Union Budget 2026: Key Highlights, Tax
Changes, and Major Announcements

Bonvista Financial Services Pvt. Ltd.

03 Feb, 2026

On February 1, 2026, Finance Minister Nirmala Sitharaman delivered the Union Budget 2026–2027 in Parliament. This budget is noteworthy since it represents her ninth straight budget presentation, making her one of India's longest-serving finance ministers.

While upholding fiscal restraint in a difficult global context, the budget focuses on maintaining economic development, bolstering household finances, assisting enterprises, and developing long-term infrastructure.

Let's examine the few main points that will influence the financial environment in the upcoming year.

Three Fundamental "Kartavyas" (Duties):

The three key areas that comprise the government's vision are the foundation of the budget:

To boost and maintain economic expansion
To fulfil residents' dreams and fortify households
To develop that is inclusive across industries, communities, and geographies

The government's intention to maintain a balance between growth, social welfare, and broad-based development is reflected in these pillars.

Highest-Ever Capital Spending

One of the biggest highlights of Union Budget 2026 is the continued focus on infrastructure.

Capital expenditure has been raised to a record ₹12.2 lakh crore
Major allocations will go towards roads, railways, metro projects, ports, logistics, and urban infrastructure

This increased spending is aimed at boosting job creation, improving connectivity, and strengthening India’s long-term growth potential.

Strong Support for MSMEs

Recognising the role of MSMEs as the backbone of the economy, the Budget announced several measures:

A ₹10,000 crore SME Growth Fund to support expansion and innovation
₹2,000 crore liquidity support targeted at micro enterprises
Strengthening of the TReDS platform to ensure faster invoice payments

These initiatives aim to ease credit access, improve cash flows, and reduce financial stress for small businesses

Institutional Reforms and Financial Markets

To increase liquidity and strengthen capital markets:

Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) will be reorganized by the government.

To facilitate single bond issuances exceeding ₹1,000 crore, a ₹100 crore provision has been announced.

To increase liquidity, a market-making framework for the corporate bond market will be established.

The number of investors will increase when foreign citizens are permitted to purchase Indian stocks.

Modifications to STT and Buybacks:

All shareholders will now be subject to capital gains taxes on share buybacks.

For futures, the Securities Transaction Tax (STT) is raised from 0.02% to 0.05%. And for options, the STT is raised from 0.10% to 0.15%.

The aim to increase the STT for F&O is to discourage speculative activities, and it will encourage long-term investing.

Let’s see one example: Trade of ₹2 Lakhs per day for 20 trading days (₹40 Lakhs)

Futures

Options

Extra Cost of 0.03%: ₹1200/-

(₹60 * 20 Trading days)

Extra Cost of 0.05%: ₹2000/-

(₹100 * 20 Trading days)

Borrowing, Fiscal Deficit, and Debt:

The government has suggested lowering the debt-to-GDP ratio from 56.11% in FY25–26 to 55.6% in FY26–27 (RE).

It is anticipated that lower debt levels will free up resources by lowering interest expenses.
The fiscal deficit is predicted to drop to 4.3% in FY26–27 from an expected 4.4% in FY25–26 (RE).

The government intends to borrow ₹11.7 lakh crore through dated securities in FY26–27 to cover the shortfall.

Other Key Highlights:

Capital gains (LTCG/STCG) on maturity are taxed if you purchased SGB (Sovereign Gold Bonds) from the secondary market. It means there is still NO tax upon maturity to the original subscribers who purchased SGBs directly from the RBI.

TCS on travel (5 and 20%), Education (5%) and Medical (5%) abroad is reduced to a flat 2%

You can submit 15G or 15H so that TDS is not deducted to NSDL & CDSL, and they will send it to every institution instead of you having to do it independently with every institution.

Arbitrage funds and hybrid funds are slightly impacted on returns due to an increase in STT (Higher Cost)

Customs duty is reduced from 20% to 10% if you import goods for personal use.

Changes in Income Tax Return (ITR) Filing:

You can now revise the income tax return till 31st March. The deadline has been revised from 31st December to 31st March, with a nominal fee.

New Income Tax Act will be applicable w.e.f. 1st April 2026.

There are no changes in the current Income Tax slabs or Standard Deductions.

Staggered ITR filing timelines introduced: ITR-1 and ITR-2 (individuals) - up to July 31, and Non-audit businesses and trusts - up to August 31

Taxpayers will not be required to pay interest on penalty amounts while their case is under appeal before the first appellate authority. Further, the amount required to be deposited to file a tax appeal (pre-deposit) is reduced from 20% to 10% of the disputed tax demand.

What got cheaper? What got Costlier?

Cheaper	Costlier
Smartphones/ Tablets (Made in India)	Tobacco products
Cancer & Rare disease medicines	Stock Trading in F&O (higher STT)
Microwave ovens & Aircraft parts (lower duties)	Imported Luxury watches)
Solar Panels & EV Batteries (reduced tariffs)
Essential Medicines & Personal Imports

Conclusion:

A balanced strategy centred on long-term development, stability, and growth is presented in the Union Budget 2026.

The Budget aims to reinforce India's economic foundation through record capital spending, robust support for MSMEs, infrastructure and manufacturing, focused tax and compliance reforms, and a clear push towards future-ready industries like semiconductors, renewable energy, and digital services.

The government's intention to promote equitable and sustainable growth in the coming years is also reflected in ongoing fiscal restraint, social welfare programs, and business-friendly initiatives.

Mr. Unmesh Deshmukh

Founder & Director, Bonvista Financial Services | AMFI ARN: 136656

With over 24 years of elite experience in the financial services industry, Unmesh is a seasoned investment expert. He acts with a strict fiduciary mindset, leveraging data-backed strategies to help individuals and families create sustainable, generational wealth.