Budget 2026 in two minutes: Income tax laws will change from April 1st. Understand in two minutes how it will affect your income and savings..
Union Finance Minister Nirmala Sitharaman, while presenting the Union Budget for the financial year 2026-27 in Parliament, shared a roadmap to further strengthen the foundation of a 'Developed India'. This budget, focused on 'youth power' and economic stability, has a total outlay of approximately ₹53.5 lakh crore. The government has opened its coffers for infrastructure and manufacturing to maintain the pace of development, while also prioritizing fiscal discipline. The government has set a target of limiting the fiscal deficit to 4.3 percent of the Gross Domestic Product (GDP) for the financial year 2026-27, which is lower than the revised estimate of 4.4 percent for the current financial year.
Big relief for the common man on foreign travel and tax filing
Providing relief to common taxpayers and the middle class, the Finance Minister has taken a significant step towards making foreign travel and education more affordable. The government has proposed reducing the TCS (Tax Collected at Source) rate on the sale of foreign travel packages from the 5-20 percent slab to a flat 2 percent. The same relief has been extended to remittances sent abroad for education and medical purposes under the Liberalized Remittance Scheme (LRS), where the TCS rate will now be 2 percent. Additionally, making the tax filing process more flexible, the deadline for filing 'Revised Returns' has been extended from December 31st to March 31st. The Finance Minister also announced that the 'Income Tax Act 2025', prepared after a comprehensive review, will come into effect from April 1, 2026.
Setback for stock market traders, stricter rules on F&O and buybacks
The budget provisions have been somewhat stringent for stock market investors, especially traders. The government has announced an increase in the Securities Transaction Tax (STT) on derivatives trading. The STT on futures is proposed to be increased from 0.02 percent to 0.05 percent, and on options from 0.1 percent to 0.15 percent. In addition, income from share buybacks by companies will now be treated as 'capital gains' in the hands of shareholders and taxed accordingly. However, to prevent tax arbitrage by promoters, a provision has also been made to levy an additional buyback tax on them.
Government's Big Push on Infrastructure and Connectivity
To accelerate infrastructure development, the government has increased the capital expenditure target to ₹12.2 lakh crore in FY 2026-27, exceeding the ₹11.2 lakh crore allocation in the previous budget. To boost urban development and connectivity, a proposal has been made to develop 7 high-speed rail corridors between major cities of the country, including routes like Mumbai-Pune and Delhi-Varanasi. Furthermore, an 'Infrastructure Risk Guarantee Fund' will be established to mitigate risks in infrastructure projects, and 'City Economic Regions' will be mapped to make cities centers of economic activity.
'Reform Express' for Industry and Innovation
For industrial development and innovation, the government has made several major announcements under the 'Reform Express'. The 'Bio-Pharma Shakti' scheme has been announced to make India a hub for bio-pharma manufacturing, and the 'India Semiconductor Mission 2.0' has been launched for self-reliance in the semiconductor sector. To support the MSME sector, a dedicated 'SME Growth Fund' of ₹10,000 crore will be created, and their access to credit will be facilitated through the TReDS platform. To make healthcare affordable, 17 life-saving drugs and medicines for cancer patients have been completely exempted from basic customs duty.
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