Highlights of Union Budget For 2026-27

India’s Union Budget for 2026-27 leaned on fiscal consolidation without diluting growth support, maintaining a steady glide path for deficits, sustained capital expenditure and predictable transfers to states. Borrowing assumptions remained conservative, while revenue projections reflected confidence in nominal growth. 

Sector-specific interventions focused on agriculture, energy transition and tourism.

Here are the key takeaways.

Fiscal Framework and Macro Assumptions

• Fiscal deficit estimated at 4.4% of GDP in 2025-26
• Fiscal deficit estimated at 4.3% of GDP in 2026-27
• Fiscal deficit estimated at ₹16.96 trillion in 2026-27
• Revenue deficit estimated at 1.5% of GDP in 2026-27
• Debt-to-GDP ratio estimated at 55.6% in 2026-27
• Nominal GDP growth estimated at 10% in 2026-27
• Vertical devolution to states retained at 41%
• Government accepted the recommendations of the 16th Finance Commission

Borrowings, Cash Management and Debt Operations

• Gross market borrowings estimated at ₹17.2 trillion in 2026-27
• Net market borrowings estimated at ₹11.7 trillion in 2026-27
• Gilt switches estimated at ₹2.5 trillion in 2026-27
• Net cash drawdown estimated at ₹327 billion in 2026-27
• Gross market borrowings revised to ₹14.61 trillion for 2025-26
• Net market borrowings revised to ₹11.33 trillion for 2025-26
• Gilt switches revised to ₹1.58 trillion for 2025-26
• Net cash drawdown revised to ₹457 billion for 2025-26

Capital Expenditure and Key Spending Heads

• Capital expenditure estimated at ₹12.2 trillion in 2026-27
• Defence expenditure estimated at ₹5.95 trillion in 2026-27, compared with ₹5.68 trillion in 2025-26
• Fertiliser subsidy estimated at ₹1.71 trillion in 2026-27
• Food subsidy estimated at ₹2.28 trillion in 2026-27
• Petroleum subsidy estimated at ₹120.85 billion in 2026-27
• PMGKAY outlay estimated at ₹2.27 trillion in 2026-27
• MGNREGA outlay estimated at ₹300 billion in 2026-27
• Pension outgo estimated at ₹2.96 trillion in 2026-27

Agriculture, Rural Economy and Allied Sectors

• Credit Linked Subsidy Programme announced for the animal husbandry sector
• Coconut promotion scheme to be launched to support farmers and value chains
• Support announced for high-value crops including coconut, sandalwood, cocoa and cashew
• Multilingual AI-based farming tool Bharat Vistar to be launched for advisory services
• Support announced for community-owned retail outlets set up by women entrepreneurs

Infrastructure, Transport and Tourism

• Integrated industrial corridor announced along the East Coast to boost manufacturing
• Provision announced for 4,000 electric buses to support urban mobility
• New scheme announced to develop Buddhist tourist circuits in the Northeast

Tax Administration and Compliance Measures

• Taxpayers to be allowed to revise income tax returns up to March 31 instead of December 31
• One-time six-month window announced for foreign asset disclosure for select taxpayers
• Amnesty scheme announced for voluntary declaration of foreign assets
• Immunity offered to taxpayers paying due tax, with penalties on undisclosed assets capped at ₹50 million
• Interest awarded by Motor Accident Claims Tribunal to be exempt from income tax

Direct Taxes and Corporate Taxation

• Safe harbour threshold for IT services raised to ₹20 billion
• Unified safe harbour margin fixed at 15.5% for all IT services
• Minimum Alternate Tax rate reduced from 15% to 14%
• Minimum Alternate Tax removed for non-residents paying tax on presumptive income
• Tax holiday extended until 2047 for select foreign companies providing cloud services
• Promoters required to pay additional tax on share buybacks
• Share buybacks to be taxed as capital gains for all shareholders

Securities and Transaction Taxes

• Securities Transaction Tax raised on futures and options premium
• STT on futures and options premium increased to 0.05%

Customs, Trade and Indirect Taxes

• Customs duty on select minerals reduced to 2%
• Basic customs duty exempted on sodium antimonate used in solar glass manufacturing
• Basic customs duty exemption extended on imports for nuclear power projects until 2035
• Basic customs duty exempted on parts used to manufacture or maintain aircraft
• Seventeen anti-cancer drugs exempted from import duty
• Certain exemptions withdrawn on items made in India or with negligible imports
• Sale of goods from SEZs permitted into domestic tariff areas
• Validity of advance rulings under customs extended from three years to five years
• Customs integrated system to be rolled out over the next two years

Revenue Receipts: Budget Estimates 2026-27

• Total gross tax collection estimated at ₹44.04 trillion
• Income tax receipts estimated at ₹14.66 trillion
• Corporation tax receipts estimated at ₹12.31 trillion
• GST receipts estimated at ₹10.19 trillion
• Excise duty receipts estimated at ₹3.89 trillion
• Customs duty receipts estimated at ₹2.71 trillion
• Tax devolution to states estimated at ₹15.26 trillion

Non-Tax Revenues and Other Receipts 2026-27

• RBI surplus and dividends from PSU financial companies estimated at ₹3.16 trillion
• Dividends from public sector undertakings estimated at ₹750 billion
• Telecom receipts estimated at ₹1.17 trillion

Revised Estimates 2025-26

• Fiscal deficit revised to ₹15.58 trillion from ₹15.68 trillion
• Total gross tax collection revised to ₹40.78 trillion
• Income tax receipts revised to ₹13.12 trillion
• Corporation tax receipts revised to ₹11.09 trillion
• GST receipts revised to ₹10.46 trillion
• Excise duty receipts revised to ₹3.37 trillion
• Customs duty receipts revised to ₹2.58 trillion
• Tax devolution to states revised to ₹13.93 trillion
• Total transfers to states revised to ₹23.36 trillion
• PMGKAY outlay revised to ₹2.28 trillion
• MGNREGA outlay revised to ₹880 billion
• Pension outgo revised to ₹2.87 trillion
• Dividends from public sector undertakings revised to ₹710 billion
• RBI surplus and PSU financial companies’ dividends revised to ₹3.05 trillion