Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 today, marking her record ninth consecutive presentation. While the middle class was eyeing major tax breaks, the government stayed the course on fiscal consolidation, focusing heavily on infrastructure and domestic manufacturing instead. The total budget size is pegged at Rs 53.5 lakh crore, with a significant push toward a capital expenditure (Capex) target of Rs 12.2 lakh crore.
Income Tax: No Changes in Slab Rates
In a move that might leave salaried professionals wanting more, the Finance Minister has kept the income tax slabs unchanged for the financial year 2026-27. The New Tax Regime remains the default option, offering a standard deduction of Rs 75,000 and zero tax for income up to Rs 12 lakh (inclusive of rebates). Analysts might read this as a signal that the government is prioritizing stability over populist sops ahead of the upcoming fiscal cycle.
- ITR Revision: The deadline to revise income tax returns has been extended to March 31 with a nominal fee.
- TDS Relief: Tax Deducted at Source on interest awarded by motor accident claims tribunals has been removed.
- New Act: The new Income Tax Act, 2025, is set to take effect from April 1, 2026.
What Gets Cheaper and Costlier?
The budget brought immediate relief to patients and travelers but added a “sin tax” burden elsewhere. The reduction in Tax Collected at Source (TCS) for overseas tour packages from 5%–20% down to a flat 2% is a massive win for the tourism industry.
Cheaper:
- 17 essential Cancer drugs (Basic Customs Duty fully exempted).
- Medicines for 7 rare diseases.
- Mobile phones and tablets (due to local manufacturing push).
- Foreign education remittances (TCS reduced to 2%).
- Microwave oven components and aircraft parts.
Costlier:
- Imported umbrellas and ATM machines.
- Luxury watches and imported alcoholic beverages.
- Stock market trading: STT on futures hiked to 0.05% and options to 0.15%.
- Coffee roasting and brewing machines (exemptions removed).
Manufacturing and State Devolution
The PLI scheme for Auto and Auto Components saw its allocation nearly double to Rs 5,940 crore, aiming to de-risk supply chains from China. Interestingly, the budget also revealed a shift in state funding. Under the 16th Finance Commission, Karnataka is set to receive Rs 63,049 crore in tax devolution, which remains lower than the allocation for Andhra Pradesh, a point likely to spark political debate in the coming days.
“Historically, such moves have meant a “wait-and-watch” approach for the stock market, which reacted sharply to the STT hike during the speech.”
Figures may shift once official updates and fine-print notifications arrive from the Ministry of Finance. For now, the strategy is clear: build the nation’s “bones” via infrastructure while keeping the tax structure predictable.
What to do now: Since tax slabs haven’t changed, focus on maximizing the Rs 75,000 standard deduction if you are in the New Regime. If you are an active F&O trader, factor in the higher STT costs into your strategy immediately, as these will eat into high-frequency trading margins.
Written by: Anil Sinha – Business Reporter – News Hours18 – https://www.newshours18.com
FAQ
Q: Is there any change in the income tax slabs for 2026?
A: No, the Finance Minister has kept the income tax slabs and rates unchanged for the FY 2026-27.
Q: Why did the stock market fall during the Budget speech?
A: The market reacted negatively to the hike in Securities Transaction Tax (STT) on futures and options trading.
Q: Which items became cheaper in Budget 2026?
A: Critical items like 17 cancer drugs, medicines for rare diseases, microwave parts, and foreign tour packages became cheaper.
Disclaimer: This summary is based on the initial Union Budget 2026 announcements. Please consult a financial advisor for specific tax planning. Figures are subject to official Gazette notifications.
