Union Budget 2026 Highlights: Key Announcements, Tax, Capex & Sectors

Union Finance Minister Nirmala Sitharaman presented the Union Budget 2026 in Parliament on February 1, 2026, at 11:00 AM, marking her ninth consecutive budget presentation. Her budget speech lasted approximately 85 to 90 minutes, during which she clearly outlined the country’s economic direction and the government’s priorities. This budget was not merely a presentation of figures, but was also linked to the vision of a developed India (Viksit Bharat) by 2047.

The main focus of this budget was on economic growth, increasing investment, maintaining fiscal stability, strengthening the manufacturing sector, the MSME sector, and healthcare services. The government aims to create new employment opportunities while maintaining the stability of the country’s economy and strengthening India’s position on the global stage.

The Union Budget 2026 is extremely important for ordinary citizens, businesses, investors, states, and the entire economy, as it sets the direction for policies and expenditures for the coming year.

Union Budget 2026: Key Highlights

Key areas / indicators	Budget 2026 announced
Public capital expenditure (Public Capex)	₹12.2 lakh crore for the financial year 2026–27.
Fiscal Deficit	4.4% of GDP
Debt-to-GDP ratio	55.6%
Income tax slabs	No changes were made.
Cancer medications	No changes were made.
High-speed rail corridor	Seven new high-speed rail corridors will be built in the country.
Semiconductor Mission	The launch of ISM 2.0, with a budget of ₹40,000 crore.
MSME Growth Fund	A new fund of ₹10,000 crore for small industries.
Rare Earth Corridor	Special corridors in Tamil Nadu, Kerala, Odisha and Andhra Pradesh.
Bio-Pharma Power Plan	A new scheme has been launched with an investment of ₹10,000 crore.
Carbon Capture Fund	₹20,000 crore for the steel and cement sectors.
The share received by the states	₹14 lakh crore (41% of total tax transfers)
Electronics Manufacturing	The budget has been increased to ₹40,000 crore.
Textile Park	Large mega textile parks will be built in the country.
Freight Corridor	New freight train corridor from Dankuni (West Bengal) to Surat
Ayurvedic AIIMS	3 new Ayurvedic AIIMS will be established.
Medical tourism	Five regional medical tourism hubs will be created.
Women’s entrepreneurship	The launch of SHE (Self Help Entrepreneur) stores.
Urban development	₹5000 crore per city (over 5 years) for City Economic Regions.
Coastal Cargo Scheme	Increase the share of waterways and coastal shipping from 6% to 12% (by 2047).
Developed India Goal	All schemes are linked to the Viksit Bharat 2047 vision.

Income Tax & Direct Tax Announcements

In the Union Budget 2026, the government has focused on simplifying and streamlining the tax system rather than changing tax rates. Finance Minister Nirmala Sitharaman clearly stated that there have been no changes to the income tax slabs this year, but the rules and procedures have been simplified for the convenience of taxpayers.

1. No Change in Income Tax Slabs : The income tax slabs have been kept unchanged in Budget 2026. The government believes that maintaining stability in tax rates is better than making changes in the current economic climate. This will ensure fiscal discipline and allow for continued spending on development-related schemes.
2. Tax Filing Process Simplified : For the convenience of taxpayers, the deadline for filing revised returns has been extended from December 31st to March 31st. Additionally, rules related to TDS on property sales for NRIs have been simplified, and the deadlines for filing returns for different categories have been clarified to avoid confusion for taxpayers.
3. Relief in TCS on Foreign Expenditure : The Tax Collected at Source (TCS) on remittances for foreign travel, education, and medical treatment has been reduced to 2 percent. This will provide direct relief to students, patients, and other individuals traveling abroad, reducing their additional expenses.
4. Foreign Asset Declaration Scheme : This budget introduces a six-month foreign asset declaration scheme. This scheme is specifically for individuals who have lived abroad for education or work and may have inadvertently failed to properly declare their tax-related information. They can now declare their foreign assets and regularize their tax status.

Healthcare & Pharma Focus

1. Relief on Cancer Medicines : Customs duty has been completely waived on 17 cancer medicines. In addition, import duties have been exempted on medicines and medical food used in the treatment of 7 rare diseases, making treatment more affordable for patients.
2. New Medical Institutions : Three new Ayurvedic AIIMS (All India Institute of Medical Sciences) will be established in the country. A proposal has been made for the establishment of NIMHANS-II to strengthen mental health services in North India.
3. Bio-Pharma Shakti Scheme : A “Bio-Pharma Shakti” scheme with an outlay of ₹10,000 crore has been launched to promote the bio-pharma sector. Its objective is to strengthen research, drug manufacturing, and innovation.
4. Medical Tourism : Five regional medical tourism centers will be established to make India a medical tourism hub.

Read Also: Union Budget 2026 Expectations: Tax Relief, Sector Boosts & Market Impact

Infrastructure Push: Rail, Freight & Cities

In the Union Budget 2026, the government has prioritized the infrastructure sector to accelerate connectivity and urban development. New high-speed rail corridors, freight networks, and the development of Tier-2 and Tier-3 cities will directly benefit trade, employment, and regional economies.

1. High-Speed ​​Rail and Freight Corridors

The country plans to build seven high-speed rail corridors to facilitate faster travel between major industrial and IT cities and boost trade.

Key Routes:

• Mumbai – Pune
• Pune – Hyderabad
• Hyderabad – Bengaluru
• Bengaluru – Chennai

In addition to this, a new dedicated freight corridor will be built from Dankuni in West Bengal to Surat in Gujarat. This will expedite freight movement and reduce logistics costs.

2. Investment in Cities

The government aims to develop Tier-2 and Tier-3 cities as new economic hubs. City Economic Regions (CERs) will be created for this purpose, with each region receiving approximately ₹5000 crore in investment over the next five years. The objective is to strengthen road, transport, and trade infrastructure.

Manufacturing & Technology Focus: From Chips to Textiles

The government has launched the India Semiconductor Mission 2.0 with a budget of ₹40,000 crore to accelerate chip manufacturing and research. The outlay for electronics manufacturing, including mobile phones and electronic components, has also been increased to ₹40,000 crore. In addition, large-scale mega textile parks, container manufacturing units, and chemical parks will be established through a challenge-based approach, which will boost employment and strengthen domestic industries.

Key announcements

Area	Announcement
Semiconductor	India Semiconductor Mission 2.0 – ₹40,000 crore
Electronics	Manufacturing outlay: ₹40,000 crore
Textile	Mega Textile Park
Industry	Container manufacturing units
Chemical sector	New Chemical Park (Challenge Route)

Rare Earth & Clean Energy Corridors

The 2026 budget places a strong emphasis on rare earth minerals and clean energy to strengthen the EV and renewable energy supply chains. The aim is to make India self-reliant in future technologies.

Rare Earth Corridor (State-wise)

State	Initiative
Odisha	Rare Earth Corridor
Kerala	Rare Earth Corridor
Tamil Nadu	Rare Earth Corridor
Andhra Pradesh	Rare Earth Corridor

Important announcements related to clean energy

• Exemption from customs duty on raw materials for sunglasses.
• Customs duty exemption on products of lithium-ion battery companies.
• A fund of ₹20,000 crore for carbon capture in the steel and related sectors.

MSMEs & Employment Generation

Several practical steps have been announced to strengthen MSMEs, women’s entrepreneurship, and skill development.

Initiative	Description
MSME Growth Fund	A fund of ₹10,000 crore has been created to enable small industries to expand and create new jobs.
SHE Stores	Community-owned retail stores for women, where they can sell their products.
ICAI and ICSI Support	Short-term modular courses that provide young people with industry-ready skills.
Mahatma Gandhi Gram Swaraj Initiative	Scheme to promote rural industries, khadi and handicrafts.

Tourism, Culture & Sports Development

Budget 2026 emphasizes connecting the tourism and sports sectors with employment generation and regional development.

Key Announcements –

1. National Institute of Hospitality : A national institute will be established for the tourism and hospitality sector to strengthen skill development and training.
2. Development of Buddhist Circuit : Buddhist circuits will be developed in Andhra Pradesh, Sikkim, Mizoram, and Tripura, promoting religious tourism and boosting the local economy.
3. Bird Watching Trails : Bird-watching trails will be created in the Pulicat Lake region of Andhra Pradesh and Tamil Nadu to promote eco-tourism.
4. Khelo India Mission (10-year roadmap) : A plan to nurture sporting talent over the next 10 years, focusing on training centers, sports science, and infrastructure.
5. Global Big Cat Summit : India will host the Global Big Cat Summit for the first time, with representatives from approximately 95 countries participating.
6. Medical Tourism Hubs : Five regional medical tourism hubs will be established in the country to develop India as an affordable and reliable medical treatment destination.

Conclusion

The Union Budget 2026 is a budget focused on accelerating growth, strengthening manufacturing, and prioritizing healthcare. Its vision is clearly aligned with the goal of a developed India by 2047 (Viksit Bharat 2047). The government has pushed for increased investment in infrastructure, industry, and social sectors while maintaining a balance between growth and fiscal discipline. Overall, this budget can be considered a solid step towards long-term economic stability and inclusive development. Stay updated with the latest market information – download Pocketful and begin your investing journey with zero brokerage.

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