India Union Budget key highlights 2026

By Atul Muchhala, Managing Director, India and Aniket Jadhav, Associate Director – Investor Services, Taxation and Regulatory Reporting.

The Union Minister of Finance and Corporate Affairs, Nirmala Sitharaman, presented the Union Budget in the Indian Parliament on Sunday 1 February 2026.

Over the past decade, economic growth, fiscal discipline, inflation control, structural reforms, development and inclusivity were the focus areas of the Government of India. This budget comes at a time when the global economy is grappling with slower growth, rising protectionism, geopolitical fragmentation, trade barriers and supply-chain vulnerabilities. Despite these challenges and the disruptive acceleration of artificial intelligence, India is expected to maintain GDP growth above 6%, reinforcing its position as the world’s fastest-growing economy.

The Union Budget 2026 builds on this momentum, aiming not only for higher growth but also to advance India’s transformation into Viksit Bharat (a developed nation).

We’re pleased to share our summary of the Budget highlights: 

India Union Budget 2026 Highlights

The budget places strong emphasis on small and micro enterprises, manufacturing, agriculture, rural development, digital public infrastructure, people-led capacity building and fiscal stability.  Increased investments in skill development, entrepreneurship, farmer incomes, animal husbandry, fisheries, technology-enabled agriculture, healthcare and education are expected to drive meaningful improvements at a grassroots level, uplifting large segments of the population currently in the lower economic strata.

The continuation of existing income-tax slabs and rates provides stability for both individuals and corporates, signalling the Government’s confidence in the structural reforms implemented in recent years. A new compliance friendly scheme for small taxpayers aims to simplify procedures and reduce penalties. The budget also places strong emphasis on trust building, with significant rationalisation of provisions relating to prosecution, penalties, decriminalisation, revised filings and dispute resolution. Measures such as lower tax collection at source (TCS) rates, improved transparency and reduced litigation are expected to ease compliance burdens and support stronger tax collection.

A major highlight is the boost to the International Financial Service Centre (IFSC) at GIFT City. Extending the tax-holiday period from 10 to 20 years, followed by a fixed 15% tax rate, offers long-term certainty and demonstrates the Government’s commitment to making IFSC globally competitive.

Further incentives have been introduced for notified IT and tech-enabled services, with the tax-holiday period extended up to 2047 for cloud and data-service providers using Indian data centres, subject to qualifying conditions.

The policy framework for alternative investment funds (AIFs) remains largely unchanged, offering continuity and stability for the industry, with only limited classification-related refinements. Maintaining the current structure reinforces predictability for this rapidly growing segment.

Announcements supporting corporate bonds, municipal bonds and investments by persons resident outside India (PROIs) are expected to enhance liquidity and deepen India’s capital markets. The increase in securities transaction tax (STT) on futures and options may raise transaction costs, however, it is intended to curb excessive speculation, reduce volatility and promote long-term market stability.

Overall, this Budget places strong emphasis on sustained growth, resilience and long-term transformation. It seeks to steer India forward and amid global disruption, aiming to position the country as the world’s third-largest economy through continued acceleration in GDP growth.            

If you have any queries or comments regarding the Union Budget 2026, reach out to our team.