Union Budget 2026–27: Growth Focus with Tax and Market Reforms

Union Budget 2026–27: Growth Focus with Tax and Market Reforms..!

S.Sridharan, Founder, https://www.walletwealth.co.in/

The Union Budget for the financial year 2026–27 was presented by Finance Minister Nirmala Seetharaman on February 1, 2026.

The budget outlines India’s economic roadmap for the coming year, with a strong emphasis on accelerating growth, maintaining fiscal discipline, and simplifying taxation systems.

It reflects the government’s intent to balance economic expansion with structural reforms and responsible financial management.

Economic Growth and Infrastructure Push

One of the key highlights of the budget is its clear focus on sustaining India’s economic growth momentum. The government has projected GDP growth at around 7.4 percent for the upcoming year, supported by robust domestic consumption and increased public investment.

To strengthen the country’s infrastructure backbone, capital expenditure has been raised significantly to approximately ₹12.2 lakh crore. This enhanced allocation is expected to boost critical sectors such as roads, railways, energy, and urban development. The increased investment in infrastructure is aimed at creating jobs, improving productivity, and stimulating long-term economic activity.

Support for Manufacturing and Technology

The budget places strong emphasis on strengthening India’s manufacturing capabilities and technological self-reliance. Special initiatives have been introduced to promote semiconductor manufacturing, rare-earth mineral corridors, and green technologies

Support measures for Micro, Small, and Medium Enterprises (MSMEs) have also been expanded. These initiatives aim to improve competitiveness, encourage innovation, and integrate Indian manufacturers more deeply into global supply chains.

Fiscal Discipline Maintained

Despite increased public spending, the government has reiterated its commitment to fiscal prudence. The fiscal deficit target has been set at around 4.3 percent of GDP. This demonstrates a balanced approach—stimulating economic growth while keeping government borrowing within manageable limits.

Employment and Inclusive Growth

The budget also focuses on job creation and inclusive development. New frameworks and funding mechanisms have been introduced to support small businesses, skill development, and regional economic balance. These measures aim to ensure that the benefits of growth reach a wider section of society.

Direct Tax Reforms

Direct taxes, particularly income tax, have received significant attention in the budget.

· The income tax slabs under the new tax regime have largely been maintained.

· Compliance has been simplified through measures such as nil-deduction certificates for small taxpayers, reducing unnecessary Tax Deducted at Source (TDS) burdens.

· Additional tax deductions have been introduced in specific areas such as cooperative dividend income.

· The new Income-tax Act, which will come into force from April 1, 2026, aims to simplify tax laws and reduce litigation.

These steps are expected to make tax administration more transparent and taxpayer-friendly.

Market-Related Tax Changes: Impact on Traders

A notable change announced in the budget relates to Securities Transaction Tax (STT) on Futures and Options (F&O):

· STT on futures contracts has been increased from 0.02% to 0.05%.

· STT on options premium has been raised from 0.10% to 0.15%.

These hikes will increase transaction costs for traders in the equity derivatives market. While the move is intended to boost tax revenues, it has also affected market sentiment, with shares of brokerage and exchange-related companies witnessing declines after the announcement.

Indirect Tax Highlights

GST Reforms Continue

The budget continues to strengthen the Goods and Services Tax (GST) framework under a “GST 2.0” approach. The focus remains on:

· Simplifying compliance procedures

· Reducing litigation

· Clarifying valuation rules

· Improving credit mechanisms

· Supporting exporters

Steady growth in GST collections indicates improving economic activity and provides the government with a stable revenue base.

Customs Duty Changes

Several customs duty reforms were announced to support domestic manufacturing and reduce consumer costs:

· Exemptions on parts for microwave ovens, aviation raw materials, and nuclear power projects until 2035.

· Reduction in import duties on personal-use goods (for example, from 20% to 10%).

· Modernization of customs procedures and increased digitalization to speed up clearances and boost exports.

These measures are designed to make Indian industries more competitive and to encourage ease of trade.

Conclusion

The Union Budget 2026–27 presents a balanced and forward-looking economic strategy. By combining higher public investment with structural reforms, the government aims to sustain India’s growth trajectory while ensuring fiscal stability.

The focus on infrastructure, manufacturing, technology, and tax simplification is expected to strengthen India’s economic foundation. At the same time, changes in market-related taxes and customs duties indicate the government’s intent to optimize revenue without placing undue burden on consumers.

Overall, the budget lays out a clear path toward economic transformation, positioning India for stronger, more inclusive, and sustainable growth in the years ahead.

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