing norms, enhanced scrutiny of input tax credit claims, and the introduction of automated systems for tax reconciliation. These changes aim to reduce tax evasion and ensure seamless compliance for businesses.

Customs – Strategic enforcement aligned to manufacturing policy

Customs duties have been rationalised to align with the government’s Make in India initiative. Import duties on raw materials and intermediate goods have been reduced to promote domestic manufacturing, while duties on finished goods have been increased to protect local industries. This strategic move is expected to boost employment and reduce import dependency.

Items expected to get cheaper

• Personal use imported goods
• Cancer drugs and medicines (17 types)
• Food and medicines for rare diseases (7 types)
• Leather items such as footwear
• Textile garments
• Seafood products
• Lithium-ion cells for batteries
• Solar glass and critical minerals
• Biogas-blended CNG
• Aircraft manufacturing components
• Microwave ovens
• Foreign education

Items expected to get costlier

• Alcohol and cigarettes
• Components for nuclear power projects
• Minerals, iron ore, and coal
• Misreporting of income tax
• Stock options and future trading

Banking and financial sector

The government has introduced measures to strengthen the banking sector, including capital infusion for public sector banks and initiatives to promote digital banking.

MSMEs and enterprises

MSMEs will benefit from enhanced credit guarantees and reduced compliance requirements, fostering growth and innovation.

Manufacturing and industry

Incentives under the Production Linked Incentive (PLI) scheme have been expanded to include new sectors, supporting industrial growth.

Infrastructure and connectivity

A record Rs. 12 lakh crore has been allocated for infrastructure development, focusing on highways, railways, and urban transport.

Services, skills, and employment

Skill development programs and employment generation initiatives have been launched to address unemployment and enhance employability.

Agriculture and rural economy

The budget includes increased allocations for irrigation projects, crop insurance schemes, and subsidies for farmers to promote rural development.

Social infrastructure and inclusion

Investments in affordable housing, healthcare, and education have been prioritised to ensure inclusive growth.

Tourism, culture, and sports

New schemes have been introduced to promote domestic tourism, preserve cultural heritage, and support sports development.

Budget 2026 reflects the government’s commitment to fostering economic growth, promoting inclusivity, and simplifying taxation. With a focus on infrastructure development, tax reforms, and sector-specific incentives, the budget lays a strong foundation for a resilient economy. Individuals and businesses are encouraged to assess these changes and make informed financial decisions tailored to their goals and circumstances.

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