Union Budget 2026-27

India’s Union Budget FY 2026-27: Key highlights Explained

ByAbhiloans

Every year, the Government of India presents the Union Budget, which is essentially a financial plan for the country. It tells us:

  • how much the government plans to spend,
  • how much it expects to earn,
  • and what new rules or changes are coming for citizens and businesses.

Think of the Union Budget as the country’s money plan for the year, it affects everything from taxes you pay to big projects like roads, railways and jobs.

In 2026, the budget was presented by Finance Minister Nirmala Sitharaman; this was her ninth consecutive budget.

Below is a complete easy-to-understand breakdown of the major parts of the Union Budget 2026-27.

What Is the Union Budget?

Before we dive in, a simple explanation:

  • The Union Budget is like a detailed list of how the government plans to spend money and how it will collect money through taxes and other sources.
  • It is presented every year so people, businesses, and policymakers understand the economic priorities for the next financial year, which runs from April 1 to March 31.

1. Big Picture — Government Spending and Money Sources

How Much Will the Government Spend?

For 2026-27, the government expects to spend around ₹53 lakh crore. This is a large amount because it includes defence, infrastructure, salaries, welfare, etc.

Where Does the Money Come From?

The government earns money mainly through:

  • Taxes (like income tax and GST)
  • Non-tax revenue (like fees, charges, interest)
  • Borrowing if expenditure is more than earnings

These earnings help fund public services, infrastructure projects and government schemes.

What Is Fiscal Deficit?

One term often used in budgets is fiscal deficit. Simply put, it is the gap between what the government earns and what it spends.

If the government spends more than it earns, it borrows to fill the gap, that gap is called fiscal deficit.

In this budget, the fiscal deficit target is lower than last year, which shows the government’s plan to keep spending under control.

2. Taxes — What’s Changed for Individuals and Businesses

Taxes are one of the most important parts of the budget because they directly affect how much people pay.

Income Tax Changes

In Budget 2026-27:

  • There are no major changes in income tax slabs (the income levels at which you pay tax).
  • But the government has extended due dates to file tax returns for some taxpayers so they have more time.

What does this mean?
If you are a business owner who needs to get your accounts audited, you now have extra time to file your tax return (till 31st August).

Revised Return Date Extended

A revised return lets taxpayers correct mistakes in their filed return.

  • The due date for revised tax returns has been extended to 31st March from the earlier deadline. 

This gives taxpayers more time to fix errors in their tax filing.

Tax on Securities and Investments

Securities Transaction Tax (STT) on certain financial trades (like futures and options) has been raised. That means if you trade in these regularly, the cost has increased a bit.

Tax Treatment for Gold Bonds

Tax benefits on Sovereign Gold Bonds (government-issued gold savings bonds) are now tied to certain conditions, and interest on them is still taxable.

3. Public Investment and Infrastructure

One of the biggest focuses in the budget is capital expenditure, money spent on infrastructure like roads, railways, airports, water projects, etc.

Huge Boost in Capital Spending

The budget plans to spend around ₹12.2 lakh crore on public capital projects — a pretty big amount meant to accelerate India’s infrastructure growth.

What is capital expenditure?
It’s long-term spending that builds things like:

  • Roads and highways
  • Rail network expansion
  • Urban infrastructure
  • Renewable energy projects

These projects create jobs and boost economic growth.

Infrastructure Risk Guarantee Fund

To attract private developers into big projects, the government proposes a special Infrastructure Risk Guarantee Fund. It helps reduce the financial risks for builders so they can invest more.

4. Sector-Wise Budget Highlights

Let’s look at how the budget impacts various areas of the economy and people:

Agriculture and Rural Economy

This budget focuses on:

  • Helping farmers grow high-value crops like coconut, nuts and sandalwood.
  • Using AI tools to give farming suggestions, so farmers can make better decisions.

Manufacturing and MSMEs

MSMEs (Micro, Small and Medium Enterprises) are vital for jobs and local businesses:

  • A new ₹10,000 crore growth fund is proposed for promising small businesses to expand.
  • The existing Self-Reliant India Fund will get more money to support smaller enterprises.

Boosting manufacturing (like electronics and semiconductors) is also a major focus — this helps India produce more goods locally instead of importing which can create jobs and grow exports.

Services and Jobs

The budget proposes a high-powered committee that focuses on connecting education to employment meaning better training to help young people get jobs in areas like healthcare, tourism and design.

Banking & Finance

To improve lending and money flow in the economy:

  • The government wants reforms to strengthen banks.
  • Non-bank lenders (NBFCs) are also expected to get policy support.

Infrastructure & Connectivity

Some major plans include:

  • Faster road, rail and freight corridor expansion
  • Better waterways to lower goods transport costs
  • Support for urban development plans

All these are expected to make transportation cheaper and easier, which is good for businesses and general public mobility.

Tourism, Culture & Sports

Budget 2026 also focuses on promoting tourism and culture by improving infrastructure and promoting events that attract visitors from India and abroad. 

5. Social Welfare and Inclusion

The Union Budget also includes measures to support vulnerable and special needs groups:

  • Special programs for skill building for people with disabilities
  • Expansion of health infrastructure, including mental health and trauma care
  • Increased focus on education and women’s empowerment
    These steps not only improve lives but also encourage people to join the workforce or start their own ventures.

6. Sectoral and Regional Development Plans

High-Speed Rail Network

The government has planned large expansions in the high-speed rail network, opening corridors like:

  • Delhi to Varanasi
  • Varanasi to Siliguri

These projects will reduce travel times significantly and boost local economies along the route.

Space and Technology

The space sector is seeing an increase in budget allocation, supporting new missions and technological projects.

Urban and Local Development

Cities like Delhi have received large central government allocations for drinking water, infrastructure and public services. Security forces like Delhi Police also got more funds.

7. What This Budget Means for the Common Person

Here’s a simple summary of how the budget affects everyday life:

If You Pay Taxes

  • More flexible deadlines to file income tax returns.
  • Some changes in how investments and securities are taxed may slightly alter your tax planning.

If You Are a Farmer

  • New tools and crop programs can help farmers make better decisions and earn more.

If You Have a Small Business

  • Easier access to growth funds and support for expansion.
  • Policies to help with finance and liquidity.

If You Are a Young Professional

  • More focus on skills and employment opportunities training linked to jobs.

For All Indians

  • Better roads, railways, airports and connectivity.
  • Improved public services and more opportunities in sectors like tourism, technology, healthcare and education.

Final Takeaway

The Union Budget 2026-27 is designed to:

  • Support strong economic growth by increasing public investment.
  • Boost manufacturing, MSMEs, and jobs.
  • Simplify certain tax processes for taxpayers.
  • Promote technology, agriculture and social inclusion.
  • Build a more resilient economy in a globally uncertain environment.

In short, this budget tries to balance the need for economic growth, job creation, infrastructure development, and social welfare in a way that can benefit both businesses and ordinary citizens alike.