Union Budget 2026-27 Highlights: Key Takeaways and Tax Changes

The Union Budget 2026-27, presented on February 1, 2026, focuses on “Yuva Shakti-driven growth” through record capital expenditure and structural reforms aimed at a “Viksit Bharat” by 2047. Finance Minister Nirmala Sitharaman raised the capex target to a historic ₹12.2 lakh crore (4.4% of GDP) for FY 2026-27, emphasizing infrastructure and domestic manufacturing. While income tax slabs remained unchanged, the budget introduced the Income Tax Act, 2025, to simplify the six-decade-old tax code starting April 1, 2026. 

Market Impact and Key Indicators

On February 2, 2026, Indian equity markets are attempting to recover from a 2% crash on Budget day, triggered by a significant hike in the Securities Transaction Tax (STT) on derivatives. 

Sensex : 

Recovered slightly to trade at 81,024.94 (+302 pts) in early trade on February 2, after falling over 1,500 points on Sunday.

Nifty 50 : 

Trading near 24,884.70 (+59 pts) as of 10:20 AM, February 2, attempting to hold technical support after slipping below 25,000.

Rupee : 

Rose 18 paise to 91.75 against the US dollar in early Monday trade.

Fiscal Deficit : 

Targeted at 4.3% of GDP for FY27, down from 4.4% in the previous fiscal. 

Key Budget Highlights

Taxation & Compliance :

• STT Hike: Raised to 0.05% on futures and 0.15% on options to curb speculative trading.
• TCS Relief: Tax Collected at Source on overseas tour packages and LRS for education/medical remittances reduced to a flat 2%.
• Buyback Tax: Proceeds will now be taxed as Capital Gains for shareholders, with additional levies for promoters.

Infrastructure & Transportation :

• Railways: Allocated a record ₹2.77 lakh crore for capital expenditure.
• High-Speed Rail: Development of seven new corridors, including the Varanasi-Siliguri line.
• Waterways: 20 new National Waterways to be operationalised over 5 years.

Sectoral Missions :

• Biopharma SHAKTI: Launched with a ₹10,000 crore outlay to make India a biologics manufacturing hub.
• Semiconductors: ISM 2.0 announced to strengthen domestic chip supply chains.
• Electronics: Outlay for the Electronics Components Manufacturing Scheme increased to ₹40,000 crore.

Social & Rural Initiatives :

• VB-G RAM G Scheme: Allocated ₹95,692.31 crore for rural development.
• Agriculture AI: Launch of ‘Bharat-VISTAAR’, a multi-lingual AI tool to provide customised advisory to farmers.
• SHE-Marts: Community-owned retail outlets to be established to boost rural women-led enterprises. 

What is Cheaper/Dearer?

• Cheaper: Cancer and rare disease drugs (17 categories), lithium-ion cells, solar glass inputs, textile garments, and seafood products.
• Dearer: F&O trading (due to STT), share buybacks (for promoters), and specific minerals like coal/iron ore due to rationalised TCS.