The Union Budget 2026-27, presented on 1 February 2026, continues the government's steady approach toward fiscal consolidation, infrastructure-led growth, and tax simplification. Rather than dramatic announcements or populist giveaways, this budget focuses on incremental reforms, long-term planning, and stability across sectors.

Here is a clear breakdown of what changed, what stayed the same, and what the Budget signals going forward.

This was the ninth consecutive Union Budget presented by the Finance Minister and reflects continuity in policy direction. The total size of the Union Budget stands at ₹53.5 lakh crore, with net tax receipts estimated at ₹28.7 lakh crore. Tax devolution to states is pegged at ₹1.4 lakh crore, underlining continued fiscal cooperation between the Centre and states.

The overall tone of the Budget is measured, aiming to balance growth with fiscal discipline.

1. Fiscal Position and Capital Expenditure

One of the most important shifts in Budget 2026 is the further tightening of the fiscal deficit, targeted at 4.3% of GDP for FY27, marginally lower than the previous year. This signals the government's intent to gradually consolidate finances while maintaining growth momentum.

Capital expenditure has been increased to ₹12.2 lakh crore, up from ₹11.2 lakh crore in FY26. Infrastructure continues to be positioned as the primary engine of economic expansion, with sustained investment in connectivity and logistics.

2. Railways and Connectivity Push

The Budget outlines a focused expansion in rail infrastructure, with seven sustainable passenger rail corridors planned across key economic regions. These include major routes such as Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Chennai-Bengaluru, Delhi-Varanasi, and Varanasi-Siliguri.

In addition, a dedicated freight corridor connecting Dankuni and Surat has been announced, aimed at easing logistics bottlenecks and improving freight efficiency.

3. Manufacturing and Strategic Resources

Budget 2026 places renewed emphasis on strategic manufacturing, particularly in critical minerals. Rare earth corridors have been identified across Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, reinforcing the government's intent to reduce import dependence in key industrial inputs.

The Budget also highlights the development of cluster-based chemical parks, indicating a structured approach to industrial expansion rather than scattered capacity creation.

4. Tax Compliance and Filing Relief

While tax rates remain unchanged, several compliance-related changes stand out.

The revised return filing deadline has been extended to March 31, providing taxpayers with a longer correction window. Filing deadlines have also been staggered, with July 31 applicable to individuals and August 31 for non-audit businesses and trusts.

A significant structural reform is the implementation of the Income Tax Act, 2025, effective from 1 April 2026. This signals a move toward simplified tax language, streamlined provisions, and redesigned return forms.

5. Targeted Tax Relief Measures

The Budget introduces relief measures aimed at fairness and clarity rather than broad concessions. Interest income received on compensation awarded by Motor Accident Claims Tribunals has been fully exempted from tax, with no TDS applicable.

TCS on overseas tour packages has been reduced to 2%, without a minimum transaction threshold. Additionally, lower TCS rates under the Liberalised Remittance Scheme have been specified for education and medical purposes.

Clarity has also been provided on TDS applicability for manpower services, bringing them under contractor provisions. Taxpayers with small foreign assets below ₹20 lakh receive immunity from penalties for non-disclosure, reducing compliance anxiety for minor omissions.

1. Income Tax Slabs

There is no change in personal income tax slabs under Budget 2026. The existing structure continues, reaffirming the government's preference for stability over frequent rate revisions.

This absence of slab changes indicates a focus on compliance simplification rather than immediate tax relief or burden adjustments.

2. Overall Policy Direction

The Budget avoids abrupt policy shifts. Infrastructure-led growth, manufacturing support, and fiscal discipline remain central themes, consistent with previous years. There are no sweeping reforms or headline-grabbing announcements that alter the broader economic trajectory.

Financial markets reacted with volatility on Budget day. Commodity futures witnessed an increase in Securities Transaction Tax, and buyback proceeds are now proposed to be taxed as capital gains, impacting certain investor segments.

Gold and silver prices saw sharp corrections following the announcements, driven largely by leveraged positions and shifts in market sentiment. Equity indices also experienced fluctuations as investors digested the changes.

Budget 2026 signals continuity rather than disruption. The emphasis on capital expenditure, rail and logistics infrastructure, strategic manufacturing, and tax simplification points toward long-term economic planning.

The rollout of the new Income Tax Act from April 2026 will be a key development to watch, particularly how it reshapes compliance and interpretation. Similarly, the execution of rail corridors, freight projects, and rare earth initiatives will determine how effectively the Budget's intent translates into outcomes.

Overall, Budget 2026 positions itself as a stabilising framework, focused less on short-term stimulus and more on building economic resilience over time.