Finance Minister Nirmala Sitharaman on Sunday presented the Union Budget 2026, her ninth consecutive Budget, guided by three core kartavyas (responsibilities) aimed at accelerating and sustaining economic growth. While the Budget announced several duty exemptions and policy reforms to boost growth and ease costs in select sectors, it offered no direct relief to income tax payers in the form of slab changes or higher standard deductions.
What Gets Cheaper
The Budget proposed multiple customs duty exemptions and reductions, making several goods and services more affordable. These include overseas tourism packages, foreign education-related remittances, essential cancer drugs, footwear, leather goods, microwave ovens, TV equipment, cameras, and video game manufacturing parts. Alcoholic liquor scrap, certain minerals, coffee and vending machines, and equipment used in energy transition projects will also see cost reductions. Notably, basic customs duty has been exempted on 17 essential cancer drugs, and imports for nuclear power projects will remain duty-free until 2035.
What Gets Costlier
On the other hand, stricter tax compliance measures have been introduced. Income tax misreporting will now attract a penalty equal to 100% of the tax amount. Non-disclosure of movable assets, stock options and futures trading, and coal are also set to become costlier.
Key Policy Highlights
Among major announcements, approvals for cargo clearance will move to a fully digital window by FY2027. Fish catch by Indian vessels on the high seas will be duty-free, and customs duty has been removed on key raw materials for aviation, solar glass, and nuclear power projects. The Budget also proposed tax holidays till 2047 for foreign cloud service companies setting up data centres in India and raised safe harbour thresholds for IT services.
Capital expenditure for FY2027 has been pegged at Rs 12.2 lakh crore, while fiscal deficit for 2026–27 is estimated at 4.3% of GDP. Significant allocations were announced for semiconductors, biopharma, SMEs, agriculture, tourism, high-speed rail corridors, and women-led entrepreneurship.
Boost for Foreign and NRI Investment
In a key reform, individuals living abroad can now directly invest in Indian stocks under the Portfolio Investment Scheme. The individual investment limit for persons resident outside India has been raised from 5% to 10%, and the aggregate limit from 10% to 24%. The government also announced a review of FEMA rules related to non-debt instruments.
Also Read: Sensex Falls 600 Points, Nifty Drops 250 After Union Budget 2026 Speech
Relief for Students Under LRS
The Budget reduced the Tax Collected at Source (TCS) rate under the Liberalised Remittance Scheme from 5% to 2% for education and medical purposes on remittances exceeding Rs 10 lakh. The move is expected to ease the financial burden on families sending money abroad for higher education.
Overall, Union Budget 2026 focuses on long-term growth, investment facilitation, and sector-specific relief, while maintaining fiscal discipline—though expectations of immediate income tax relief for salaried individuals remained unmet.
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