In her ninth consecutive budget presentation on Sunday, February 1, 2026, Finance Minister Nirmala Sitharaman unveiled the Union Budget 2026, emphasizing increased capital expenditure, support for domestic manufacturing, infrastructure development, and maintaining fiscal discipline. The budget, driven by "Yuvashakti" (youth power), is built upon three pillars: accelerating economic growth, fulfilling citizens' aspirations, and ensuring universal access to resources.

No Changes to Income Tax Slabs

In a move that provides stability for taxpayers, the budget did not introduce any changes to the existing income tax slabs. This means that individuals will continue to pay income tax at the same rates as the financial year 2025-26. While there were no modifications to the income tax slabs, the new Income Tax Act, 2025, will come into effect from April 1, 2026, with simplified rules and return forms to be notified soon. The 2025 I-T law aims to simplify direct tax laws, remove ambiguities, and reduce litigation, with no change in tax rates.

Capex Boost

The government has significantly increased the capital expenditure (capex) target, raising it to ₹12.2 lakh crore for FY27, up from ₹11.2 lakh crore in the current fiscal year. This boost in capex is aimed at continuing the momentum of public capital expenditure, which has increased from ₹2 lakh crore in 2014-15. The enhanced capex is expected to drive infrastructure development and boost economic growth. The government expects the fiscal deficit to narrow slightly to 4.3% of GDP in 2026-27, compared with 4.4% projected for the current year.

NRI Benefits

The budget included several provisions to benefit Non-Resident Indians (NRIs). One significant change is the simplification of the TDS (Tax Deducted at Source) process for property sales involving NRIs. Resident buyers can now deduct and deposit TDS using a PAN-based challan, eliminating the requirement for a separate Tax Deduction and Collection Account Number (TAN). This change aims to ease compliance and reduce procedural hurdles in property transactions for NRIs.

Furthermore, the budget has proposed increasing the investment limit for Persons Resident Outside India (PROIs) in equity instruments of listed Indian companies under the Portfolio Investment Scheme. The individual PROI limit will rise from 5% to 10%, while the overall cap for all PROIs will increase from 10% to 24%, allowing greater foreign participation in Indian markets.

To attract global talent, the budget proposes an exemption on non-India-sourced income of non-resident experts for five years under notified schemes. The budget also proposes exempting all non-residents paying tax on a presumptive basis from Minimum Alternate Tax (MAT).

Other Key Highlights

• Increased STT on Futures: The Securities Transaction Tax (STT) on commodity futures has been increased from 0.02% to 0.05%.
• Customs Duty Relief: The tariff rate on all dutiable goods imported for personal use has been reduced from 20% to 10%. Basic customs duty has been exempted on 17 drugs and medicines, particularly benefiting cancer patients.
• Manufacturing Boost: Incentives are given for MSMEs, rare-earth corridors and high-speed rail projects. Focus on scaling up manufacturing in strategic and frontier sectors. An increase in the Electronics Components Manufacturing Scheme outlay to Rs 40,000 crore.
• Focus on States: The central government allocated Rs 14 lakh crore to the states, ensuring resources for development and welfare initiatives across the country.

Overall, the Union Budget 2026 aims to balance economic growth with fiscal prudence, providing a stable tax regime while incentivizing investment and simplifying procedures for NRIs. The increase in capital expenditure and focus on manufacturing are expected to drive economic activity and create opportunities for businesses and individuals.