Highlights of Union Budget 2026–27

Budget Vision & Framework

The Union Budget 2026–27 is anchored on three Kartavyas (responsibilities):

• Accelerating and sustaining economic growth by enhancing competitiveness
• Fulfilling the aspirations of the people
• Ensuring equitable access to resources and opportunities for every family, community, and region

Strategic Minerals & Industrial Development

Rare Earth Corridors to be established in mineral-rich states:

• Odisha
• Kerala
• Andhra Pradesh
• Tamil Nadu

₹10,000 crore allocation proposed for the biopharma sector.

Government proposes targeted interventions across six sectors, including:

• Manufacturing
• Strategic and frontier sectors
• Healthcare
• Advanced technology

Textiles, MSMEs & Traditional Industries

Launch of Mahatma Gandhi Gram Swaraj Initiative to strengthen:

• Khadi
• Handloom sector

Proposal to establish Mega Textile Parks with emphasis on:

• Value addition
• Technical textiles

Chemicals & Electronics Manufacturing

Proposal to set up three dedicated Chemical Parks to:

• Enhance domestic production
• Reduce import dependency

Outlay for electronics manufacturing proposed to be increased to ₹40,000 crore.

Urban Development & Infrastructure

Continued focus on infrastructure development in:

• Tier-2 cities
• Tier-3 cities
• Temple towns

Proposal to establish a high-level committee on banking reforms aligned with the vision of Viksit Bharat.

Railways & Logistics

Proposal for seven High-Speed Rail Corridors:

• Mumbai – Pune
• Pune – Hyderabad
• Hyderabad – Bengaluru
• Hyderabad – Chennai
• Chennai – Bengaluru
• Bengaluru – Varanasi
• Varanasi – Siliguri

Proposal to establish a new Dedicated Freight Corridor connecting:

• Dankuni – Surat

Manufacturing & Industrial Ecosystems

Launch of India Semiconductor Mission 2.0, with emphasis on:

• Industry-led research
• Training centres
• Skilled workforce development

Proposal for a Container Manufacturing Scheme with a capital outlay of:

• ₹10,000 crore over five years

Announcement of a Portfolio Investment Scheme to support capital markets.

Inland Waterways & Sustainable Transport

Proposal to operationalise 20 new National Waterways over the next five years to:

• Promote environmentally sustainable cargo movement

Healthcare & AYUSH

Announcement to set up three new All India Institutes for Ayurveda

Education, Media & Creative Economy

Proposal to establish ABGC (Animation, Visual Effects, Gaming, and Comics) Content Creator Labs:

• In 1,500 secondary schools
• In 500 colleges

Proposal to create Content Creator Labs in 15,000 schools nationwide.

Establishment of five University Townships near major industry corridors.

Tourism, Culture & Sports

• Training of 10,000 tourist guides to strengthen tourism services.
• Proposal to develop 15 archaeological sites into vibrant experiential cultural destinations.
• Announcement of the ‘Khelo India Mission’ to be implemented over the next decade.

Climate Action & Sustainability

Proposal for an outlay of ₹20,000 crore to launch a Carbon Capture and Utilisation Scheme, covering sectors such as:

• Steel
• Cement

Agriculture & Allied Activities

Announcement of a Coconut Production Scheme aimed at:

• Enhancing productivity
• Improving income levels of coconut farmers
• Strengthening value chains in coconut-growing regions

Foreign Investment & Capital Flows

The Government has enhanced the overall investment limit for Overseas Residents of India (ORI):

• Increased to 24%
• From the existing 10%, to facilitate higher foreign capital inflows and investor participation

Women Entrepreneurship & Self-Help Groups

Proposal to establish ‘She MARTS’ (SHE Marts):

• Community-owned retail outlets
• Managed by women Self-Help Group entrepreneurs
• Aimed at promoting women-led enterprises and local market access

Healthcare & Medical Tourism

Proposal to promote India as a global medical tourism destination through:

• A central scheme to support States
• Establishment of five regional medical tourism hubs across the country

Fiscal Transfers to States

Allocation of ₹1.4 lakh crore to States for FY 2026–27 as Finance Commission grants, covering

• Rural local bodies
• Urban local bodies
• Disaster management grants

Tax Collection at Source (TCS) – Overseas Travel

The TCS rate on the sale of overseas tour programme packages has been rationalised:

• Reduced from 5% and 20% to 2%
• Applicable without any threshold amount
• Aimed at easing cash flow burden on individuals undertaking overseas travel

Tourism & Ecological Conservation

Proposal to develop ecologically sustainable mountain trails in:

• Himachal Pradesh
• Uttarakhand
• Jammu & Kashmir
• Araku Valley (Eastern Ghats)
• Western Ghats

Development of Turtle Trails along key nesting sites in:

• Odisha
• Karnataka
• Kerala
• To promote eco-tourism while ensuring wildlife conservation

Income Tax Compliance & Taxpayer Relief

Taxpayers will now be permitted to file a revised Income Tax Return (ITR) up to 31 March:

• Subject to payment of a nominal fee
• Intended to encourage voluntary compliance and reduce litigation

Proposal to introduce a rule-based, automated process for small taxpayers:

• To be implemented from FY 2027
• Aimed at simplifying assessments and minimizing human interface

Income Tax Exemptions

Proposal that interest awarded by the Motor Accident Claims Tribunal (MACT) to a natural person shall:

• Be fully exempt from income tax
• Not be subject to Tax Deducted at Source (TDS)

Income Tax Administration & Taxpayer Facilitation

Proposal to introduce a rule-based, automated process for small taxpayers:

• To be implemented from FY 2027
• Aimed at simplifying tax administration, ensuring transparency, and reducing discretionary interventions

Taxpayers will be permitted to file a revised Income Tax Return (ITR) up to 31 March:

• Subject to payment of a nominal fee
• Intended to encourage voluntary compliance and reduce litigation

Devolution to States & Cooperative Federalism

The Government has accepted the recommendations of the 16th Finance Commission to:

• Retain the vertical share of tax devolution at 41%

Allocation of ₹1.4 lakh crore to States for FY 2026–27:

• To strengthen fiscal capacity of States
• Supporting development priorities at the State and local levels

Rationalisation of Penalties & Prosecution

Proposal to decriminalise minor offences, with

• Monetary fines in place of penalties

Immunity from prosecution proposed in cases of:

• Non-disclosure of non-immovable foreign assets
• Where the aggregate value is less than ₹20 lakh

Tax Collection at Source (TCS) – Liberalised Remittance Scheme

Proposal to reduce TCS rate under LRS for specific purposes:

• For education and medical purposes
• Reduced from 5% to 2%
• To ease financial burden on individuals and families

Income Tax Incentives for Manufacturing & Investment

Proposal to provide income tax exemption for a period of five years to:

• Non-residents supplying capital goods and equipment

To large manufacturers operating in bonded zones

• Aimed at strengthening domestic manufacturing and global supply chains

Direct Tax Reforms

Proposal to introduce capital gains tax on share buybacks:

• Aimed at ensuring equity in taxation and preventing tax arbitrage

Proposal to extend the time limit for filing revised Income Tax Returns:

• From 31 December to 31 March
• Subject to payment of a nominal fee

Proposal to rationalise timelines for filing Income Tax Returns:

• Individuals filing ITR-1 and ITR-2: deadline to remain 31 July
• Non-audit business cases and trusts: filing deadline proposed to be 31 August
• Intended to ease compliance and improve administrative efficiency

Tax Collection at Source (TCS) – Rationalisation

Proposal to reduce TCS rate on overseas tour programme packages:

• Reduced from 5% and 20% to 2%
• Applicable without any threshold amount

Proposal to reduce TCS rate under the Liberalised Remittance Scheme (LRS):

• For education and medical purposes
• Reduced from 5% to 2%
• To ease financial burden on individuals

Customs Duty Rationalisation & Trade Facilitation

Proposal to increase the limit for duty-free imports of specified inputs:

• For leather and synthetic footwear manufacturing
• To enhance competitiveness and value addition

Proposal to increase duty-free import limit for specified inputs used in seafood exports:

• From 1% to 3% of FOB value of the previous year’s export turnover

Proposal to extend duty-free import benefits:

• Currently available for leather and synthetic footwear exports
• To also include exports of shoe uppers

Proposal to exempt customs duty on aviation components and parts:

• To support domestic aviation maintenance and manufacturing

Healthcare & Social Welfare

Announcement of significant relief for cancer patients, including:

• Exemption from Basic Customs Duty on 17 cancer drugs and medicines
• Addition of seven more rare diseases eligible for:
• Import duty exemption on personal import of drugs, medicines, and food
• Applicable for special medical purposes

Financial Market Measures

Proposal to increase Security Transaction Tax (STT) on Futures & Options (F&O):

• STT on futures to be increased from 0.02% to 0.05%
• Aimed at improving market integrity and broadening the tax base

Customs Duty & Nuclear Energy

Proposal to extend Basic Customs Duty exemption on import of goods required for nuclear power projects:

• Exemption extended until 2035
• Expanded to cover all nuclear plants, irrespective of their capacity
• Aimed at supporting nuclear energy expansion and clean energy transition

Lithium-Ion Battery & Energy Storage

Proposal to extend Basic Customs Duty exemption on capital goods used for manufacturing Lithium-Ion Cells for batteries to also include:

• Lithium-Ion Cells for Battery Energy Storage Systems (BESS)
• Aimed at supporting clean energy transition and strengthening energy storage manufacturing capacity

Solar Manufacturing

Proposal to exempt Basic Customs Duty on import of Sodium Antimonate:

• For use in the manufacture of solar glass
• Aimed at enhancing domestic solar manufacturing and reducing import dependency

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The Source’s Authority and Ownership of the Article is Claimed By THE STUDY IAS BY MANIKANT SINGH