Union Budget 2026 Highlights: FM Nirmala Sitharaman Concludes Her Speech; Key Announcements, Major Reforms, Income Tax Changes, Sector-Wise Allocations & Policy Moves

• Exempt basic customs duty (BCD) on raw materials imported for MRO (Maintenance, Repair, and Overhaul).

• Reduce BCD for components and parts used in the manufacturing of civilian aircraft.

• Propose customs duty exemption on 17 drugs related to cancer treatment.

• BCD exemption for specified parts used in the manufacture of microwave ovens.

• BCD exemption for the import of capital goods required for processing crucial minerals in India.

The Finance Minister Nirmala Sitharaman delivered her Union Budget 2026 speech in the Lok Sabha, which included important proposals to strengthen India’s strategic and export industries. She proposed a basic customs duty exemption on capital goods imported for processing critical minerals, signaling strong support for domestic resource development. She extended the nuclear power project import exemption until 2035 while stating that all nuclear plants would receive benefits from the extension, which would promote energy security investments. Sitharaman raised the duty-free import limit for specific seafood processing materials from 1% to 3% of last year’s export value to assist exporters. The government has expanded duty-free imports, which leather and synthetic footwear exporters already use, to include shoe uppers, which will enable more businesses to enter the market. The government intends to reduce expenses through these measures while improving market competition and helping India achieve its goal of industrial self-sufficiency.

• Sensex: Down 63.41 points (-0.08%) at 82,206.37

• Nifty: Down 57.35 points (-0.23%) at 25,263.30

• Advances: 2,080 shares

• Declines: 1,526 shares

• Unchanged: 149 shares

Sensex and Nifty traded lower in mid-session, with marginal losses of 0.08% and 0.23% respectively. Market breadth showed 2,080 advancing shares, 1,526 declining, and 149 unchanged, reflecting mixed investor sentiment.

• Tax Holiday for Cloud Services: Foreign companies providing cloud services to Indian customers to enjoy tax holiday till 2047.

• Tax on Buybacks: Buybacks to be taxed as capital gains for all categories of shareholders.

• Safe Harbour Limit for IT Services: Increased from Rs 300 crore to Rs 2,000 crore to ease compliance for IT companies.

• Income Tax Act 2025: Comes into effect from 1 April 2026, introducing simplified rules and redesigned forms.

• Direct Tax Reliefs: Includes lower TCS rates and new exemptions to reduce taxpayer burden and ambiguities.

• Motor Accident Compensation: Interest awarded by Motor Accident Claims Tribunal to natural persons exempt from income tax.

• TCS Rates Reduced: Overseas tour packages and LRS remittances for education and medical purposes now at 2%.

• Manpower Services: Supply of manpower services included under contractor payments for TDS, eliminating ambiguity.

• ITR Filing Dates: ITR-1 and ITR-2 deadline July 31; non-audit business entities and trusts can file by August 31.

• Foreign Investment Expansion: Individual PIO equity limit raised from 5% to 10%; combined PIO cap increased from 10% to 24% to encourage long-term capital formation.

• Bond Market Deepening: Market-making framework for corporate bonds introduced; total return swaps to align foreign investment with economic priorities.

• Sector-Specific Boosts: ₹10,000 crore for Biopharma Shakti; ₹40,000 crore for electronics manufacturing; stocks like Sun Pharma, Dixon Technologies, Amber Enterprises rose.

• Fiscal Prudence: Fiscal deficit pegged at 4.3% of GDP for FY27, signaling stability.

• F&O Trading: No ban proposed; investors urged to understand risks as 91% of retail traders incurred losses in FY25.

• Retail as Market Stabilizer: Domestic investors praised for countering FII outflows and stabilizing markets during volatility.

• Market Performance: Sunday session showed flat opening; BSE Sensex at 82,376 (+0.13%), NSE Nifty 50 near 25,324; power sector stocks REC and PFC surged 4%.

“I propose to set up three new All India Institutes of Ayurveda; Upgrade Ayush pharmacies and drug testing labs and make available more skilled persons; Upgrade the WHO global Traditional Medicine Centre in Jamnagar,” said Sitharaman.

Finance Minister Nirmala Sitharaman, presenting the Union Budget 2026, announced the launch of India Semiconductor Mission (ISM) 2.0 with an outlay of Rs 40,000 crore to boost the semiconductor sector. Building on Phase 1 gains, ISM 2.0 will focus on manufacturing equipment and materials, full-stack chip design, domestic intellectual property, and supply chain reinforcement. The mission also includes industry-led research and training centres to develop a skilled talent pool. Additionally, the ‘Shakti’ initiative was unveiled with Rs 10,000 crore over five years to support the broader semiconductor ecosystem, strengthening India’s position as a global semiconductor hub.

While Tabling The Union Budget 2026, Finance Minister Nirmala Sitharaman Said “Public capital expenditure has increased manifold from 2 lakh crore in 2014-15 to an all-occupation of 11.2 lakh crore in BE 25-26. In this coming year, that is, financial year 2026-27, I propose to increase it to 12.2 lakh crores to continue the momentum. To strengthen the confidence of private developers regarding risks during infrastructure development, and construction phase, I propose to set up an infrastructure risk guarantee fund to provide prudentially calibrated public credit guarantee to lenders. Over the years, rights have emerged as a successful instrument for asset monetization. I propose to accelerate recycling of significant real estate assets of the CPSEs through the setting up of dedicated rights. To promote environmentally sustainable movement of cargo, I propose two. One, establish new dedicated freight corridors connecting Dangkuni in the east to Surat in the Infrastructure Risk Guarantee Fund: New prudentially calibrated public credit guarantee mechanism to support lenders during infrastructure development.”

• Scaling up manufacturing in seven strategic and frontier sectors

• Rejuvenating legacy industrial sectors to modernize traditional industries

• Creating champion MSMEs to boost entrepreneurship and innovation

• Delivering a powerful push for infrastructure development

• Ensuring long-term security and stability in economic and industrial sectors

• Developing city-economic regions to promote industrial clusters and regional growth

Finance Minister Nirmala Sitharaman says achieving the three Kartavyas in Budget 2026-27 requires more than policy—it needs a tech-powered ecosystem. AI functions as India’s hidden engine, driving economic development through enhanced work efficiency and improved public sector operations. The combination of artificial intelligence with ongoing financial system improvements and effective banking operations will enable India to develop at a faster pace while achieving its development targets across all regions of the country. The message is clear: in Budget 2026, AI serves as a fundamental requirement that must be fulfilled.

• Finance Minister Nirmala Sitharaman describes Union Budget 2026-27 as a unique yuva shakti-driven Budget.

• Government’s focus is on the poor, underprivileged, and disadvantaged.

• Guided by three Kartavyas (duties):

  • Accelerate and sustain economic growth, enhance productivity and competitiveness, and build resilience against global volatility.

  • Fulfil aspirations of citizens by building capacity and making them partners in India’s prosperity.

  • Ensure access to resources, amenities, and opportunities for meaningful participation across all families, sectors, and regions.

BJP MP Kanagana Ranaut says, “I expect that we will move closer to India’s goal of becoming a developed nation.”

Finance Minister Nirmala Sitharaman emphasized the strategic importance of the semiconductor sector, highlighting initiatives to boost domestic manufacturing, attract global investments, and reduce import dependence. Additionally, the government plans to support rare earth mineral development in Odisha, Kerala, and Tamil Nadu, establishing a dedicated rare earth mineral corridor to strengthen critical supply chains, promote technological self-reliance, and secure long-term growth in high-tech industries.

Finance Minister Nirmala Sitharaman highlighted the bio-pharma sector, emphasizing its critical role in addressing current and future health crises. She outlined policy support, investment opportunities, and strategic initiatives aimed at strengthening India’s healthcare infrastructure, boosting domestic production, and ensuring long-term resilience in the pharmaceutical and biotechnology industries.

The ninth consecutive Union Budget presentation by Finance Minister Nirmala Sitharaman highlighted that Atmanirbharta, India’s self-reliance initiative, enables the government to achieve its 7% growth target. She explained that India must maintain strong global market connections, as current worldwide conditions are obstructing trade and multilateral activities, while resource and supply chain disruptions continue. Exports need to increase, and the country should attract long-term investments to drive economic development.

According to Sitharaman, the Indian economy has maintained stability, fiscal discipline, and moderate inflation since the Modi government took office. The Finance Minister’s statement reflects two key objectives: developing self-sufficiency and maintaining robust international economic relationships. India’s economic strategy focuses on domestic development to strengthen industrial capacity, enabling the nation to compete globally. This approach prepares the country to manage future challenges while seizing new opportunities in the coming years.

PM Narendra Modi Reached Parliament Ahead Of Union Budget 2026

The Finance Minister Nirmala Sitharaman wore a special outfit which attracted attention when she entered Kartavya Bhawan to present the Union Budget 2026-27. Sitharaman appeared in a stunning magenta kasuti saree which displayed traditional Indian handloom fashion that captured the attention of all who passed by and the news photographers who were present.

Read More: Union Budget 2026 Fashion Statement: Traditional Elegance As FM Nirmala Sitharaman Stuns In Magenta Kanchipuram Saree, Check Photos

President Droupadi Murmu offered traditional dahi-cheeni to Finance Minister Nirmala Sitharaman ahead of Budget 2026, symbolising good luck before the historic ninth consecutive Union Budget presentation.

Union Finance Minister Nirmala Sitharaman is all set to unveil her ninth consecutive Union Budget today at 11 am. As the country waits with bated breath, taxpayers and the public brace themselves for a pause in endless speculation, time to see which policies sparkle, which surprises sting, and which numbers truly count!

Union Finance Minister Nirmala Sitharaman met with President Droupadi Murmu before presenting her ninth consecutive Union Budget. The pre-Budget meeting, following established customs, underscores the importance of Budget 2026-27, which will introduce major policy changes, financial reforms, and new programs that will shape India’s future development path.

Domestic stock markets opened largely flat today during the special budget session. The Nifty 50 index started at 25,333.75, gaining 13.10 points, a 0.05% increase, while the BSE Sensex opened at 82,445.97, rising 176.19 points, a 0.21% gain. Investors remained cautious, awaiting key announcements and financial policies in the Union Budget.

The markets on Dalal Street opened with a cautious approach during their first trading day of the week because pre-opening trade showed only small market improvements. The markets declined on Friday because investors prepared for the Union Budget 2026–27. The Sensex dropped 400 points to 82,165 while the Nifty fell below 25,280 because investors showed apprehension about Finance Minister Nirmala Sitharaman’s upcoming important speech on Sunday.

Read More: Stock Market Today: Dalal Street on Alert, Markets Open Cautiously Ahead of Union Budget 2026 Amid Pre-Budget Caution and Global Cues

Travelers look forward to tax relief, improved rail services, and better connectivity as the Union Budget 2026 is expected to address commuter concerns and enhance transport infrastructure nationwide.

On Saturday, January 31, 2026, Commerce and Industry Minister Piyush Goyal expressed his belief that Finance Minister Nirmala Sitharaman would present a strong Union Budget 2026-27 on February 1. He pointed out that Prime Minister Narendra Modi and FM Sitharaman have delivered excellent Budgets throughout their tenure, and this Budget would follow the same pattern as it marks her ninth consecutive budget presentation. Goyal explained that the Modi government has provided continuous support to MSMEs through multiple initiatives and programs, demonstrating their ongoing commitment to developing small businesses and fostering entrepreneurial opportunities.

Sunday is traditionally a day of rest for Dalal Street. Today, that tradition is being broken. In a rare and historic moment, the Indian stock market opens on Sunday, February 1, 2026, to coincide with the presentation of the Union Budget 2026–27 by Union Finance Minister Nirmala Sitharaman.

Read More: Stock Market Today: For the First Time in History, Dalal Street Breaks Its Sunday Off Record, Markets Open as India Awaits Union Budget 2026

Will There Be A Tax Cut In Budget 2026?

Tax experts broadly agree that the government is unlikely to make sweeping changes to the old personal income tax regime. Instead, the policy direction is expected to continue nudging taxpayers towards the new tax regime, which has already undergone extensive reforms over successive Budgets.

Over the past few years, the government introduced lower slab rates, higher rebates, and simplified compliance structures under the new regime, positioning it as a long-term structural reform rather than a temporary relief measure.

Read More: Tax Cuts In Union Budget 2026? Here’s What Nirmala Sitharaman May Announce For Salaried Taxpayers

As the Finance Minister begins her speech at 11:00 AM IST, taxpayers, businesses, and investors are watching closely for key announcements.

Income Tax Relief

• Increase in the standard deduction for salaried taxpayers

• Possible hike in the 30% income tax slab threshold to ₹30 lakh

• Potential boost to disposable income and consumer demand

Infrastructure and Logistics Push

• Continued focus on PM Gati Shakti

• Increased spending on railways and freight corridors

• Expansion of high-speed and logistics infrastructure

• Aim to reduce logistics costs, currently around 8% of GDP, and enhance global competitiveness

AI, Technology and Future Skills

• Launch or expansion of AI skilling initiatives

• Incentives for indigenous semiconductor and electronics manufacturing

• Support for deep-tech startups and digital infrastructure

• Strengthening India’s position in the global technology supply chain

Rural Economy and Social Welfare

• Expansion of rural employment schemes such as VB G-RAM-G

• Possible restructuring or enhancement of MGNREGA

• Focus on productive employment, skill development, and rural asset creation

Key Sectors in Focus

• Boost to manufacturing and MSMEs through expanded PLI schemes

• Increased allocation for renewable energy and green infrastructure

• Easier credit access for small businesses and entrepreneurs