Highlights from Union Budget of India 2026
The India Union Budget 2026-27, presented by Finance Minister, focuses on long-term structural reforms, fiscal stability, and a transition from economic scale to efficiency. The economy shows resilience with an estimated real GDP growth of 7.4% for FY26 and a projected growth of 6.8–7.2% moving forward. A central pillar of this budget is the implementation of the Income-tax Act, 2025, which replaces the 1961 Act to simplify tax laws starting April 1, 2026. While personal income tax slabs and rates remain unchanged for the 2026-27 tax year, the budget introduces several compliance-friendly measures. These include extending the deadline for revised tax returns by three months and introducing a voluntary disclosure scheme for small taxpayers with foreign assets to regularize undisclosed income without penalties.
On the regulatory and industrial front, the government is revamping the Non-Debt Instruments Policy to boost foreign investment and capital markets. Significant support is directed toward making GIFT City a global financial hub by extending its tax holiday to 20 years. The budget also emphasizes technology and manufacturing, offering tax holidays for foreign companies providing data center services and tools to contract manufacturers in India. Industrial momentum is supported by the National Manufacturing Mission and PLI schemes, with high-technology industries now making up over 46% of manufacturing value added. Furthermore, the budget outlines a strategic approach to AI, focusing on a multi-sectoral, employment-generating model tailored to India’s specific economic needs.
Indirect tax reforms are centered on creating a technology-driven, "low-friction" customs ecosystem through the new Customs Integrated System. This digital platform aims to automate approvals and integrate processing to improve the turnaround time for shipments. Targeted incentives have also been introduced for labor-intensive sectors such as electronics, aerospace, renewable energy, and footwear to enhance domestic manufacturing and export competitiveness. Additionally, the budget rationalizes prosecution proceedings for tax defaults, replacing rigorous imprisonment with simple imprisonment and decriminalizing minor offenses where the tax evaded is under INR 10 lakhs. Overall, the budget prioritizes a predictable regulatory landscape and deeper global integration through milestones like the Free Trade Agreement with the European Union.
