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India Pulse | Union Budget 2026-27 Special
Budget 2026-27: Govt Gives Strong Push To Manufacturing, Infrastructure & Job Creation, Says FM Sitharaman
Finance Minister Nirmala Sitharaman on Sunday presented the Union Budget 2026-27, giving a strong push to manufacturing, infrastructure and job creation, while proposing a simpler tax and customs regime.
In her ninth consecutive Budget in Parliament, Ms Sitharaman laid out a multi-pronged strategy to sustain growth amid global uncertainty, including expanding domestic electronics and semiconductor capabilities, de-risking infrastructure projects, skilling India’s youth for emerging technologies, and easing compliance for taxpayers and importers.
Budget put a special emphasis on the manufacturing landscape in India. The outlay for electronics components manufacturing was raised sharply to 40 thousand 000 crore rupees, while new schemes for rare earth magnets, chemical parks, container manufacturing and capital goods seek to reduce import dependency, and strengthen domestic supply chains. Textiles got an integrated, employment-oriented package covering fibres, clusters, skilling and sustainability.
Infrastructure got a boost with a higher capex allocation and initiatives like a risk guarantee fund to de-risk projects for private developers, new dedicated freight corridors and national waterways.
Maintaining fiscal discipline, Ms Sitharaman said the government expects the fiscal deficit to be at 4.3 per cent of the GDP in 2026-27, lower than 4.4 per cent projected for the current financial year.
Tier-II and Tier-III cities have been placed at the centre of urban growth via City Economic Regions, backed by reform-linked funding.
The Budget placed renewed emphasis on the services economy as a jobs engine. A high-powered Education-to-Employment and Enterprise Committee will realign skilling with market needs, including the impact of emerging technologies.
Content creation and creative industries get a boost through AVGC labs in schools and colleges, support for animation, gaming and comics, and new institutional capacity for design and hospitality. Tourism-linked skilling, from guides to digital heritage documentation, signals a clear intent to convert culture and content into employment and exports.
Artificial intelligence (AI) has been positioned as a cross-sector force multiplier rather than a standalone theme. The Budget provided a push to artificial intelligence (AI) by promoting adoption with governance, agriculture, education and skilling, including proposals for AI-enabled advisory tools for farmers and AI integration in education curricula.
A major structural reform comes with the Income Tax Act, 2025, effective April 1, 2026, containing simpler rules and redesigned forms. Budget 2026 provided compliance relief for individuals, including extended timelines for revising returns to March 31 from December 31 earlier, staggered ITR due dates, and easier filing of Form 15G/15H through depositories.
Customs duty rationalisation continued with a clear focus on domestic manufacturing, energy transition and ease of living. Exemptions have been extended or introduced for capital goods used in lithium-ion batteries, critical minerals processing, nuclear power projects and aircraft manufacturing.
Personal imports will become cheaper with a reduction in duty on goods for personal use from 20% to 10%. Seventeen cancer drugs and additional rare-disease treatments were exempted from customs duty. Process reforms aimed at trust-based, tech-driven clearances, faster cargo movement and lower compliance costs, especially for exporters and MSMEs (micro, small, medium and enterprises).
HERE IS SUMMARY OF UNION BUDGET 2026-27
YUVA SHAKTI-DRIVEN BUDGET EMPHASIZES ON GOVERNMENT’S ‘SANKALP’ TO FOCUS ON POOR, UNDERPRIVILEGED AND THE DISADVANTAGED
FIRST BUDGET PREPARED IN KARTAVYA BHAWAN INSPIRED BY 3 KARTAVYA
FIRST KARTAVYA IS TO ACCELERATE AND SUSTAIN ECONOMIC GROWTH
SECOND KARTAVYA IS TO FULFIL ASPIRATIONS OF PEOPLE AND BUILD THEIR CAPACITY
THIRD KARTAVYA, ALIGNED WITH VISION OF SABKA SATH, SABKA VIKAS
NEW INCOME TAX ACT, 2025 TO COME INTO EFFECT FROM APRIL 2026, SIMPLIFIED INCOME TAX RULES AND FORMS TO BE NOTIFIED SHORTLY
MULTIPLICITY OF PROCEEDINGS TO BE REDUCED TO RATIONALISE PENALTY AND PROSECUTION
DEDUCTION ALREADY AVAILABLE TO CERTAIN PRIMARY COOPERATIVE SOCIETIES TO BE EXTENDED TO CATTLE FEED AND COTTON SEED
SINGLE CATEGORY OFINFORMATION TECHNOLOGY SERVICES WITH COMMON SAFE HARBOUR MARGIN OF 15.5%
2000 CRORE THRESHOLD FOR AVAILING SAFE HARBOUR FOR IT SERVICES, UP FROM 300 CRORE RUPEES
FOREIGN CLOUD SERVICE PROVIDER TO BE GIVEN TAX HOLIDAY TILL 2047
EXEMPTION FROM MINIMUM ALTERNATE TAX TO ALL NON-RESIDENTS PAYING TAX ON PRESUMPTIVE BASIS
MINISTRY TO SET UP JOINT COMMITTEE TO MODIFY IndAS TO DO AWAY WITH SEPARATE ACCOUNTING REQUIREMENT BASED ON ICDS FROM TAX YEAR 2027-28
STT ON FUTURES TO BE RAISED TO 0.05% FROM PRESENT 0.02%
BASIC CUSTOMS DUTY EXEMPTION GIVEN TO CAPITAL GOODS USED FOR MANUFACTURING LITHIUM-ION CELLS FOR BATTERIES TO BE EXTENDED.
BASIC CUSTOMS DUTY TO THE IMPORT OF CAPITAL GOODS REQUIRED FOR PROCESSING OF CRITICAL MINERALS TO BE EXEMPTED
TARIFF RATE ON ALL DUTIABLE GOODS IMPORTED FOR PERSONAL USE TO BE REDUCED FROM 20% TO 10%
BASIC CUSTOMS DUTY ON 17 DRUGS OR MEDICINES TO BE EXEMPTED.
BIOPHARMA SHAKTI WITH AN OUTLAY OF ₹ 10,000 CRORES TO BUILD THE ECOSYSTEM FOR DOMESTIC PRODUCTION OF BIOLOGICS AND BIOSIMILARS
₹10,000 CRORE SME GROWTH FUND PROPOSED TO CREATE MSME’S AS FUTURE CHAMPIONS
PUBLIC CAPEX ENHANCED FROM ₹11.2 LAKH CRORE IN BE 2025-26 TO ₹12.2 LAKH CRORE IN FY 2026-27
SEVEN HIGH-SPEED RAIL CORRIDORS BETWEEN CITIES WILL BE DEVELOPED AS ‘GROWTH CONNECTORS’ TO PROMOTE ENVIRONMENTALLY SUSTAINABLE PASSENGER SYSTEMS
INDIAN INSTITUTE OF CREATIVE TECHNOLOGIES, MUMBAI TO SETUP AVGC CONTENT CREATOR LABS IN 15,000 SECONDARY SCHOOLS AND 500 COLLEGES
TO ADDRESS THE CHALLENGES FOR GIRL STUDENTS IN HIGHER EDUCATION STEM INSTITUTIONS, ONE GIRLS HOSTEL WILL BE ESTABLISHED IN EVERY DISTRICT
GOVERNMENT ANNOUNCES A SCHEME FOR UPSKILLING 10,000 GUIDES IN 20 TOURIST SITES THROUGH A STANDARDIZED, HIGH-QUALITY 12-WEEK TRAINING COURSE IN HYBRID MODE, IN COLLABORATION WITH AN IIM
KHELO INDIA MISSION TO TRANSFORM THE SPORTS SECTOR OVER THE NEXT DECADE
BHARAT-VISTAAR, A MULTILINGUAL AI TOOL TO INTEGRATE THE AGRISTACK PORTALS AND THE ICAR PACKAGE ON AGRICULTURAL PRACTICES WITH AI SYSTEMS
OVERSEAS TOUR PROGRAM PACKAGE REDUCED FROM THE CURRENT 5 PERCENT AND 20 PERCENT TO 2 PERCENT
CUSTOMS WAREHOUSING FRAMEWORK TO BE TRANSFORMED INTO A WAREHOUSE OPERATOR-CENTRIC SYSTEM WITH SELF-DECLARATIONS, ELECTRONIC TRACKING AND RISK-BASED AUDIT
CARGO CLEARANCE APPROVALS FROM VARIOUS GOVERNMENT AGENCIES TO BE SEAMLESSLY PROCESSED THROUGH A SINGLE AND INTERCONNECTED DIGITAL WINDOW BY END OF THE FINANCIAL YEAR
Read Budget Estimates
The non-debt receipts and the total expenditure are estimated as ₹36.5 lakh crore and ₹53.5 lakh crore respectively. The Centre’s net tax receipts are estimated at ₹28.7 lakh crore.
The gross market borrowings are estimated at ₹17.2 lakh crore and the net market borrowings from dated securities are estimated at ₹11.7 lakh crore.
The Revised Estimates of the non-debt receipts are ₹34 lakh crore of which the Centre’s net tax receipts are ₹26.7 lakh crore.
The Revised Estimate of the total expenditure is ₹49.6 lakh crore, of which the capital expenditure is about ₹11 lakh crore.
The fiscal deficit in BE 2026-27 is estimated to be 4.3 percent of GDP.
In RE 2025-26, the fiscal deficit has been estimated at par with BE of 2025-26 at 4.4 percent of GDP.
The debt-to-GDP ratio is estimated to be 55.6 percent of GDP in BE 2026-27, compared to 56.1 percent of GDP in RE 2025-26.
Ease of Living Measures Announced
Finance Minister Nirmala Sitharaman announced several measures for Ease of Living in the Union Budget 2026-27:
Interest awarded by the Motor Accident Claims Tribunal to a natural person will be exempt from Income Tax, and any TDS on this account will be done away with.
TCS Rationalization
Reduce TCS rate on sale of overseas tour program package to 2 % (from current 2-20%).
Reduce the TCS rate to 2% (from current 5%) for LRS remittances for education and medical.
Simplified TDS provisions for manpower supply will benefit labour intensive business.
Scheme for small taxpayers wherein a rule based automated process for obtaining Lower or nil deduction certificate instead of filing application with the assessor.
Single window filing with depositories for Form 15G or 15 H for TDS on dividends, interests etc
Extend time available for revising returns from 31st December to upto 31st March with payment of nominal fees
The timeline for filing of tax returns to be staggered .
TAN for property transactions involving NRIs will be replaced with resident buyers PAN based challan.
A one-time 6 month foreign asset disclosure scheme for small taxpayers to disclose their overseas income or asset.
Union Budget 2026-27 Rationalizes Tax Penalty and Prosecution
Finance Minister Nirmala Sitharaman announced several measures to rationalize Penalty and Prosecution under New Income tax Act, 2025:
IT assessment & penalty proceedings are proposed to be integrated by way of common order for both.
Taxpayers allowed to update their returns even after reassessment proceedings have been initiated to reduce litigations, at an additional 10 percent tax rate over and above the rate applicable for the relevant year.
Penalty for misreporting of income also eligible for immunity with payment of additional income tax.
Prosecution framework under the Income Tax Act to be rationalized.
Non-production of books of account and documents, and requirement of TDS payment, where payment is made in kind, to be decriminalised.
Non-disclosure of non-immovable foreign assets with aggregate value less than 20 lakh rupees to be provided with immunity from prosecution with retrospective effect from 1.10.2024.
Push To Ease of Doing Business
Finance Minister Nirmala Sitharaman announced push to Ease of Doing Business in the Union Budget 2026-27:
Cargo clearance approvals from various Government agencies to be seamlessly processed through a single and interconnected digital window by the end of the financial year.
Processes involved in clearance of food, drugs, plant, animal & wild life products, accounting for around 70 percent of interdicted cargo, to be operationalised on this system by April 2026 itself.
For goods not having any compliance requirement, clearance to be done by Customs immediately after online registration is completed by the importer.
Customs Integrated System (CIS) to be rolled out in 2 years as a single, integrated and scalable platform for all the customs processes.
Utilization of non-intrusive scanning with advanced imaging and AI technology for risk assessment to be expanded in a phased manner with the objective to scan every container across all the major ports.
Union Budget 2026-27 Scales Up Manufacturing In 7 Strategic And Frontier Sectors
1. Biopharma SHAKTI (Strategy for Healthcare Advancement through Knowledge, Technology and Innovation) announced, with an outlay of ₹ 10,000 crores over the next 5 years to develop India as a global Biopharma manufacturing hub.
A Biopharma-focused network to be created with 3 new National Institutes of Pharmaceutical Education and Research (NIPER) and upgrading 7 existing ones.
A network of over 1000 accredited India Clinical Trials sites to be created
2. India Semiconductor Mission (ISM) 2.0 to be launched to produce equipment and materials, design full-stack Indian IP, and fortify supply chains with focus on industry led research and training centres to develop technology and skilled workforce.
3. The Electronics Components Manufacturing Scheme outlay increased to ₹40,000 crore.
4. Dedicated Rare Earth Corridors to be established, to support the mineral-rich States of Odisha, Kerala, Andhra Pradesh and Tamil Nadu to promote mining, processing, research and manufacturing.
5. Government to launch a Scheme to support States in establishing 3 dedicated Chemical Parks, through challenge route, on a cluster-based plug-and-play model.
6. Strengthening Capital Goods Capability
Hi-Tech Tool Rooms to be established by CPSEs at 2 locations as digitally enabled automated service bureaus that locally design, test, and manufacture high-precision components at scale and at lower cost.
A Scheme for Enhancement of Construction and Infrastructure Equipment (CIE) to be introduced, to strengthen domestic manufacturing of high-value and technologically-advanced CIE.
A Scheme for Container Manufacturing announced, to create a globally competitive container manufacturing ecosystem, with a budgetary allocation of over ₹10,000 crore over a 5 year period.
7. Integrated Programme for the Textile Sector announced
The National Fibre Scheme for self-reliance in natural fibres such as silk, wool and jute, man-made fibres, and new-age fibres.
Textile Expansion and Employment Scheme to modernize traditional clusters with capital support for machinery, technology upgradation and common testing and certification centres.
Mega Textile Parks to be setup in challenge mode with focus on bringing value addition to technical textiles.
Mahatma Gandhi Gram Swaraj initiative announced, to strengthen khadi, handloom and handicrafts.
Initiative to help in global market linkage, branding and will streamline and support training, skilling, quality of process and production.
Union Budget 2026-27 Gives Powerful Push To Infrastructure
Public capital expenditure to be increased to ₹12.2 lakh crore in FY 2026-27.
Government to set up an Infrastructure Risk Guarantee Fund to strengthen the confidence of private developers regarding risks during infrastructure development and construction phase.
Government to accelerate recycling of significant real estate assets of CPSEs through the setting up of dedicated REITs.
To promote environmentally sustainable movement of cargo, following measures are proposed:
i) New Dedicated Freight Corridors to be established connecting Dankuni in the East, to Surat in the West
ii) 20 new National Waterways (NW) to be operationalised over next 5 years, starting with NW-5 in Odisha to connect mineral rich areas of Talcher and Angul and industrial centres like Kalinga Nagar to the Ports of Paradeep and Dhamra.
* Training Institutes to be set up as Regional Centres of Excellence for development of the required manpower.
* Further, a ship repair ecosystem catering to inland waterways to be set up at Varanasi and Patna
iii) A Coastal Cargo Promotion Scheme to be launched for incentivising a modal shift from rail and road, to increase the share of inland waterways and coastal shipping from 6% to 12 % by 2047.
* Incentives to be provided to indigenize manufacturing of seaplanes and enhance last-mile and remote connectivity, and promote tourism.
* Seaplane VGF Scheme to be introduced to provide support for operations.
Seven City Economic Regions To Be Developed
Seven City Economic Regions were announced in the Union Budget 2026-27.
These regions target Tier-2, Tier-3 cities, and temple towns to boost growth through modern infrastructure.
Each will receive ₹5,000 crore over five years via a public-private partnership model with reform-based financing.
Seven City Economic Regions Are: Bengaluru, Pune, Surat, Varanasi, Visakhapatnam, Bhubaneswar-Puri-Cuttack (tricities), and Coimbatore-Erode-Tiruppur (tricities).
Seven High-Speed Rail Corridors To Be Developed
As per announcement in Union Budget 2026-27, the Government will develop Seven High-Speed Rail corridors between cities as ‘growth connectors’ to promote environmentally sustainable passenger systems. These include:
Mumbai-Pune
Pune-Hyderabad,
Hyderabad-Bengaluru,
Hyderabad-Chennai
Chennai-Bengaluru,
Delhi-Varanasi,
Varanasi-Siliguri.
Union Ministers Hail Union Budget 2026-27
Union Minister Kiren Rijiju has termed the Union Budget 2026-27 as growth and development-oriented. Talking to reporters outside Parliament, Mr Rijiju said that it is not a political budget but has a vision of Viksit Bharat. He said that the budget is focusing on the people of the country.
Home Minister Amit Shah has extended heartfelt congratulations on behalf of every Indian to Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for the Union Budget. In a series of social media posts, Mr Shah said the Union Budget reflects the vision of building a developed India by 2047 and outlines the roadmap for the next 25 years.
Union Minister Ashwini Vaishnaw has thanked Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for creating a strong foundation of growth for Viksit Bharat through the Union Budget. Talking to reporters outside Parliament, Mr Vaishnaw said that the Budget has laid emphasis on manufacturing including electronics and semiconductor manufacturing.
Defence Minister Rajnath Singh has termed the union budget 2026-27 as a budget that will fulfil the sentiments and expectations of citizens.
Union Agriculture Minister Shivraj Singh Chouhan said the Budget will change the destiny of villages, poor, agriculture and the farmers. He said to make Indian agriculture developed and farmers self-reliant, a provision of 1,62,671 crore rupees has been made in the budget for agriculture and allied sectors.
Union Minister of Road Transport and Highways Nitin Gadkari Union Budget 2026 places infrastructure at the heart of India’s journey towards Viksit Bharat by 2047. He said the Budget clearly focus on connectivity, manufacturing depth, and regional balance and outlineed a decisive push to build world-class, future-ready infrastructure.
Union Minister Jyotiraditya Scindia has commended the Union Budget 2026-27, stating that it focuses on every sector of the Indian economy.
Youth Affairs and Sports Minister Mansukh Mandaviya today hailed Union Budget 2026-27 as a budget that will empower the youth. Talking to media in New Delhi, Mr Mandaviya said that the budget will ensure employment of youth, improve sports infrastructure and create a robust and long-term sports ecosystem in the country through the Khelo India initiative.
Commerce and Industry Minister Piyush Goyal hailed the Union Budget 2026-27 as the foundation for Viksit Bharat 2047. Talking to media in New Delhi, the Minister said the budget lays primary focus on the manufacturing sector.
Women and Child Development Minister Annpurna Devi has said that the union budget for 2026-27 is historic in the direction of a bright future for daughters. Welcoming the Budget, the Minister said that this year’s budget reflects the government’s strong affirmation and commitment to women-led development and child well-being.