Budget Highlights 2026: No change in tax slabs, high-speed rail and rare earth corridors among key announcements by FM Nirmala Sitharaman

Nirmala Sitharaman presents Union Budget 2026.

NEW DELHI: Union finance minister Nirmala Sitharaman on Sunday presented the Budget for the financial year 2026–27 in the Lok Sabha during the ongoing Budget session of Parliament. This marked FM Sitharaman’s ninth consecutive Union Budget presentation.FM Sitharaman announced that the capital expenditure (capex) target will be increased to Rs 12.2 lakh crore for FY27, up from Rs 11.2 lakh crore allocated in the current fiscal year.

The government expects the fiscal deficit to narrow to 4.3 per cent of GDP in 2026–27, slightly lower than the 4.4 per cent projected for the current financial year. Economists generally consider a fiscal deficit of 3–4 per cent to be comfortable for a developing economy like India, as it helps balance growth requirements with financial stability.In her speech, Sitharaman said the Centre will provide Rs 1.4 lakh crore to states as tax devolution in the next financial year, while net tax receipts are estimated at Rs 28.7 lakh crore. The total size of the Union Budget has been pegged at Rs 53.5 lakh crore. The general government debt-to-GDP ratio stood at around 85 per cent in 2024, including about 57 per cent attributed to central government debt. During her speech, Sitharaman also announced that the new Income Tax Act, 2025, will come into effect from April 1, with rules and income tax return forms to be notified soon.

Here are the highlights of the Union Budget 2026-2027:

No change in income tax slabs

The income tax rates and slabs remain unchanged following last year’s major tax reforms.While the basic tax structure remains the same, the FM announced several measures aimed at simplifying tax compliance and providing relief to taxpayers. The FM proposed extending the timeline for revising income tax returns from December 31 to March 31 with a nominal fee.

New tax regime

FM Sitharaman also suggested staggered deadlines for filing returns: individuals using ITR‑1 and ITR‑2 will continue to file by July 31, while non-audit business cases and trusts will have time until August 31.

Tax relief for:

Multiple tax proposals have been announed with the aim of improving ease of living, simplifying compliance, and providing relief to individual taxpayers. The government is focusing on making the income tax system simpler and more citizen-friendly. – Tax relief for accident compensationInterest awarded by the Motor Accident Claims Tribunal (MACT) to individuals will be exempt from income tax. Tax Deducted at Source (TDS) on such interest payments will be removed. The move is aimed at ensuring accident victims and their families receive full compensation without tax deductions.– Reduction in TCS on overseas tour packagesTCS on the sale of overseas tour programme packages will be reduced to 2 per cent. The current TCS rates range between 5 per cent and 20 per cent. The reduced 2 per cent rate will apply without any minimum transaction threshold, making foreign travel spending simpler for taxpayers.– Lower TCS under Liberalised Remittance Scheme (LRS)TCS for remittances sent abroad for education and medical purposes will be reduced from 5 per cent to 2 per cent. The move is expected to reduce the financial burden on families funding overseas education and medical treatment.– Clarity on TDSSupply of manpower services will be explicitly included under contractor payments for TDS purposes. TDS on such services will be applicable at 1 per cent or 2 per cent.– Relief for Small Foreign Asset Non-DisclosureImmunity from prosecution will be provided for non-disclosure of small foreign assets. The exemption applies to non-immovable foreign assets with a total value below Rs 20 lakh. The provision will apply retrospectively from October 1, 2024.– Implementation of New Income Tax ActThe Income Tax Act, 2025 will come into force from April 1, 2026. Simplified tax rules and redesigned income tax return forms will be notified soon to help taxpayers transition smoothly.

Railways

Seven environmentally sustainable passenger corridors planned including Mumbai–Pune, Pune–Hyderabad, and Hyderabad–Bengaluru. – Dedicated freight corridor connecting Dankuni in the east to Surat in the west.– Proposed corridors between

Rare earth corridors, chemical parks

The government announced three dedicated chemical parks in every state using a cluster-based plug-and-play model to enhance domestic chemical production. – Rare Earth Corridors: Four states including Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated rare earth corridors.– Chemical Parks: Support to states for three dedicated chemical parks through a challenge route on a cluster-based plug-and-play model.A large portion of the world’s rare earth refining capacity is controlled by China, who keep tightened export controls on critical minerals.

Sensex, Nifty tumble

Benchmark stock market indices Sensex and Nifty slumped on Sunday afternoon trade after the Union Budget proposed raising the Securities Transaction Tax (STT) on commodity futures to 0.05 per cent from the existing 0.02 per cent.Sitharaman also announced that buyback proceeds will be taxed as capital gains for all categories of shareholders.After witnessing volatility in early trade, the 30-share BSE Sensex briefly recovered but erased all gains during the Budget presentation. It later plunged 2,370.36 points, or 2.88 per cent, falling below the 80,000 mark to 79,899.42 in afternoon trade. Similarly, the 50-share NSE Nifty dropped 748.9 points, or 2.95 per cent, to 24,571.75.Among Sensex constituents, Bharat Electronics fell 6.50 per cent. Other major losers included State Bank of India, HCLTech, Tata Steel, Asian Paints and Eternal.

Gold, silver prices decline

Gold prices plunged sharply, dropping by nearly 20 per cent in the last two days amid extreme volatility in commodity markets, according to Multi-Commodity Exchange (MCX) data. The decline continued on Sunday, which coincided with Budget day, with 24-carat gold on the MCX falling to around Rs 1,36,185 per 10 grams. The metal had opened the session at about Rs 1,46,800 per 10 grams, highlighting persistent selling pressure and sharp intraday fluctuations. The weakness was reflected in global markets as well, with international gold prices falling by more than 9 per cent to around USD 4,887 per ounce, further weighing on domestic bullion rates.Selling pressure was also seen in the silver market. Silver prices on the MCX dropped to about Rs 2,65,900, registering a decline of nearly 9 per cent in a single trading session on Sunday. The sharp correction followed strong weekly gains recorded over the past two months.Market experts said a large number of investors had entered gold and silver trades during this period, drawn by the sustained upward momentum in prices. Much of the rally was supported by leveraged positions, which benefited from consistent weekly gains in both gold and silver.

A ‘Humpty Dumpty’ Budget: Unimpressed oppn slams Centre

Senior opposition leaders including leader of oppositions Mallikarjun Kharge and Rahul Gandhi criticised the Budget for “ignoring” looming global shocks. West Bengal CM Mamata Banerjee termed it a “directionless and visionless Humpty Dumpty” Budget.“Youth without jobs. Falling manufacturing. Investors pulling out capital. Household savings plummeting. Farmers in distress. Looming global shocks – all ignored,” said Rahul Gandhi.“This Budget is directionless, visionless, actionless and anti-people. It is also anti-women, anti-farmer, anti-education and against the SC, ST and OBC… There is nothing on offer for Bengal… in the Humpty Dumpty budget,” Mamata said, adding, “education funds and subsidy have been slashed, along with social security subsidy and fertiliser subsidy. This is a garbage of lies… of Himalayan incompetence. The economy will be totally derailed”.Echoing similar sentiments, Kharge said that the Budget had “no policy vision and political will”.“Modi Govt has run out of ideas. #Budget2026 does not provide a single solution to India’s many economic, social, and political challenges. ‘Mission Mode’ is now ‘Challenge Route.’ ‘Reform Express’ rarely stops at any ‘Reform’ Junction. Net result: NO policy vision, NO political will. Our Annadata Farmers still await meaningful welfare support or an income security plan. Inequality has surpassed the levels seen under the British Raj, but the Budget does not even mention it or provide any support to SC, ST, OBC, EWS, and Minority communities. The Finance Commission’s recommendations will have to be studied more, but they do not appear to provide any relief to State Governments which are under severe financial stress. Federalism has become a casualty.,” Kharge said.