Budget

Understanding of Union Budget 2026 and Economic Implications 

On February 1, 2026, coinciding with the auspicious occasion of Magha Purnima and the birth anniversary of Guru Ravidas, Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27. The budget reflects a strategic focus on boosting domestic manufacturing (Atmanirbhar Bharat) and enhancing healthcare accessibility. It also introduces significant customs duty changes, reducing costs for essential electronics and life-saving treatments while increasing duties on imported luxury goods. 

It is a Yuva Shakti-driven budget which emphasizes on Government’s Sankalp to focus on the underprivileged and the disadvantaged, it also mentions specifically that India will continue to take confident steps towards Viksit Bharat, balancing ambition with inclusion. As a growing economy with expanding trade and capital needs, India must also remain deeply integrated with global markets, exporting more and attracting stable, long-term investment. 

Overall, the budget emphasizes economic growth, social inclusion, and technological advancement. Crafted under the vision of Viksit Bharat (Developed India), it revolves around three main pillars: accelerating economic growth, fulfilling citizen aspirations, and promoting inclusive development (Sabka Sath, Sabka Vikas). Business owners with a company registration certificate must have a complete understanding of the budget 2026.This blog provides a detailed understanding of the Union Budget 2026-27 and its implications for the new India. 

Scaling Up Manufacturing in 7 Strategic & Frontier Sectors 

With the current changes in the global supply chains and new technologies, India’s manufacturing is entering an important phase. India wants to be more than a low-cost option as it aims to be a global manufacturing leader. For this, the government is focusing on seven key sectors to boost growth and build strong industrial ecosystems. Let’s explore how these seven sectors together form the backbone of India’s next manufacturing leap. 

Biopharma SHAKTI: Healing India, Powering the World 

With the changing disease profile in India, where non-communicable diseases like diabetes, cancer and autoimmune disorders are rising, the government of India has taken this initiative under this budget, making biologics and biosimilars indispensable for affordable and long-term healthcare.  

For this, the Biopharma SHAKTI has been proposed with an outlay of Rs. 10,000 crore for over five years. The objective is to transform India into a global biopharma manufacturing hub. This covers a biopharma-focused research and manufacturing ecosystem, 3 new NIPERs and upgrades to 7 existing ones, a network of 1000-plus accredited clinical trial sites and strengthening CDSCO with global standard scientific review capacity. 

India Semiconductor Mission 2.0: From Chips to Champions 

In the changing global economy, semiconductors are becoming crucial, like oil, where India is stepping up to build its own capabilities. Building on the progress of ISM 1.0, the India Semiconductor Mission 2.0 goes beyond chip fabrication to focus on equipment, materials, end-to-end design, and the creation of homegrown intellectual property. Its goal is to move India from major consumer of chips to becoming a global creator of advanced semiconductor technology. 

Electronics Components: Doubling Down on Momentum 

Launched in April 2025 with a budget of Rs 22,919 crore, the Electronics Components Manufacturing Scheme has already attracted a massive number of investments that are twice its original target. Additionally, in this budget, the government increased the budget to Rs 40,000 crore. This increase in the budget is to support India’s goal to become a reliable global electronics manufacturing hub by reducing imports and increasing value addition within the country. 

Rare Earth Permanent Magnets: Securing Strategic Minerals 

India, in the new budget 2026, is planning to develop Rare Earth Corridors in mineral-rich states such as Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These rare earth elements are essential for electric vehicles, wind energy, defence equipment, and advanced electronics. These said corridors will bring together mining, processing, research and manufacturing in one integrated system. The goal is to ensure a stable supply chain, reduce dependence on other countries, and become self-sufficient. 

Chemicals & Capital Goods: Building the Industrial Backbone 

In order to reduce dependence on imports, the Indian government has proposed to set up three dedicated Chemical Parks under a cluster-based, plug-and-play model. While, these parks will support a large-scale domestic chemical production while maintaining environmental and operational efficiency.    

Additionally, to boost productivity and precision, the government have introduced a scheme for construction and infrastructure equipment, and launched a Rs 10,000 crore container manufacturing scheme to build a globally competitive ecosystem. These initiatives overall want to strengthen the core foundation of India’s manufacturing sector. 

Textiles: Tradition Meets Technology 

The textile industry is India’s largest employment generator. A new Integrated Textile Programme combines traditional strengths and modern technology through five key initiatives. These include support for natural and manmade fibres under the National Fibre Scheme, modernization of textile clusters and job creation through the Textile Expansion & Employment Scheme, and continued support for artisans through the National Handloom and Handicraft Programme. Additionally, a Mega Textile Park will be developed through a challenge-based approach, with a strong focus on technical textiles. 

Sports Goods & Legacy Clusters: Manufacturing with Identity 

India has the potential to emerge as a global hub for high-quality and affordable sports goods. An initiative is taken to boost manufacturing, research, development and advancements in material science within this sector. Also, a dedicated scheme will help to revive 200 legacy industrial clusters by upgrading their infrastructure and technology.  This will overall help in restoring their cost efficiency and competitiveness in the market. 

Post-Budget 2026: Items That Just Got More Affordable 

The list of items that are going to be more affordable post-budget 2026 is as follows: 

• Essential Goods & Medical Supplies 

The Budget has brought significant relief in the healthcare sector. Basic Customs Duty (BCD) has been fully exempted on 17 cancer drugs, which is expected to substantially reduce the cost of chemotherapy and related treatments. In addition, seven medicines used for treating rare diseases, along with specialized medical foods, have also been made duty-free, improving affordability for patients with critical conditions. Further, diabetes care has become more affordable, as the rationalization of supply chain taxes is likely to lower the prices of insulin and other essential diabetic medicines. 

• Consumer Goods 

Several consumer goods are expected to become cheaper due to reductions and exemptions in customs duties. Mobile phones and tablets will see a drop in prices as duties on key components such as connectors, PCBAs, and battery covers are reduced. Domestic microwave ovens will also become more affordable since the Basic Customs Duty (BCD) on certain manufacturing parts has been removed.  

In addition, duty-free import of inputs like Wet Blue for leather footwear and accessories has been allowed, which will lower production costs in the leather sector. Further, the extension of duty exemptions on equipment used for lithium-ion cell manufacturing is likely to reduce the overall cost of electric vehicles. 

• Services 

Travelers are going to get an advantage since the TCS (Tax Collected at Source) on overseas tour packages has been reduced from 5-20%, thus making foreign holidays cheaper. Additionally, TCS on remittances for foreign education and medical purposes is also capped at 2%, thus easing the burden of students studying abroad. 

• Tax-related Reliefs 

A salaried individual continued to benefit from a standard deduction of Rs 75,000 in this new tax regime. Also, any interest awarded by the Motor Accident Claims Tribunal (MACT) is now fully exempt from income tax, providing further relief to individuals receiving compensation from accident claims. 

Post-Budget 2026: Items That Just Got Costlier 

The list of items that just got costlier post-budget 2026 is as follows: 

• Luxury and Non-Essential Goods 

Imported luxury products, such as premium watches, will face higher tariffs to support domestic high-end brands. Duties on imported alcoholic beverages, including spirits and wines, will also increase. Similarly, prices for high-end cameras are expected to go up. 

• Environment & Sin Goods 

Cigarettes and tobacco products are set to become more expensive due to an increase in the National Calamity Contingent Duty (NCCD). Additionally, duties on certain plastics and non-recyclable packaging materials have also been raised. 

• Health & Wellness Adjustments 

Coffee lovers may see an increase in coffee prices, as duty exemptions on coffee roasting and brewing machines will be removed. This could make café-style home equipment slightly more expensive. 

• Tax Adjustments 

The Securities Transaction Tax (STT) has gone up 0.05% on Futures and 0.15% on Options, making trading a bit costlier for active retail investors.  

A Focus on Fisheries, Livestock & HighValue Agriculture 

Budget 2026 has ensured to increase the incomes of farmers as a central pillar of India’s agricultural strategy. With the inflation, rising costs, climate change, and changing market demands, the focus is shifting from traditional farming to diversified, value-driven and employment-oriented agricultural models.   

An initiative has been taken by the Government of India through this budget in various agricultural sectors like fisheries, animal husbandry, and highvalue agriculture aim to create sustainable livelihoods and strengthen rural prosperity. 

Here mention below are the depth details for the same: 

Fisheries: Strengthening the Blue Economy 

The fisheries sector generates a significant income and employment, especially in the coastal and inland regions. For this, the Government has taken initiatives to support the integrated development of 500 reservoirs and Amrit Sarovars to promote scientific aquaculture and better water utilization. Also, Start-ups, women-led groups, and Fish Farmers Producer Organizations (FFPOs) will be encouraged to build strong market linkages, ensuring inclusive growth and better price discovery for fishers. 

Animal Husbandry: Promoting Rural Entrepreneurship 

In order to support animal husbandry, this budget has introduced to unlock its full potential by supporting through entrepreneurship led reforms. These covers a credit-Linked Subsidy Programme, modernization and scaling-up of livestock enterprises, and the development of integrated value chains for livestock, dairy, and poultry. While Animal Husbandry serves as a key source of supplementary income in rural and peri-urban India. 

High-Value Agriculture: Diversification for Better Returns  

 To increase farm profitability and reduce dependence on traditional crops, a high value agriculture is being promoted across regions. While coastal areas will focus on coconut, sandalwood, cocoa, and cashew, the North-East on agar trees, and hilly regions on walnuts, almonds, and pine nuts. These crops offer a higher income potential, encourage value addition and overall supports agro-processing industries aligned with regional strengths. 

Coconut, Cashew & Cocoa: Building Global Competitiveness 

India is the world largest coconut producer, supporting about 30 million livelihoods. A proposed Coconut Promotion Scheme is to replace old and unproductive trees with high-yielding varieties to improve productivity and competitiveness. Similarly, a dedicated Programme for cashew and cocoa will be established to make India self-reliant in production and processing boost exports, and position Indian Cashew and Indian Cocoa as premium global brands by 2030. 

Sandalwood & Nut Orchards: Reviving Traditional Strengths 

As we know Sandalwood is deeply rooted with the India’s cultural heritage, therefore this Budget has introduced to focused its cultivation and post harvested processing in partnerships with state governments. Along with that an old and low-yielding orchards of walnuts, almonds, and pine nuts will be rejuvenated through high-density cultivation and value addition, with a strong emphasis on youth participation. 

Budget 2026: What’s Changing in TDS & TCS from April 1 

The Union Budget 2026 has introduced an important reform in the TDS and TCS framework under the Income Tax Act, 2025. Its goal is to rate rationalization, compliance simplification, clarity in interpretation, relief to taxpayers, and partial decriminalization. These changes will be effective from April 2026 unless stated otherwise. Given below are details for the same: 

Rationalization of TCS Rates- Section 394(1) 

Earlier Section 394(1) prescribed multiple and inconsistent TCS rates for different transactions. On the other hand, Union Budget 2026 proposes to rationalize and standardize TCS rates, wherever feasible, while also providing rate reduction relief in certain cases. 

Table for Revised TCS Rate Structure 

S. No.	Nature of Receipt	Current Rate	Proposed Rate
1	Sale of alcoholic liquor for human consumption	1%	2%
2	Sale of tendu leaves	5%	2%
3	Sale of Scrap	1%	2%
4	Sale of minerals (coal, lignite, iron ore)	1%	2%
5(a)	LRS remittance- education / medical treatment exceeding ₹10 lakh	1%	2%
5(b)	LRS remittance-other purposes	20%	20% (unchanged)
6	Sale of “overseas tour Programme  package” including expenses for travel or  hotel stay or boarding or lodging or any  such similar or related expenditure	(a) 5% of amount or  aggregate of amounts  up to ten lakh rupees  (b) 20% of amount or  aggregate of amounts  exceeding ten lakh  rupees.	2% without threshold

Overseas Tour Programme Package- Major Relief 

Particulars	Earlier Provision	Budget 2026 Change (Effective 1 April 2026)
TCS rate on overseas tour packages	5% up to ₹10 lakh	Uniform TCS rate of 2%
Higher value packages	20% above ₹10 lakh	No higher rate applicable
Threshold limit	₹10 lakh threshold applied	Threshold of ₹10 lakh removed
Applicability	Rate depended on tour cost	Applicable irrespective of amount

Impact of Union Budget 2026 

Overall, the Union Budget 2026 has reduced the tax burden on travelers, prevents business shift from Indian tour operators to overseas sellers and simplifies compliance for tour operators. 

Liberalized Remittance Scheme (LRS) – Rate Reduction 

This liberalized remittance scheme has given significant relief to students and patients remitting funds abroad, obtaining degrees from foreign universities.  

Purpose	Earlier TCS	New TCS
Education / Medical treatment (above ₹10 lakh)	5%	2%
Other purposes	20%	No change

Enabling Electronic Application for Lower / Nil TDS Certificates- Section 395 

Particulars	Details
Earlier Position	• Application for lower or nil TDS had to be filed manually before the Assessing Officer   • The process was time-consuming and involved heavy compliance
Budget 2026 Amendment	• Payee can now apply electronically   • Application to be submitted before a prescribed income-tax authority   • Certificate may be:   – Issued electronically, or   – Rejected if conditions are not fulfilled or the application is incomplete
Key Benefits	• Significant compliance relief for small taxpayers   • Faster processing   • Improved transparency in the system

TDS on Supply of Manpower – Ambiguity Removed 

Aspect	Details
Issue Earlier	There was confusion on whether the supply of manpower should be taxed as contract work under Section 393(1) (TDS at 1% / 2%) or as technical/professional services under Section 393(1) (TDS up to 10%).
Budget 2026 Clarification	Supply of manpower has been explicitly included under the definition of “work” in Section 402(47).
Applicable TDS	• 1% if the payee is an Individual or HUF  • 2% in all other cases
Result	Reduced litigation risk and uniform tax treatment across taxpayers.

Deduction Allowed to Non-Life Insurance Business for Late TDS Payment 

Aspect	Details
Issue Earlier	If TDS was not deducted or paid on certain expenses, the related expense was disallowed. However, there was no clear mechanism to allow the deduction in a later year after TDS payment.
Budget 2026 Solution	Schedule XIV has been amended. A new sub-paragraph has been proposed to allow deduction of such expenses in the year in which TDS is actually deducted and paid.
Applicability	Applicable specifically to non-life insurance businesses.
Effective From	Applicable from Assessment Year (AY) 2026–27 onwards.

Decriminalization & Rationalization of TDS/TCS Offences- Section 476 & 477 

Category	Nature of Default	Punishment
Fully Decriminalized Offences	Failure to deposit TDS on lottery or crossword puzzle winnings	No imprisonment
	Failure to deposit TDS on benefits or perquisites arising from business or profession	No imprisonment
Modified Punishment Structure	Online gaming winnings / Virtual Digital Asset (VDA) transactions	–
	TDS default exceeding ₹50 lakh Simple imprisonment up to 2 years, or fine, or both	Simple imprisonment up to 2 years/fine/both
	TDS default between ₹10 lakh and ₹50 lakh Simple imprisonment up to 6 months, or fine, or both	Simple imprisonment up to 6 months/fine/both
	Other cases	Fine only

TDS on Sale of Immovable Property by Non-Resident – Procedural Relief 

Aspect	Earlier	Now	Impact
TAN Requirement	Buyer was required to obtain a Tax Deduction and Collection Account Number (TAN) for TDS compliance	No TAN required	Removes an extra registration step for buyers
Mode of TDS Payment	TDS could be deposited only after obtaining TAN	TDS can be deducted and deposited using the resident buyer’s PAN-based challan	Makes the process faster and more convenient
Compliance Burden	High procedural and documentation burden	Simplified and streamlined procedure	Reduces compliance hurdles for buyers
Overall Effect	Lengthy and complex process for property purchase from NRIs	Easy and straightforward TDS compliance	Simplifies property transactions involving NRIs

How People Can Benefit from the New Budget Changes? 

People can benefit from the Union Budget 2026 in the following ways: 

Cheaper International Travel  

TCS are reduced to 2%, therefore the upfront cost of booking foreign trips is much lower. 

Upgrade Electronics Locally 

You may prefer buying “Made in India” smartphones and appliances instead of buying imported gadgets as they benefit most from the new duty cuts. 

Review Trading Strategies 

In order to avoid tax slippage F&O traders should account for the higher STT in their profit/loss calculations. 

Maximize New Tax Regime 

In case your income is below Rs 12.75 lakh (including standard deduction), ensure you opt into New Tax Regime to enjoy zero tax liability. 

Full list of Costlier and Cheaper Items 

The table given below is the full list of costlier and cheaper items: 

List of Items becoming Cheaper 

Category	Item	Customs Duty Change	Impact
Healthcare	Cancer & Rare Disease Drugs	Basic Customs Duty (BCD) fully exempt on 17 cancer drugs and 7 drugs for rare diseases	Significant reduction in treatment costs for patients
Travel & Study	Foreign Tour Packages	Tax Collected at Source (TCS) reduced from 5–20% to 2% with no threshold	Cheaper international travel and lower upfront booking costs
Electronics	Mobile Phones & Tablets	Reduced customs duties on specific components and capital goods	Lower retail prices for Made-in-India smartphones and tablets
Electronics (Household Appliances)	Microwave Ovens	BCD exempted on specified parts and components	Reduced production costs and more affordable kitchen appliances
Clean Energy	EV Batteries & Solar Panels	BCD exempted on lithium-ion cells and solar glass inputs (Sodium Antimonate)	Lower costs for electric vehicles and solar power installations
Aviation	Civil Aircraft Components	BCD fully exempt on parts used for manufacturing and MRO	Boost to domestic aircraft manufacturing and reduced maintenance costs
Exports	Leather & Textiles	Duty-free import of inputs for shoe uppers and technical textiles	Cheaper raw materials for footwear and textile exporters
Consumer Goods	Personal Imports	BCD reduced from 20% to 10%	Lower costs for goods imported for personal use
Seafood	Shrimp & Fish Feed	Duty-free import limit for inputs increased from 1% to 3%	Reduced input costs for the marine and seafood export industry

List of Items Becoming Costlier 

Category	Item	Customs Duty Change	Impact
Trading	Stock Market Transactions	STT hiked to 0.05% on Futures and 0.15% on Options	Higher cost for retail traders in the F&O segment
Luxury Goods	Imported Watches & Alcohol	Rationalization of duties / Excise hikes on high-end imports	Increased prices for premium luxury brands
Sin Goods	Tobacco & Cigarettes	Hike in National Calamity Contingent Duty (NCCD) or Excise	Higher retail prices for cigarettes and pan masala
Home/Kitchen	Coffee Machines	Removal of existing BCD exemptions on roasting/brewing units	Higher cost for imported professional coffee equipment
Agriculture	Specific Fertilizers	Removal of import fee exemptions on Ammonium Phosphate	Potentially higher costs for certain manure and complex fertilizers
Photography	Imported Cameras/Equipment	Duty increases on specific filming and sound recording equipment	Higher costs for high-end professional imported gear

Sector Specific Price Changes  

Here’s the table below, which states the sector-wise specific price changes as per Union budget 2026. 

Sector	Impact	Reason
Automobile	Mixed	Cheaper EV batteries, but luxury imported cars remain expensive
Electronics	Cheaper	Lower duties on phone and TV parts due to Semiconductor Mission 2.0
Agriculture	Costlier	Fertilizer prices may rise due to the removal of import exemptions
Marine	Cheaper	Duty-free import limit for shrimp feed increased

Conclusion  

The Union Budget 2026-27 presents a forward-looking roadmap aimed at transforming India into a self-reliant, technologically advanced, and inclusive economy. With a strategic focus on boosting domestic manufacturing, expanding healthcare access, and supporting underprivileged sections of society, the budget reflects a careful balance between ambition and social equity. Key initiatives across seven frontier sectors including Biopharma SHAKTI, Semiconductor Mission 2.0, electronics, rare earth minerals, chemicals, textiles, and sports goods signal India’s intent to strengthen industrial ecosystems, enhance global competitiveness, and create sustainable employment opportunities. 

At the same time, the budget addresses everyday citizen concerns by making essential healthcare, electronics, consumer goods, and international travel more affordable, while rationalizing taxes and duties to encourage local production and investment. Agricultural reforms, high-value crops, and fisheries initiatives aim to diversify rural incomes, strengthen food security, and support climate-resilient growth. Reforms in TDS, TCS, and tax compliance further simplify the financial landscape for businesses and individuals. 

Overall, Budget 2026 reinforces India’s vision of Viksit Bharat a developed, inclusive, and globally integrated economy. By combining economic growth, technological advancement, and social inclusion, the budget lays a solid foundation for India’s next phase of development, empowering citizens, industries, and the nation as a whole. To get more insights into the latest updates, visit Enterslice.  

Frequently Asked Questions About Union Budget Economic Implications