Union Budget 2026-27: The "Reform Express" Takes Flight

NEW DELHI – In a historic departure from 75 years of parliamentary tradition, Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 today, February 1, 2026. The speech famously "flipped the script," moving the government's core economic vision and structural roadmap into Part B, a section traditionally reserved for technical tax amendments.

This pivot signals a shift toward "Strategic Indispensability," focusing on deep-rooted reforms to insulate India from global volatility while turbocharging domestic manufacturing.

The Part B Pivot: Strategic Reforms

By expanding Part B, the government has integrated tax policy directly with industrial strategy. Key structural announcements include:

• Customs Duty Overhaul: A comprehensive rationalization of Basic Customs Duty (BCD) to correct "inverted duty structures."
• Exemptions: Slashed duties on lithium-ion cell manufacturing equipment, 17 cancer drugs, and critical mineral processing capital goods.
• Aviation & Defence: Massive BCD cuts for civilian aircraft components and raw materials for defence MRO (Maintenance, Repair, and Overhaul) hubs.
• The "Unified Zones" Mission: A plan to evolve SEZs into Unified Manufacturing & Export Zones.
• Domestic Integration: These zones will allow "reverse job-work" and Indian Rupee (INR) payments for services, effectively merging export enclaves with the domestic supply chain.
• Biopharma Shakti: A ₹10,000 crore initiative to establish 1,000 accredited clinical trial sites and position India as a global biopharma hub.

Personal Income Tax: Modest Relief for the Middle Class

While the budget focused heavily on structural reforms, the salaried class received a targeted "inflation buffer" under the New Tax Regime.

Key Tax Highlights:

Standard Deduction Hike: Increased from ₹75,000 to ₹1,00,000 for salaried individuals under the New Tax Regime.

• Slab Rationalization: The zero-tax bracket has been stretched to ₹4 Lakh, with the 30% top rate now kicking in only above ₹24 Lakh.
• LTCG Exemption: The exemption limit for Long-Term Capital Gains (LTCG) on listed equities was raised from ₹1.25 lakh to ₹2 Lakh.
• Section 87A Rebate: Maintained to ensure that individuals earning up to ₹12.75 Lakh (after deductions) pay zero effective tax.

"If companies are taxed on net profit and not gross turnover, the same logic of basic deductions must eventually apply to the hardworking salaried class." — Expert sentiment echoed during post-Budget analysis.

Corporate & Digital Reforms

MAT Overhaul: The Minimum Alternate Tax (MAT) has been reduced from 15% to 14% and turned into a "Final Tax" with no credit carry-forward, aimed at simplifying compliance.

• Cloud Tax Holiday: A new tax incentive for cloud service providers who establish local data centers in India to boost data sovereignty.
• Bharat Vistaar: An AI-powered, multilingual platform integrating agricultural practices with real-time weather and soil data for farmers.
• Economic Health: The "Triple Kartavyas"

The Finance Minister anchored the budget in three Kartavyas (Responsibilities):

• Accelerate & Sustain Growth: Aiming for a 7.2% GDP growth target.
• Fulfill Aspirations: Focusing on the "Creator Economy" and education townships.
• Inclusive Access: Ensuring resources reach every district through schemes like one girls' hostel per district and the National Fibre Scheme.