Union Budget 2026 Live : Taxation, Credit Policy And Financial Sector Announcements

Union Budget 2026-2027 was presented on February 1, 2026, in the Lok Sabha. This year, Finance Minister Nirmala Sitharaman has outlined the government’s financial roadmap for the year ahead under the Viksit Bharat vision, with a strong focus on stability, growth, and long-term economic resilience.

This year’s Budget placed a clear emphasis on financial markets, credit availability, lending conditions, and infrastructure-led financing. The new policy signals are emerging around how the government plans to manage borrowing costs while sustaining public investment and private sector credit growth. Measures announced for MSMEs, infrastructure financing, and banking reforms indicate a shift towards strengthening the financial ecosystem rather than short-term relief, setting the tone for credit expansion in the coming year.

Budget 2026-27: Live Updates

• FM emphasised Prime Minister Narendra Modi’s ideas at the Viksit Bharat Young Leaders Dialogue 2026, setting the tone for a Yuva Shakti-driven Budget. The government positioned young India as the key engine of growth, with deeper engagement with global markets to attract long-term and stable investment.

• The Budget outlined three core Kartavyas- accelerating and sustaining economic growth, fulfilling aspirations by building people’s capacity, and ensuring access to resources and opportunities. To achieve this, the government emphasised structural reforms, a resilient financial sector, and the use of advanced technologies, including AI.

• Over 350 reforms have been rolled out since PM Modi’s 2025 Independence Day address, including GST simplification and labour code notifications. Building on this, the Finance Minister proposed interventions across six areas, covering manufacturing expansion, revival of legacy industries, creation of champion MSMEs, infrastructure push, long-term security, and development of city economic regions.

• Industrial corridors and new urban clusters have been identified as growth engines, with a strong focus on employment-led housing demand. Infrastructure coverage has been extended to cities with populations above five lakh, recognising Tier II and Tier III cities as emerging economic hubs.

• The government announced India Semiconductor Mission 2.0, raising support for the electronics component manufacturing scheme to ₹40,000 crore. The electronics scheme launched in April 2025 has already attracted investment commitments exceeding twice its original target.

• To support MSMEs, a ₹10,000 crore SME Growth Fund has been announced, along with continued backing through the Self-Reliant India Fund. Enterprises will be incentivised based on performance and eligibility, while GeM will be linked with TReDS to improve liquidity and working capital access.

• Infrastructure financing will be supported through new instruments, including REITs and funds backed by the National Investment and Infrastructure Fund and NAFED. A scheme to revive 200 legacy industrial clusters has also been announced to strengthen domestic manufacturing capacity.

• Biopharma SHAKTI has been proposed with an outlay of ₹10,000 crore over five years. The Budget also announced the establishment of Hi-Tech Tool Rooms for precision manufacturing, five regional medical hubs under the PPP model, and three new All India Institutes of Ayurveda.

• Public capital expenditure has been increased to ₹12.2 lakh crore for FY 2026-27. Seven high-speed rail corridors will act as growth connectors, while infrastructure investments will focus on logistics, construction equipment, and industrial connectivity.

• On fiscal management, the fiscal deficit for FY 2026-27 has been estimated at 4.3% of GDP, down from 4.5% in the previous year. Debt-to-GDP is projected to decline to 55.6%, while the Centre will retain a 41% share of tax devolution to states, with ₹1.4 lakh crore provided as Finance Commission grants.

• Total expenditure in revised estimates stands at ₹49.6 lakh crore, while non-debt receipts for FY 2026-27 are estimated at ₹36.5 lakh crore. Gross market borrowings from dated securities are projected at ₹11.7 lakh crore.

• On the tax front, the New Income Tax Act, 2025, will come into effect from April 1, 2026. Interest awarded by the Motor Accident Claims Tribunal to a natural person has been exempted from income tax.

• TCS rates have been reduced to 2% on overseas tour packages with no minimum threshold. TCS on education-related payments has also been lowered, offering relief to students and families, while TDS on manpower services has been fixed at 1% or 2%.

• Small taxpayers will benefit from a rule-based automated process for lower or nil deduction certificates. The need to submit multiple Forms 15G or 15H across institutions has been reduced, and return filing timelines for ITR-1 and ITR-2 will continue till July 31, with non-audit cases allowed till August 31, 2026.

• TDS on the sale of immovable property by a non-resident will now be deposited using the resident buyer’s PAN-based challan, removing the requirement for a TAN. A one-time six-month Foreign Asset Disclosure Scheme has also been introduced to help small taxpayers regularise overseas income or assets.

• The Budget 2026 clarified that misreporting of tax will attract an additional tax equal to 100% of the tax amount. The quantum of pre-payment has been reduced from 20% to 10% and will continue to be calculated on the core tax demand.

Union Budget 2025-26 vs 2026-27

Below is a snapshot of key financial sector measures announced in the Union Budget 2026-27, compared with the previous year:-

Tax (Direct & Compliance)

Budget 2025-26 : Personal income tax slab restructuring. Higher TDS threshold on rent. Updated returns allowed up to 4 years.

Budget 2026-27 : Time to revise returns extended till 31 March. One-time Foreign Asset Disclosure Scheme introduced. MAT made the final tax. MAT credit set-off capped at one-fourth. Decriminalisation of book-keeping and select TDS defaults.

TCS / TDS

Budget 2025-26 : TDS and TCS rationalisation started.

Budget 2026-27 : TCS on overseas tour packages cut to 2% with no threshold. TCS on education and medical remittances cut to 2%. TDS on manpower supply fixed at 1% or 2%.

MSMEs

Budget 2025-26 : MSME definition revised. Credit guarantee doubled to ₹10 crore. Credit cards for micro enterprises announced.

Budget 2026-27 : ₹10,000 crore SME Growth Fund introduced. Self-Reliant India Fund topped up by ₹2,000 crore. TReDS made mandatory for CPSEs. MSME receivables allowed securitisation. Corporate Mitras for compliance support announced.

Loans (General & MSME)

Budget 2025-26 : Term loans up to ₹2 crore for first-time entrepreneurs. Higher guarantee cover for MSMEs and startups.

Budget 2026-27 : The Infrastructure Risk Guarantee Fund was announced for partial credit guarantees. Stronger MSME credit flow through TReDS, CGTMSE and securitisation.

Banks

Budget 2025-26 : Revamped Central KYC Registry announced. Partial Credit Enhancement Facility via NaBFID.

Budget 2026-27 : High-Level Committee on Banking for Viksit Bharat announced. PFC and REC restructuring proposed.

NBFCs

Budget 2025-26 : Infrastructure and bond market support through NaBFID.

Budget 2026-27 : Market-making framework and total return swaps introduced for corporate bonds, improving NBFC participation.

Credit Cards

Budget 2025-26 : Customised credit cards for micro enterprises with ₹5 lakh limit announced.

Budget 2026-27 : No new credit card scheme announced. Focus shifts to MSME credit via formal platforms like TReDS.

Financial Sector (Markets)

Budget 2025-26 : FDI limit in insurance raised to 100%. Regulatory reforms announced.

Budget 2026-27 : STT on futures raised to 0.05%. STT on options premium and exercise raised to 0.15%.

Financial Sector (Bonds)

Budget 2025-26 : Partial Credit Enhancement Facility announced.

Budget 2026-27 : ₹100 crore incentive for municipal bond issuances above ₹1,000 crore. Market-making and TRS framework introduced.

Infrastructure Financing

Budget 2025-26 : ₹1.5 lakh crore interest-free loans to states. Asset Monetisation Plan launched.

Budget 2026-27 : ₹2 lakh crore support to states under SASCI scheme. CPSE real estate recycling through REITs. Infrastructure coverage extended to Tier II and III cities.

Fiscal Position (Impact on Credit)

Budget 2025-26 : Fiscal deficit estimated at 4.5% of GDP.

Budget 2026-27 : Fiscal deficit reduced to 4.3% of GDP. Debt-to-GDP projected at 55.6%, signalling borrowing discipline.

Budget 2026-27: Key Takeaways

Union Budget 2026-27 focuses on simplifying tax laws and easing compliance pressure for individuals and businesses. Here are the key takeaways:

• New Income Tax Act: Income Tax Act, 2025, comes into force from April 1, 2026, with simplified provisions and redesigned return forms.

• Revised Return Timeline: Taxpayers can revise returns till March 31 with a nominal fee, reducing disputes and litigation.

• Banking Review Panel: High-Level Committee on Banking for Viksit Bharat announced.
  Lower Fiscal Deficit: Fiscal deficit reduced to 4.3% of GDP for FY 2026-27.

• SME Growth Fund: ₹10,000 crore fund announced to support scalable and growth-stage MSMEs.NBFC Restructuring: PFC and REC to be restructured to improve efficiency and lending capacity.

• Equity Support Boost: Self-Reliant India Fund topped up by ₹2,000 crore for micro enterprises.

• Higher Capital Spending: Public capex increased to ₹12.2 lakh crore for FY 2026-27.

• City-Focused Expansion: Infrastructure push extends to Tier II and Tier III cities, industrial corridors, and logistics hubs.

• Risk Guarantee Fund: The Infrastructure Risk Guarantee Fund was introduced to provide partial credit guarantees during the construction phase.

• STT Increase: STT on futures raised to 0.05%; STT on options premium and exercise increased to 0.15%.

• Municipal Bonds Boost: ₹100 crore incentive for single municipal bond issuances above ₹1,000 crore.

• PAN-Based TDS: TDS on the sale of immovable property by non-residents to be deposited using the buyer’s PAN.

• TAN Requirement Removed: Buyers no longer need to obtain a Temporary Account Number.

• Automated Certificates: Rule-based automated process for lower or nil TDS deduction certificates.

• Centralised Forms: Depositories to accept Form 15G and 15H centrally across multiple holdings.

• Six-Month Window: A special disclosure scheme introduced for small taxpayers, students, professionals, and NRIs.

• Mandatory TReDS: All CPSE purchases from MSMEs to be routed through TReDS.

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