Stay tuned for live updates from the Union Budget 2026, presented by Finance Minister Nirmala Sitharaman. Get real-time coverage of tax reforms, government schemes, infrastructure spending, MSME support, manufacturing push, and sector-wise allocations that directly impact citizens, businesses, and government job aspirants across India.
Finance Minister Nirmala Sitharaman is presenting her ninth Union Budget in Parliament today, February 1, 2026. Notably, this marks a historic first, as the Union Budget is being presented on a Sunday. Ahead of the Budget speech, the Union Cabinet approved the Budget proposals in a meeting chaired earlier today.
Budget 2026: Major Tax, Economy, Infrastructure & Sectoral Announcements
Defence
- India’s defence manufacturing sector has reached a significant milestone, with annual defence production crossing ₹1.3 lakh crore for the first time, underscoring the country’s steady progress toward self-reliance in defence.
- Defence exports have expanded sharply over the past decade, rising from less than ₹2,000 crore in 2015 to over ₹21,000 crore in FY25. This growth highlights India’s increasing integration into the global defence supply chain and rising international demand for Indian-made defence equipment.
- In the previous Union Budget, the defence outlay was pegged at approximately ₹6.81 lakh crore, reflecting a year-on-year increase of nearly 9.5%. The sustained rise in allocations signals the government’s continued emphasis on military modernisation, operational readiness, and strategic preparedness.
- A notable structural shift has occurred in defence procurement, with more than 65% of procurement now sourced from domestic manufacturers. This has strengthened indigenous production capabilities and accelerated the development of home-grown defence technologies.
- The private sector’s contribution to defence manufacturing has also grown, accounting for around 23% of total defence output, indicating deeper participation by Indian companies alongside public sector units.
- Looking ahead, India has set ambitious targets of achieving ₹3 lakh crore in defence production and ₹50,000 crore in defence exports by 2029, positioning itself as a major global hub for defence manufacturing.
- These trends collectively reflect India’s advancing journey toward Atmanirbhar Bharat in defence, marked by rising exports, expanding domestic capacity, and stronger private sector involvement.
- On the expenditure front, defence-related capital expenditure is projected to rise to ₹2.3 lakh crore, up from ₹1.8 lakh crore in the previous year, according to Bloomberg estimates, indicating sustained investment in modern military equipment and infrastructure.
- However, data cited by BMI suggests that defence spending as a share of total central government expenditure has remained largely unchanged since 2020, following a sharp decline between 2018 and 2020. This indicates that while defence spending is increasing in absolute terms, its relative share in overall government expenditure has not seen a significant expansion.
🔹 Taxation & Foreign Investment Reforms
The government has proposed income tax exemption for non-residents supplying capital goods and related services from bonded zones, aimed at attracting global manufacturers to India’s trade and manufacturing hubs.
To promote component manufacturing, safe harbour taxation at a fixed profit margin of 2% will apply to non-residents operating in bonded warehouses, bringing clarity and reducing disputes.
In a major digital economy boost, foreign cloud service providers using data centres located in India will get a tax holiday till 2047. This is expected to accelerate large-scale data centre investments and strengthen India’s global digital services footprint.
Safe harbour approvals for IT services will now be automated, improving transparency and compliance speed. Various segments such as software services, KPO, sourcing services, and contract R&D will be merged into a single category of “Information Technology Services”, with a common safe harbour margin to simplify transfer pricing rules.
🔹 Income Tax Simplification & Relief Measures
Income tax return forms are being redesigned for simplicity and ease of filing, with a new, user-friendly format to be notified soon.
Key relief measures include:
- TCS on overseas tour packages reduced to 2%, with no minimum limit
- TCS on foreign education and medical expenses under LRS cut from 5% to 2%
- TDS on manpower services rationalised to 1–2%
- Small taxpayers to get a rule-based automatic compliance scheme
- More time allowed to revise ITRs by paying a nominal fee
- ITR-1 and ITR-2 filing deadline extended till July 31
For NRIs, TDS on property sales will now be deducted and deposited by resident buyers, easing compliance.
🔹 Foreign Asset Disclosure & Decriminalisation
- A one-time six-month foreign asset disclosure scheme has been announced:
Category A: Undisclosed assets/income up to ₹1 crore
Category B: Undisclosed assets up to ₹5 crore, with immunity from prosecution upon disclosure and payment
- There will be no penalty or prosecution for non-disclosure of foreign non-immovable assets valued below ₹20 lakh.
- Under the new Income Tax Act (effective April 1, 2026):
- Certain offences like non-production of documents will be decriminalised
- Minor procedural defaults will attract fees instead of penalties
- Prosecution framework will be rationalised, focusing only on serious tax evasion.
Fiscal Position & Government Finances
- Gross market borrowing: ₹17.2 lakh crore
- Net Domestic Revenue (FY27): ₹36.5 lakh crore
- Total expenditure (FY27): ₹53.5 lakh crore
- Fiscal deficit (FY26): 4.4% of GDP
- Debt-to-GDP ratio (FY27 BE): 55.6%
The government reaffirmed its commitment to fiscal consolidation without cutting welfare spending. States’ share in central taxes remains at 41%, with ₹1.4 lakh crore devolved in FY27.
🔹 Infrastructure, Transport & Urban Development
- East Industrial Corridor to begin from Durgapur
- 4,000 electric buses to support green urban mobility
- Seven new high-speed rail corridors, including:
- Mumbai–Pune
- Hyderabad–Bengaluru
- Chennai–Bengaluru
- Delhi–Varanasi
- Varanasi–Siliguri
- Tier II and Tier III cities will receive ₹5,000 crore per city to boost urban infrastructure and economic growth.
🔹 Agriculture, Rural Economy & Women Empowerment
- ‘SHE’ (Support for Her Enterprise) mark for rural women-led enterprises
- Export-focused programmes for cashew and coconut, targeting global branding by 2032
- Restoration of Indian sandalwood ecosystem
- Launch of Bharat Vistaar, a multilingual AI-based agri advisory platform
- Income support for plantation crop farmers.
🔹 Fisheries, Animal Husbandry & Sports
- Strengthening coastal fisheries value chains and Fish Farmer Producer Organisations
- Credit-linked subsidies for dairy, poultry, and livestock activities
- Expansion of Khelo India Mission
- Hosting of the first International Big Cat Alliance Summit
🔹 Education, Skills & Creative Economy
- Five university townships near industrial corridors
- Capital support for girls in STEM
- New Institute of Design in eastern India
- Indian Institute of Creative Technology for AVGC sector
- AVGC labs in 15,000 schools and 500 colleges
- Over 20,000 additional veterinary professionals to be trained
Healthcare & Biopharma
- ₹10,000 crore investment in biopharma over five years
- Training of 1.5 lakh caregivers
- Five regional medical hubs with private partnership
- Three new All India Institutes of Ayurveda
- Upgradation of AYUSH pharmacies and labs
- Expansion of NIMHANS-2 and district trauma care capacity
🔹 Financial Sector & Capital Markets
- PROIs investment limit raised from 5% to 10%
- Continued bond issuance support for MSMEs
- Strengthening municipal bonds with ₹100 crore support
- Introduction of market-making framework for corporate bonds
- Review of foreign exchange management rules
- High-level committees on banking reforms and Viksit Bharat roadmap
Union Budget 2026 Live: Key Updates
- The Finance Minister announced the development of new Dedicated Freight Corridors (DFCs) connecting Dankuni (West Bengal) and Surat (Gujarat). These corridors aim to enhance freight efficiency, lower logistics costs, and strengthen industrial supply chains.
- The government will develop 20 new national waterways over the next five years to promote cost-effective and eco-friendly cargo transport.
- Selected training institutes will be upgraded as regional manpower development centres for the waterways sector.
- A ship repair ecosystem will be established at Varanasi and Patna, boosting inland waterways infrastructure and local employment.
- A Coastal Cargo Promotion Scheme will encourage shifting freight from road and rail to waterways to ease congestion and reduce costs.
- The Finance Minister reaffirmed India’s stable economic outlook and tabled two statements under the FRBM Act, 2003, underscoring the government’s commitment to fiscal discipline.
- An Infrastructure Risk Guarantee Fund will be set up to provide faster credit guarantees for large infrastructure projects.
- Public capital expenditure has been proposed at ₹12.2 lakh crore to sustain investment momentum.
- Focus will remain on urban infrastructure development, especially in cities with populations above 5 lakh.
- In collaboration with ICAI and ICMAI, short-term modular courses will be introduced to train “corporate mitras” in Tier II and Tier III cities to support local businesses.
🕒Union Budget 2026 Key Updates
- Public capital expenditure will rise to ₹12.2 lakh crore, continuing the infrastructure-led growth strategy.
- Capex has increased significantly over the years—from ₹2 lakh crore earlier to ₹11.2 lakh crore in BE 2025–26.
- A new credit guarantee support mechanism will ease access to loans, particularly for small businesses.
- The government announced the “Creating Champion SMEs” initiative to modernise 200 legacy industrial clusters.
- The Self-Reliant India Fund will be topped up by ₹2,000 crore to provide growth capital to MSMEs.
- A transaction settlement platform will be used to ensure faster payments and improved liquidity for MSMEs.
🕒 Budget 2026 Key Updates
- A dedicated manufacturing unit for sports shoes and a special initiative for the sports goods sector were announced.
- Mega Textile Parks will be set up to create world-class textile manufacturing hubs.
- A new Textile Expansion and Employment Scheme will focus on job creation across the textile value chain.
- A National Handloom and Handicraft Programme will strengthen support for artisans and weavers.
- The Mahatma Gandhi Gram Swaraj initiative will promote khadi, handloom, and handicrafts.
- A National Fibre Scheme will support self-reliance in silk and wool production.
- Odisha, Kerala, Tamil Nadu, and Andhra Pradesh will be part of a new Rare Earth Corridor to boost critical mineral development.
🕒 Budget 2026 Key Updates
- States will be supported to establish three chemical parks under a plug-and-play model.
- A major push will be given to capital goods manufacturing, especially construction and infrastructure equipment.
- A ₹10,000 crore scheme will develop a container manufacturing ecosystem.
- Dedicated REM corridors will be created to enhance regional industrial growth.
- The outlay for the electronics components manufacturing scheme has been increased to ₹40,000 crore after strong industry response.
🕒 Budget 2026 Highlights
- The Budget is driven by Yuvashakti and guided by three Kartavyas.
- A ₹10,000 crore Biopharma Shakti initiative will support domestic innovation.
- India Semiconductor Mission (ISM 2.0) will be launched to boost equipment and material design capabilities.
🕒 Budget 2026: Key Officials Involved
- Anuradha Thakur – Secretary, Economic Affairs
- Arvind Shrivastava – Revenue Secretary
- Vumlunmang Vualnam – Expenditure Secretary
- M. Nagaraju – Financial Services Secretary
- Arunish Chawla – Secretary, DIPAM
- K. Moses Chalai – Secretary, Department of Public Enterprises
- V. Anantha Nageswaran – Chief Economic Adviser
About the Author
