Union Budget 2026-27: What It Means for You, Businesses, and Markets

The Union Budget for FY 2026-27 outlined the government’s plans for spending, taxation, and sectoral support in the coming year.

It included measures related to manufacturing, technology, and compliance.

The Budget also introduced changes affecting market participants, such as revisions to transaction taxes and investment limits.

These announcements influenced investor behaviour on Budget day and were reflected in market movements.

Below is a simple overview of the key provisions of the Budget and how they relate to individuals, businesses, and investors.

The total budget size for FY27 stands at ₹53.47 lakh crore.

This shows the government’s strong focus on supporting economic growth.

Capital expenditure has been set at ₹12.22 lakh crore, which means more money will be spent on building roads, railways, and infrastructure.

The fiscal deficit has been estimated at 4.3% of GDP.

The revenue deficit is estimated at 1.5% of GDP at ₹5.92 lakh crore.

India’s GDP for FY27 is projected at ₹393 lakh crore, showing confidence in steady economic growth.

A large part of the budget is directed towards core sectors.

Transport received the highest allocation of ₹5.98 lakh crore. Defence followed closely with ₹5.94 lakh crore.

Rural Development and Home Affairs also get significant funding, showing a focus on villages and internal security.

These sectors are important for long-term development and social welfare.

For individuals, income tax slabs under the new regime remain unchanged. Income up to ₹4 lakh is tax-free.

The highest tax rate of 30% applies to income above ₹24 lakh.

Salaried employees earning up to ₹12.75 lakh per year will continue to pay no income tax under existing benefits.

The government has also introduced the New Income-Tax Bill 2025.

It aims to simplify the old 1961 Act by reducing sections and using clearer language. The new law is expected to come into effect from April 1, 2026.

Investors and traders will see some major changes.

Buyback income will now be treated as capital gains for all shareholders.

This is meant to protect small investors. However, promoters will have to pay extra tax.

The biggest change is the increase in Securities Transaction Tax (STT).

STT on futures and options has been raised. This increases trading costs, especially for active traders.

For foreign investors, PROI limits have been relaxed.

Individuals can now invest up to 10% in listed companies, while the overall limit has been raised to 24%.

This may improve foreign participation in Indian markets.

Several customs duties have been reduced to support manufacturing and public welfare.

17 cancer medicines have been exempted from basic customs duty.

This will help reduce treatment costs.

Nuclear power projects will enjoy duty exemption till 2035, helping clean energy development.

Parts for aircraft manufacturing and lithium-ion battery production have also received duty relief.

These steps aim to strengthen India’s manufacturing base and reduce dependence on imports.

The government has announced strong support for electronics and semiconductors.

India Semiconductor Mission 2.0 has received ₹1,000 crore. It aims to improve chip manufacturing and skill development.

The Electronics Components Manufacturing Scheme has also been expanded, with its outlay raised to ₹40,000 crore.

In addition, dedicated rare earth corridors will be set up in four states, namely Tamil Nadu, Kerala, Odisha and Andhra Pradesh.

This will support the mining and processing of critical minerals needed for high-tech industries.

The budget also promotes medical tourism through 5 new hubs.

It supports the creative economy by setting up AVGC labs in 15,000 schools and 500 colleges.

A ₹10,000 crore SME Growth Fund has been announced to help small businesses access capital.

Markets reacted negatively after the budget announcement. The Nifty 50 fell by over 2%, while PSU Banks and Metals saw sharp declines.

The main reason was the STT hike, which increased trading costs. This led to selling pressure, especially in financial and metal stocks.

Budget 2026-27 focuses on infrastructure, manufacturing, and technology while maintaining fiscal discipline.

It supports long-term growth but has disappointed traders in the short term. For individuals, tax stability is a positive.

For businesses, manufacturing incentives offer new opportunities. For investors, higher costs mean more cautious trading ahead.

Overall, this budget aims to build a stronger economic foundation, even if markets need time to adjust.

Sources:

Government of India
Budget Highlights Govt. of India
Ministry of Finance
ClearTax
NDTV
Moneycontrol
PIB