Union Budget 2026: New Income Tax Act to come into effect from 1 April

Kerala Industries minister criticises the Budget for ignoring the state

Kerala Industries and Law Minister P Rajeev met the media and criticised the Union Budget for ignoring the state, especially in the announcement of high-speed rail corridors.

He said Kerala was the first state to propose a high-speed rail project. Though seven corridors were announced, Kerala was excluded. "We submitted a detailed proposal to the Centre for a high-speed rail project, but it was not approved. Now, new corridors have been announced, yet Kerala has again been left out. This is discrimination against Kerala," he said.

The minister also pointed out that no AIIMS announced for Kerala. The state had proposed three locations for the project, after which the Centre asked Kerala to identify one site. The State then identified land at Kinaloor in Kozhikode, a high-value property under the Industries Department. ''Despite completing all formalities, Kerala was denied an AIIMS'' he said.

He further said Kerala did not receive Central allocations in proportion to the taxes it contributes. The only proposal mentioned for Kerala in the Budget was a mineral corridor, but this too lacks clarity. He noted that the State government already has related projects in this sector.

To increase the limit for duty-free imports

Fiscal deficit in 26-27 at 4.4 percent of the GDP

“In FY2026-27, the fiscal deficit is seen at 4.4 percent of the GDP. The fiscal deficit is likely to be at 4.3 percent of GDP in FY2027,” Sitharaman said.

Taxation of buybacks of shares

Nirmala Sitharaman proposed a change in the taxation of buybacks of shares to address improper use— tax on buybacks for all types of shareholders as capital gains.

She said it is aimed at disincentivising misuse of tax arbitrage as promoters are to pay additional buyback tax. Effective tax on corporate promoters will be made 22 percent; non-corporate promoters will have a tax of 30 percent on buybacks.

1,000 clinical trial sites, launches Bharat Vistar and She Marts

Sitharaman announced that the Union government will establish a network of over 1,000 accredited clinical trial sites across India, expanding beyond major centres such as Mumbai, Delhi, Bengaluru, Chennai, and Hyderabad.

She also proposed a credit-linked subsidy programme to support livestock farmer producer organisations, aimed at generating employment opportunities.

In her speech, Sitharaman unveiled the launch of Bharat Vistar, a multilingual AI tool designed to integrate the agri-stack, and announced the creation of She Marts, community-owned retail outlets to empower local entrepreneurs.

Minor offences to be decriminalised

Budget estimates

Hubs for Medical Value Tourism to be developed

Hubs for Medical Value Tourism (MVT) will be developed to make India a global destination for medical tourism services. States will be supported to set up five regional hubs in partnership with the private sector

Tax-paying timeline to be staggered

Sitharaman proposes Divyangjan Kaushal Yojana

New Income Tax Act to come into effect from 1 April 2026

The new Income Tax Act will come into effect from 1 April 2026, and ₹1.4 lakh crore as tax devolution to states in 2027.

The IT Act 2025, which replaces the 1961 Act, simplifies tax rules. Redesigned forms will be notified soon to make compliance easier for taxpayers. Sitharaman proposed that interest awarded by motor accident claims tribunals to individuals be fully exempt from income tax, removing procedural hurdles.

The TCS rate on overseas tour packages will be cut from five percent and 20 percent to two percent, with no minimum amount condition. The TCS rate under LRS for education and medical purposes will also be reduced from five percent to two percent. To avoid ambiguity, manpower supply services will be treated as contractor payments for TDS, attracting a TDS rate of one percent or two percent.

Stock market upbeat

The stock market gained momentum after initial fluctuation. The Sensex bounced back and climbed 272.23 points to 82,542.01 in morning trade. The Nifty, too, crawled back up by 66.9 points to 25,387.55.

Khelo India Mission to transform the sports sector

Scaling up production and marketing of cash crops

The finance minister said that the Union government will partner with state governments to increase production and marketing of sandalwood, cocoa, coconut and cashew.

To upgrade telescope infrastructure

To promote astrophysics and astronomy through immersive learning experiences, the Union government will set up or upgrade telescope infrastructure facilities across the country.

Key projects include the National Large Solar Telescope, National Large Optical Infrared Telescope, Himalayan Chandra Telescope, and Cosmos 2 Planetarium.

Turtles too count!

Eco-friendly mountain trails will be developed in Uttarakhand, Himachal Pradesh and Jammu and Kashmir to promote tourism.

Key turtle nesting sites along the coasts of Odisha, Karnataka, and Kerala will be developed, along with three dedicated bird-watching trails around Pulicat Lake in Andhra Pradesh and Tamil Nadu.

To develop tier 2 and tier 3 cities

Individual persons resident outside India to be permitted to invest in equity

Individual persons resident outside India will be permitted to invest in equity through the Portfolio Investment Scheme. The individual limit will be increased from five percent to 10 percent, while the combined cap for all such investors is proposed to rise from 10 percent to 24 percent.

This change would allow serious foreign individual investors to take more meaningful stakes in Indian companies, potentially improving price discovery, deepening shareholding, and supporting long-term capital formation.

Over one lakh geriatric caregivers in 5 years

The finance minister announced the plan to train one lakh Allied Health Professionals (AHPs) in 10 disciplines, like optometry, radiology, and anaesthesia. Over the next five years, the Union government plans to create 1.5 lakh caregivers for geriatric and NSQF-aligned programmes.

NIMHANS-2 to be set up in Northern India.

To develop 15 archaeological sites

Sitharaman proposed to develop 15 archaeological sites across India, including Adichanallur from Tamil Nadu

National Institute of Design in the eastern region

The finance minister proposed to establish a new National Institute of Design in the eastern region of the country.

To establish National Institute of Hospitality

To establish the National Institute of Hospitality by upgrading the existing National Council for Hotel Management and Catering Technology. It will function as a bridge between academia, industry, and government.

AVGC content creator labs in 15,000 schools

AVGC (Animation, Visual Effects, Gaming, Comics) content creator labs in 15,000 schools across India. One girls' hostel in each district. Five university townships in the vicinity of major industrial and logistics corridors.

To support veterinary professionals

To scale up the availability of veterinary professionals by more than 20,000, a loan-linked capital subsidies support scheme has been proposed for the establishment of veterinary colleges, veterinary hospitals, diagnostic laboratories, breeding facilities and the private sector. Collaboration between Indian and foreign institutions will also be facilitated.

New dedicated freight corridor

The Union Budget 2026 announced a new dedicated freight corridor from Dankuni in the East to Surat in the West to promote environmentally sustainable movement of cargo.

Push for traditional medical streams

Sitharaman announced that the government will set up three new All India Institutes of Ayurveda, upgrade Ayush pharmacies and drug testing standards, and upgrade the WHO Global Traditional Medicinal Centre to bolster research, traininga and awareness.

To promote container manufacturing

Sitharaman said she is proposing a new scheme to promote container manufacturing, aimed at building a globally competitive ecosystem for the sector, with an allocation of ₹10,000 crore spread over five years.

Standing Committee to explore potential for growth, employment and skill development

‘Education to Employment and Enterprises’ Standing Committee to explore potential for growth, employment and skill development.s

To review foreign exchange rules

The Union government will conduct a detailed review of foreign exchange rules for non-debt instruments to make it easier to attract foreign investors.

To increase capital expenditure to ₹12.2 lakh crores

Public capital expenditure increased manifold from ₹2 lakh crore in 2014-15 to an all-time high of ₹11.2 lakh crore in 25-26.

"In financial year 2026-27, I propose to increase it to ₹12.2 lakh crores to continue the momentum. To strengthen the confidence of private developers regarding risks during the infrastructure development and construction phase, I propose to set up an infrastructure risk guarantee fund to provide prudentially calibrated public credit guarantees to lenders."

"Over the years, rights have emerged as a successful instrument for asset monetisation. I propose to accelerate the recycling of significant real estate assets of the CPSEs through the setting up of dedicated rights. To promote environmentally sustainable movement of cargo, I propose two. One, establish new dedicated freight corridors connecting Dangkuni in the east to Surat in the Infrastructure Risk Guarantee Fund: New prudentially calibrated public credit guarantee mechanism to support lenders during infrastructure development," Sitharaman said.

Seven high-speed rail corridors between cities

The finance minister announced seven high-speed rail corridors between cities; poll-bound Kerala was left out.

1. Mumbai-Pune
2. Pune-Hyderabad
3. Hyderabad-Bengaluru
4. Hyderabad-Chennai
5. Chennai-Bengaluru
6. Delhi-Varanasi
7. Varanasi-Siliguri

'Global hub for sports goods'

India has the potential to emerge as a global hub for sports goods, said Sitharaman. She proposed a dedicated initiative to promote globally competitive sports goods.

Accelerating and sustaining economic growth

Nirmala Sitharaman said, "To accelerate and sustain economic growth, I propose interventions in six areas: scaling up manufacturing in seven strategic sectors; Rejuvenating legacy industrial sectors; Creating champion MSMEs; Delivering a push for infra; Ensuring long-term security and stability; and developing city economic regions."

Champion MSMEs: Three pronged approach to help them grow. Equity support of ₹10,000 crore (SME growth fund). Top up self reliant India fund with ₹2,000 crores to support micro enterprises. Liquidity support through leveraging TReDS for transactions. Professional support via institutions like ICAI, etc., to design modular courses to create para-professionals as ‘corporate mitras’.

To promote khadi products and textile industry

The Budget proposed the Mahatma Gandhi Gram Swaraj scheme to promote khadi products and India’s textile industry. This will include training, skilling, production and quality checks.

Tamil Nadu, Kerala among rare earth materials plan

The Union Budget proposed a rare mineral corridor initiative for poll-bound Tamil Nadu and Kerala, along with Odisha and Andhra Pradesh. Proposal to establish dedicated initiatives for mining

'Ensured that citizens benefit from every action of the government'

Sitharaman said, "Keeping Aatmanirbharta as a lodestar, we have built domestic manufacturing capacity, energy security and reduced critical import dependencies. Simultaneously, we have ensured that citizens benefit from every action of the government, undertaking reforms to support employment generation, agricultural productivity, household purchasing power and universal services to people. These measures have delivered a high growth rate of around seven percent and helped us make substantial strides in poverty reduction and improvement in the lives of our people."

To launch ISM 2.0

Semiconductor mission: To launch India Semiconductor Mission (ISM) 2.0 to procure equipment and materials and fortify supply chains.

Bio-pharma Shakti gets ₹10,000 crore outlay

Sitharman announced that Bio-pharma Shakti would have a ₹10,000 crore outlay.

"To develop India as a global biopharma manufacturing hub, I proposed the Biopharma Shakti with an outlay of ₹10,000 crores over the next five years. This will build the ecosystem," she said. "For domestic production of biologics and biosimilars, the strategy will include a biopharma-focused network with three new national institutes of pharmaceutical education and research, popularly known as NIPERS, and upgrading seven existing ones. It will also create a network of 1,000 accredited Indian clinical trials sites. We propose to strengthen the Central Drug Standard Control Organisation to meet global standards and approve timeframes through a dedicated scientific review and specialists," she added

Announces Reform Express

The Finance Minister announces ‘Reform Express’. Over 350 reforms have been rolled out. Reform Express will maintain its momentum.

Specific proposals:

Intervention in six areas
1. Scaling up manufacturing in 7 strategic sectors
2. Rejuvenating legacy industrial sectors
3. Creating champion memes
4. Delivering infrastructure push
5. Ensuring long-term stability
6. Developing city economic regions

'Inspired by three responsibilities'

"We are inspired by three responsibilities: Accelerate and sustain economic growth; fulfil the aspirations of people and build their capacities, making them partners in India’s path of prosperity; and ensure every family, community and region has access to resources," Sitharaman said.

'India's economic trajectory has been marked by stability,

"Since we assumed office 12 years ago, India's economic trajectory has been marked by stability, fiscal discipline, sustained growth and moderate inflation. This is the result of conscious choices we have made," said Sitharaman.

Finance Minister starts presenting Union Budget 2026

Curiosity builds as several states brace for Assembly elections

Curiosity is building up across verticals and households as the Finance Minister is about to present the Union Budget. Nirmala Sitharaman's ninth Budget presentation comes at a time when Assembly elections are in an Assembly election year in Assam, West Bengal, Tamil Nadu, Kerala, and the Union Territory of Puducherry.

MK Stalin urges Union government to announce concrete, time-bound financial commitments

Ahead of the 2026 budget, Tamil Nadu Chief Minister MK Stalin urged the Union government to announce concrete, time-bound financial commitments for the State, keeping the upcoming elections in mind.

In a post on social media, Stalin said the Budget should go beyond the customary quoting of Thirukkural and include specific allocations for long-pending demands of Tamil Nadu. He listed key expectations, including the release of ₹3,548 crore towards the education of students whose funds have been withheld, and allocations for the proposed metro rail projects in Coimbatore and Madurai.

The chief minister also sought ₹3,112 crore for the Jal Jeevan Mission, noting that Tamil Nadu has been implementing the scheme effectively, besides calling for new railway projects in the state. Stalin further reiterated the demand that States should receive 50 percent of the Union government’s tax revenue, in line with the Finance Commission’s recommendations.

“There are more items on the list. Even if the Budget is framed with elections in mind, we expect Tamil Nadu’s demands to be announced without fail,” he said, adding that the projects should not remain mere announcements like the Madurai AIIMS, but must be backed by proper financial allocation and completed within a fixed timeframe.