Union Finance Minister Nirmala Sitharaman on Sunday tabled the Union Budget for the financial year 2026-’27.
In a speech that lasted for about 1 hour and 25 minutes, the finance minister made a slew of announcements about taxation, fiscal deficit and infrastructural allocations.
Here are the key announcements from Sitharaman’s Budget:
Income Tax
The finance minister announced no changes to income tax rates and slabs for fiscal year 2026-’27.
Sitharaman announced that tax-paying timelines will be staggered and the deadline for revising filed income tax returns will be extended from December 31 to March 31, on the payment of a nominal fee.
The deadline for those filing ITR-1 – meant for salaried individuals and pensioners earning up to Rs 50 lakh – and ITR-2 – meant for individuals and Hindu Undivided Families who do not fall in the ITR-1 category – will remain July 31.
She confirmed that the 2025 Income Tax Act, which replaces the 1961 Income Tax Act, will take effect from April 1. The law was cleared by Parliament in August.
Fiscal deficit
India’s fiscal deficit is estimated to be 4.3% of the gross domestic product in the financial year 2026-’27, Sitharaman told Parliament. This will be marginally lower than the Budget estimate of 4.4% in 2025-’26.
A fiscal deficit arises when the government’s expenditure is more than the revenue it generates in a given financial year.
National debt
India’s debt-to-gross domestic product is estimated to be 55.6% in the next financial year, marginally lower than the revised estimate of 56.1% in the fiscal year 2025-’26.
The debt-to-GDP ratio measures a country’s total debt against the size of its economy.
Last year, Sitharaman had indicated that the government was targeting a debt-to-GDP ratio of 51% by 2030-’31.
Expenditure
The total expenditure of the Union government is expected to be Rs 53.5 lakh crore in the financial year 2026-’27, Sitharaman said.
The government’s net tax receipts are estimated to be Rs 28.7 lakh crore during the fiscal year, she said.
Devolution of funds
Sitharaman said that the Union government has accepted the recommendation made by the 16th Commission to retain the vertical share of devolution at 41%.
As a result, the Centre will provide states Rs 1.4 lakh crore in the financial year 2026-’27 as Finance Commission grants, she said. The amount includes grants for rural and urban civic bodies, and disaster management.
Capex
The finance minister proposed to increase capital expenditure to Rs 12.2 lakh crore from Rs 11.2 lakh crore in the current fiscal year.
Capital expenditure is the money that the government spends on building infrastructure such as roads, schools and hospitals.
She also proposed to set up a new dedicated freight corridors connecting West Bengal’s Dankuni and Gujarat’s Surat, 20 new national waterways and seven high-speed rail corridors between major cities.
Railways
The Ministry of Railways was allocated Rs 2.9 lakh crore for the fiscal year 2026-’27. The revised estimate for 2025-’26 was Rs 2.6 lakh crore.
VB-G Ram G allocation
The Union government allocated Rs 95,691 crore for the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) scheme. The VB-G RAM G Act replaced the Mahatma Gandhi National Rural Employment Guarantee Act in December.
The MGNREGA was introduced in 2005 by the Congress-led United Progressive Alliance and aimed at enhancing the livelihood security of households in rural areas. The scheme guaranteed 100 days of unskilled work annually for every rural household that wants it, covering all districts in the country.
Under the new law, the number of guaranteed workdays will increase to 125, while states’ share of costs will rise to 40%. The Union government will continue to bear the wage component, with states sharing material and administrative expenses.
The legislation has drawn criticism from economists and labour rights experts.
The VB-G RAM G Act was passed by Parliament despite protests by Opposition parties.
Gram Swaraj
The finance minister proposed to launch the Mahatma Gandhi Gram Swaraj initiative to strengthen khadi, handloom and handicrafts.
“This will help in global market linkage and branding,” Sitharaman said. “It will streamline and support training, skilling, quality of process and production.”
The government’s annual Economic Survey released on Thursday predicted that India’s real gross domestic product is expected to grow between 6.8% and 7.2% in the financial year 2026-’27.
The cumulative impact of policy reforms in recent years appeared to have lifted the economy’s medium-term growth potential closer to 7%, it added.
Read more on Budger 2026 here.
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