Budget 2026

The budget 2026 took the “new year, new me” way too seriously. The new reforms have taken everybody by surprise, as they are focusing on the underprivileged this time. The Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman, presented India’s Union Budget 2026 on February 1, detailing how the government plans to manage expenditure and conserve money for the year ahead, which focuses on jobs, growth, and ease of taxation, while keeping debt in check. 

Take a deep breath, and let’s decode the budget 2026 together.

A Look Into the Budget

Before we decode the budget 2026, let’s first understand what it means. The Union Budget is India’s financial statement for the year ahead, presented by the Finance Minister in Parliament. It deftly explains how the government plans to earn and spend money, handle debts, deal with taxation, including proposals for subsidies and economic reforms. Basically, the Union Budget reflects the government’s priorities and presents a roadmap for growth, development, and fiscal stability.

What does the New Budget Offer?

According to Nirmala Sitharaman, the new budget has drawn inspiration from the three core kartavya (duty). The very first is to prioritise the poor, underprivileged, and disadvantaged. 

The second is to work on the economic growth, job creation, capital expenditure, manufacturing, MSMEs, infrastructure, enhancing productivity, and strengthening India’s competitiveness.

The third is to build India’s economic foundation for the future, structural reforms, regulatory simplification, fiscal consolidation, and long-term stability aligned with the vision of Viksit Bharat.

Therefore, the new budget provides hope for the poor and a promising future for India.

Budget 2026 Highlights

Budget Indicator	Amount
Capital Expenditure	₹11.21 lakh crore
Effective Capital Expenditure (including asset creation)	₹15.48 lakh crore
Fiscal Deficit	₹15.69 lakh crore (4.4% of GDP)
Revenue Deficit	₹5.24 lakh crore (1.5% of GDP)
Gross Tax Revenue	₹42.7 lakh crore
Net Tax Revenue to the Centre	₹28.37 lakh crore
Non-Tax Revenue	₹5.83 lakh crore
Total Transfers to States & UTs	₹25.6 lakh crore
Nominal GDP (FY26)	₹356.97 lakh crore
Interest Payments	₹12.76 lakh crore
Total Expenditure	₹50.65 lakh crore

Now that we know what the 2026 budget aims for, let’s take a look at the major highlights, starting with the figures that are most likely to dominate all other discussions in the coming days. Taxation Policy

This new budget introduces major taxation changes that every taxpayer must know. Let’s list them down for better understanding:

Taxation of Sovereign Gold Bond (SGB)

SGB is a government security issued by the RBI which was discontinued in Budget 2024. Till now, the capital gains on Sovereign Gold Bond (SGBs) were tax-free if you held them till maturity, irrespective of the place from where you bought it. However, from April 1, 2026, the tax exemption will only be applicable if you are an individual investor, have subscribed to SGB during the time of issuance, and hold it till maturity.

Your gains will also remain tax-free if you purchase SGBs directly from the government and hold them for the full tenure. Note: the capital gains tax will apply according to the normal rules upon buying SGBs from any secondary market, though.

Change in Options & Futures

Higher Securities Transaction Tax (STT) is apparently the key highlight of the budget 2026. The government has decided to raise the STT on equity derivatives, which increases the direct cost of every futures and options trade. The exact changes are:

• STT on futures hiked to 0.02% to 0.05%.
• STT on options premium hiked to 0.15%.

This change is a structural cost increase that lowers profits for traders engaging in numerous F&O trades.

Buyback of Shares

The buyback shares were treated like dividends before the budget 2026; however, now, they won’t be taxed as dividends. The tax will be applicable only on the actual gains and not the complete amount.

There’s more to it; the promoters will have a distinct tax slab for buybacks. For individuals, the gains from buybacks will be subject to a 30% tax. Whereas, for companies, the effective tax rate would be 22%.

NRI Property Clauses

Another big change is that you don’t need to obtain a TAN to deduct TDS when purchasing an immovable property from an NRI seller. Nevertheless, TDS on property purchases from NRIs is still applicable.

NRI & PROI Investments

The budget has also brought a major reform for overseas investors. The NRIs and the residents living abroad can now invest more effectively in Indian equities through portfolio routes. Plus, the individual PROI investment has increased from 5% to 10%, and the overall PROI has risen from 10% to 24%.

This change will boost foreign participation, improving liquidity and supporting long-term equity market growth.

Changes in Income Tax Procedures

The budget 2026 has extended the deadline to file a revised ITR from December 31 to March 31, after paying a nominal fee. Also, the pre-deposit for filing a tax appeal is brought down from 20% to 10% of the core tax demand.

Capital Expenditure

For FY27, the government has earmarked Rs 12.2 lakh crore for capex, which is directed towards long-term assets such as roads, railways, power, defence, and infrastructure. Unlike daily expenditure, this investment builds capacity, creates jobs, and fuels sustainable economic growth. 

This will eventually boost employment and productivity, support infrastructure, capital goods, and PSU banking stocks, and focus on creating long-term wealth.

The Impact on the Market

Now, the STT on futures hiked to 0.02% to 0.05%, and the STT on options premium raised to 0.15%. Apparently, this hike has led to instant market reactions.

Investor Compliance Relief

The compliance depositories will now be permitted to accept Form 15G/15H centrally and pass it directly to legitimate companies. It cuts repetitive paperwork, reduces compliance burden, and makes the system more investor-friendly.

Stricter Penalties for Misreporting

The government has also drawn a clear line on tax compliance. Misreporting of income will result in a penalty equal to 100% of the tax amount, further reinforcing the importance of transparency.

Changes in TCS

The Tax Collected at Source (TCS) on overseas tour packages has been significantly reduced. Earlier ranging between 5% and 20%, the TCS rate has now been brought down to 2 per cent, easing the cost for international travellers.

New TCS rates have been introduced for foreign travel undertaken for medical treatment and education purposes. These changes aim to create a more targeted and rational tax collection framework for such essential expenses.

Key Sector in Focus

The government has also mapped out ways to enhance sectors, like Sports, Design, Orange Economy, AYUSH, Care Ecosystem, Health, and Service Sector.

For those who don’t know what an Orange Economy is, it’s basically a wide variety of knowledge and culture-based activities, alluding to culture, creativity, technology, and intellectual property, economic, social, and cultural value.

Key Schemes That Drew Attention

This budget introduced 8 fascinating schemes that drew everybody’s attention, like:

• Semiconductor Mission 2.0 for funding equipment and Indian tech designs.
• It announced Rs 10,000 crore outlay for the Biopharma Shakti Scheme.
• It introduced the Divyangjan Kaushal Yojana to create employment opportunities and skill development for disabled people.
• The budget has also made an initiative to introduce the Mahatma Gandhi Gram Swaraj to enhance Khadi production.
• The government has increased electronic expenditure to Rs 40,000 crore.
• They are planning on introducing a new scheme to boost container manufacturing in India.
• Odisha, Tamil Nadu, Andhra Pradesh, and Kerala will get special corridors for rare earth minerals to support research and mining activities.
• ISM 2.0 has been launched as the next phase to make semiconductor equipment and materials in India, develop end-to-end Indian technology, and strengthen the semiconductor supply chain.

A Quick Breakdown of Price Changes Announced in Budget 2026

The new budget isn’t just redefining the future of India but also shaping your expenses and lifestyle. 

For instance, the prices of some products went down, like leather goods and footwear, seafood, cancer medicine, foreign tour packages, studying abroad, electronics, biofuel, aircraft and aeroplane parts, sports equipment, and solar panels and EV batteries.

On the other hand, the cost of coal, scrap, liquor, and stock market trading may increase due to higher taxes or levies.

Also, check – Why Insurance is Being Sold as Investments

On a Parting Note

This new budget will raise the prices of liquor, cigarettes, coal, etc., while cutting down the cost of healthcare, education, travel, and more. Therefore, the government has worked on the upliftment and betterment of poor and downtrodden people. The impact of the budget 2026 will impact households through cheaper medicines, easier spending, and lower costs.

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Disclaimer – This article is for educational purposes only and does not intend to substitute expert guidance. Mutual fund investments are subject to market risks. Please read the scheme-related document carefully before investing.