Budget 2026, Budget Highlights, big budget News: Finance Minister Nirmala Sitharaman announced the Union Budget on 1st February, 2026. One of the major announcements of the budget was related to increase in STT on Futures from 0.02% to 0.05%. While STT on options premiums and the exercise of options will be raised to 0.15% from the rates of 0.1% and 0.125%, respectively.
On the other hand, no changes were announced in customs duties on gold and silver, easing concerns of sudden price shocks for jewellers, bullion traders, and consumers.
The budget had set a clear direction towards India’s journey towards Viksit Bharat by pushing growth through the manufacturing sector, the IT sector, supporting MSMEs, announcing Seven Proposed high-speed rail corridors, and generating employment by skilling initiatives, healthcare, tourism, and creative industries.
The Budget reaffirms commitment to fiscal consolidation, with the fiscal deficit estimated at 4.3% of GDP and a declining debt-to-GDP ratio.
The budget also announced Tax reforms under the new Income Tax Act, 2025, which aims to simplify compliance, reduce litigation, and improve ease of living. There have also been some changes in customs and indirect tax measures to support manufacturing, exports, and energy transition
HIGHLIGHTS
The following are the major highlights of the budget 2026, sector-wise
1.0 Manufacturing Sector
At the core of the Budget is an aggressive strategy to scale up manufacturing in seven strategic and frontier sectors, reinforcing India’s ambition to become a global production hub.
1.1 Manufacturing Sector: Major Announcements
· Biopharma SHAKTI with an outlay of ₹10,000 crore to position India as a global hub for biologics and biosimilars.
· India Semiconductor Mission 2.0, expanding beyond chip fabrication into equipment, materials, full-stack IP design, and skilled workforce development.
· Expansion of the Electronics Components Manufacturing Scheme to ₹40,000 crore, riding on strong investor response.
· Development of Rare Earth Corridors in mineral-rich states to strengthen supply chains for critical materials.
· New Chemical Parks, capital goods manufacturing schemes, and a ₹10,000-crore push for container manufacturing.
1.2 Manufacturing Sector: Tax Reforms Announcements
· Exemption from income tax for five years to non-residents providing capital goods, equipment, or tooling to any toll manufacturer in a bonded zone
· Some provisions were announced to safe harbour to non-residents for component warehousing in a bonded warehouse.
· The limit for duty-free imports of specified inputs used for processing seafood products for export is increased, from the current 1 per cent to 3 per cent of the FOB value of the previous year’s export turnover.
· Exemption was announced for basic customs duty on specified parts used in the manufacture of microwave ovens.
· Exemption was announced for basic customs duty on components and parts used in aircraft manufacturing.
2.0 MSMEs
Recognising MSMEs as the backbone of the economy, the Budget introduces a three-pillar support framework:
Equity support via a ₹10,000-crore SME Growth Fund and a ₹2,000-crore top-up for the Self-Reliant India Fund.
Liquidity support through deeper integration of TReDS, credit guarantees, and asset-backed securities.
Professional support via ‘Corporate Mitras’—trained para-professionals to help MSMEs with compliance and governance.
3.1 Service Sector Announcements
· Service Sector: Created a high-powered ‘Education to Employment and Enterprise’ Standing Committee whose focus is on the Services Sector. It was done as the government realized that the service sector would be a core driver of Viksit Bharat.
· Health Sector: Government to upgrade and establish new institutions for Allied Health Professionals (AHPs) in ten selected disciplines.
· Care Ecosystem: The government would develop a variety of NSQF-aligned programmes to train 1.5 lakh multiskilled caregivers.
· Medical System: The government would introduce schemes to support States in establishing Five Hubs for Medical Value Tourism in partnership with the private sector.
· AYUSH: Government would open 3 new All India Institutes of Ayurveda, upgrading AYUSH pharmacies and Drug Testing Labs for higher standards of certification ecosystem, & upgrading the WHO Global Traditional Medicine Centre.
· Orange Economy: The government would set up AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges.
· Design Sector: The Government would set up a new National Institute of Design through the Challenge route in the eastern region of India.
· Sports Sector: Government introduced the Khelo India Mission, which would integrate talent development pathway, systematic coaching development, integration of science & technology, and development of sports infrastructure
· Education: The government would open 5 University Townships in the vicinity of major industrial and logistic corridors.
Also, the government would set up a girls’ hostel in Higher Education STEM institutions in every district.
The government would also set up and upgrade four Telescope Infrastructure facilities.
· Tourism: The government had made some major announcements in the sector
· They would set up a National Institute of Hospitality as a bridge between academia, industry, and the Government.
· They would start a pilot scheme for upskilling 10,000 guides in 20 iconic tourist sites.
· They would start a National Destination Digital Knowledge Grid to digitally document all places of significance
· They would develop ecologically sustainable Mountain trails, Turtle Trails, and bird-watching trails in select states
· They would develop 15 archeological sites into vibrant, experiential cultural destinations.
· They would also develop Buddhist Circuits inthe North East Region.
3.2 Service Sector Tax Reforms
The Government would club IT services under a single category with a common safe harbour margin of 15.5%
Safe harbour threshold for IT services would be increased from ₹ 300 crore to ₹2,000 crore.
Approval of safe harbour for IT services would be done by an automated rule-driven process.
The Government would fast track unilateral APA process for IT services with an aim to conclude it within a period of two years. Can be extended by a further period of six months on the taxpayer’s request.
Some provisions were introduced on a tax holiday until 2047, for foreign companies providing cloud services to global customers through India-based data centre services. Related Entities providing data center services from India to get a safe-harbour of 15% on cost.
Exemption would be granted to the global income of a non-resident expert for a stay period of 5 years under the notified schemes
4.0 Infrastructure and Urban Transformation Announcements
Public capital expenditure continues its upward trajectory, rising to ₹12.2 lakh crore in FY 2026–27. Major highlights include:
- Creation of an Infrastructure Risk Guarantee Fund to crowd in private investment.
- Expansion of Dedicated Freight Corridors, inland waterways, coastal shipping, and seaplane connectivity.
- Mapping and funding of City Economic Regions (CERs), with ₹5,000 crore per region over five years.
- Development of seven High-Speed Rail corridors, linking major economic centres as “growth connectors”.
5.0 Energy Security and Climate Security
The Budget makes a clear bet on sustainability:
- ₹20,000 crore allocated over five years for Carbon Capture, Utilisation and Storage (CCUS).
- Customs duty exemptions to support lithium-ion batteries, energy storage, solar glass, and nuclear power projects.
- Policies aimed at long-term energy stability while supporting industrial decarbonisation.
6.1 Financial Sector’s majorAnnouncementss
To align finance with long-term growth:
· A High-Level Committee on Banking for Viksit Bharat will review the future architecture of India’s banking system.
· Incentives worth ₹100 crore were announced for the single issuance of municipal bonds of more than ₹1000 crore. The current scheme under AMRUT will continue.
· Restructuring of key public sector NBFCs was announced, namely Power Finance Corporation (PFC) and Rural Electrification Corporation (REC).
· A comprehensive review would be done of Foreign Exchange Management (FEMA), specifically on Non-debt Instruments Rules
· An introduction was done of the Market Making Framework and Total Return Swaps on corporate bonds
6.2 Financial Sector’s Tax Reforms
The Government had raised the STT on Futures from 0.02% to 0.05%
While STT on options premiums and the exercise of options will be raised to 0.15% from the rates of 0.1% and 0.125%, respectively.
7.0 Skills and Young India
Through this budget, the government had renewed emphasis on the services sector, which underpins the aspiration-building agenda:
- In order to build a Care Ecosystem and allied care services, training would be done for 1.5 multiskilled caregivers.
- Self-Help Entrepreneur (SHE) Marts to be set up as community-owned retail outlets within the cluster-level federations.
- Divyangjan Kaushal Yojana would be established, which would work on providing dignified livelihood opportunities through industry-relevant and customized training specific to disability group.s
- Governemt wouold supporting Artificial Limbs Manufacturing Corporation of India (ALIMCO) to scale up production of assistive devices, invest in R,&D and AI integration.
FAQs
1. When was the Union Budget 2026 presented and what is its overarching vision?
The Union Budget 2026 was presented on 1st February 2026 by Finance Minister Nirmala Sitharaman. It lays a clear roadmap towards Viksit Bharat, focusing on manufacturing-led growth, services expansion, infrastructure development, and large-scale employment generation.
2. How does Budget 2026 address fiscal discipline and macroeconomic stability?
The Budget reaffirms commitment to fiscal consolidation, estimating the fiscal deficit at 4.3% of GDP, while maintaining a declining debt-to-GDP trajectory, ensuring long-term macroeconomic stability.
3. What are the key initiatives announced for strengthening India’s manufacturing sector?
The Budget prioritises seven strategic manufacturing sectors through initiatives like Biopharma SHAKTI, India Semiconductor Mission 2.0, expansion of electronics manufacturing schemes, development of Rare Earth Corridors, and new chemical parks and container manufacturing programmes.
4. What tax incentives have been introduced to support manufacturing and exports?
Key tax measures include five-year income tax exemption for non-residents supplying capital goods in bonded zones, safe harbour provisions for component warehousing, higher duty-free import limits for seafood exporters, and customs duty exemptions on components for microwave ovens and aircraft manufacturing.
5. How does Budget 2026 support MSMEs across equity, liquidity, and compliance?
The Budget introduces a three-pillar MSME framework:
- Equity support via a ₹10,000-crore SME Growth Fund and ₹2,000-crore Self-Reliant India Fund top-up
- Liquidity support through expanded TReDS, credit guarantees, and asset-backed securities
- Compliance support through ‘Corporate Mitras’, trained para-professionals assisting MSMEs.
6. What major steps were announced to strengthen the services sector?
A high-powered Education-to-Employment and Enterprise Standing Committee has been created, recognising the services sector as a core driver of growth under the Viksit Bharat vision.
7. How does the Budget promote healthcare, education, and skill development?
Key announcements include new institutions for Allied Health Professionals, training 1.5 lakh multiskilled caregivers, establishment of Medical Value Tourism hubs, five University Townships, STEM hostels for girls in every district, and upgraded telescope infrastructure facilities.
8. What initiatives support creative, sports, and design-driven industries?
The Budget boosts the Orange Economy through AVGC labs in schools and colleges, establishes a new National Institute of Design in eastern India, and strengthens sports infrastructure and talent pipelines under the Khelo India Mission.
9. What reforms were announced for IT and digital services taxation?
The Budget rationalises IT services taxation by introducing a single safe harbour margin of 15.5%, increasing the threshold to ₹2,000 crore, automating approvals, fast-tracking APAs, and offering tax holidays till 2047 for foreign cloud and data centre service providers.
10. What are the key infrastructure and connectivity highlights of Budget 2026?
Public capital expenditure has been raised to ₹12.2 lakh crore, alongside the creation of an Infrastructure Risk Guarantee Fund, development of City Economic Regions, expansion of freight and waterways, and the announcement of seven high-speed rail corridors as economic growth connectors.
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