Budget 2026 Overview: What It Means For Taxpayers and Businesses

Till now, most of you know that the Budget 2026 speech of our Hon'ble Finance Minister was among the third shortest speeches in the last seven years, lasting for 1 hour and 24 minutes. However, very few business owners and taxpayers know what this Budget has in store for them. That’s why we are writing this blog. 

In this blog, we will understand the minute details of the Budget 2026 in simple language. Let’s dive in. 

Budget 2026 Highlights at a Glance

Before we dive deeper into the details, here is the summary of Budget 2026: 

• Focus on fiscal discipline without slowing growth.

• Continued support for infrastructure and job creation

• Some relief and simplification in direct taxes

• GST stability with fewer changes

• Strong push for MSMEs through credit and compliance support

Fiscal Growth 

When the government discusses the fiscal outlook, it is actually discussing the bank balance. How much money comes in? How much goes out? And how it is handled.

Revenue Sources: Where Does Money Come From

Expenditure Allocation: Where Does Money Go?

Looking at expenditures, the message is clear: Keep spending smartly, but do not lose control.

For FY 2026-27, the Centre has estimated the fiscal deficit at 4.3% of GDP, which is slightly lower than the 4.4% of GDP it is planned to have in FY 2025 to 26. The deficit in revenues remains at 1.5% of GDP, and the primary deficit is projected to be 0.7%.

The government has been on its big push in asset building for the past few years and continues. The capital expenditure outlay of FY 2026-27 is ₹12.2 lakh crore, which is approximately 9% more than the outlay of the previous year, ₹11.21 lakh crore. That is a huge signal. 

Infrastructure (roads, rail, freight corridors, ports, power and city infrastructure) is one of the main priorities, as such projects not only generate employment but also reduce business logistics costs in the long run.

The Hon'ble Finance Minister stated that nominal GDP growth of 10% is expected in FY2026-27. And yes, the government anticipates its receipts to increase as well. Receipts less borrowings are approximated to be ₹36.51 lakh crore, which is approximately 7.2 % higher than the revised estimate of this year.

Changes in Direct Tax

Changes in direct tax are important since they influence what you will have in your pocket and the level of stress experienced during tax filing season.

There was no major change announced in Budget 2026 from a direct tax perspective. However, a few changes were tabled; these changes were introduced to reduce friction in the system. 

Key changes announced:

1) TCS Reduced Foreign Tour Packages.

TCS on the sale of overseas tour program packages has come down to flat 2% instead of 5% and 20%. 

2) TCS Cut LRS Education and Medical.

TCS under the Liberalised Remittance Scheme (LRS) on education and medical purposes is down from 5%to 2%.

3) Additional Time to Amend your Return

The deadline to submit a revised return has been extended to 31st March from 31st December, subject to a nominal late fee. 

4) Staggered ITR Due Dates

Individuals filing ITR 1 and ITR 2 continue with the 31 July timeline, and non-audit business cases or trusts get time till 31 August.

5) Simpler Procedure for a Lower or NIL TDS Certificate for Small Taxpayers.

A rule-based automated scheme is proposed so that small taxpayers can get a lower or NIL deduction certificate without approaching the tax assessing officer. 

6) Depository Handling of Easier Form 15G and 15H.

Depositories will be empowered to accept Form 15G and Form 15H and distribute them to the concerned companies. This is useful when you have securities in several companies.

7) Motor Accident Tribunal Interest Exempt

The interest received by a natural person on a claim made before the Motor Accident Claims Tribunal will not be subject to income tax and TDS. 

8) One-time Foreign Asset Disclosure Scheme for Small Taxpayers.

A single-time six-month scheme is proposed for small taxpayers to report their overseas income or assets up to specified limits, and rules of payment and immunity.

Indirect Tax Changes (GST)

Since major changes were introduced earlier, only specific GST amendments were introduced in Budget 2026, which were aimed at reducing the number of disputes and enhancing the cash flow through refunds. 

Key changes announced in GST

1) Discounts on Sales 

The CGST law is proposed to be changed such that, in case of a post-sale discount, the condition of the discount being linked to a prior agreement is eliminated. 

2) Strengthening of Credit Notes by Section Reference

Section 34 is suggested to be amended to include a reference to section 15, to match credit note handling with the rules of valuation.

3) Faster Inverted Duty Structure Reimbursements

It is suggested that provisional refunds can be extended to refunds that are the result of an inverted duty structure. This assists businesses in which the input tax rate is greater than the output tax rate.

4) Refund Threshold Relief on Exports.

It is proposed that the limit on sanctioning claims of refunds of goods exported out of India should be eliminated with the payment of tax. 

5) Change in the Place of Supply of the Intermediary Services.

Section 13(8) Clause (b) of the IGST Act is proposed to be omitted in order to make place of supply of intermediary services as it is provided in the default clause in section 13(2).

Growth Schemes for MSMEs

If you are an MSME owner, this is the Budget 2026 that you must know. The following is the list of schemes proposed for the growth of MSMEs: 

1) ₹10,000 crore SME Growth Fund

A special SME Growth Fund of 10,000 crore has been launched to produce future champions, where incentives are offered on the basis of select criteria.

2) Fund Top-up in Favour of Micro Enterprises.

Self-Reliant India Fund, which was established in 2021, is proposed to be topped up with 2,000 crore to keep funding micro enterprises and ensure risk capital accessibility.

Other Important Updates from Budget 2026

• Tax holiday for foreign cloud firms using Indian data centres till 2047. 
• MAT reduced from 15% to 14%
• STT on futures contracts raised to 0.05% from 0.02% (effective April 1, 2026).
• STT on options premium increased to 0.15% from 0.1%.
• STT on exercise of options hiked to 0.15% from 0.125%.
• Defence allocation increased to ₹5.94 lakh crore for modernising our arsenal. 

Closing Notes 

Unlike other Budgets, the 2026 budget was based on structural cleanup rather than reforms. After understanding all the details, experts are concluding that the government is focusing on tightening fiscal numbers, keeping capex strong, simplifying direct tax compliance, and reducing GST friction. 

Frequently Asked Questions on Budget 2026

What are the main highlights of the 2026 budget?

The following pointers are the highlights of Budget 2026: 

Capex Surge: Rs 12.2 lakh crore for infra

Fiscal Target: Deficit at 4.3% GDP

Tax Stability: No slab changes; Rs 12L income nearly tax-free

STT Hike: Futures 0.05%, options 0.15%

What is the tax free income in India 2026?

Income up to ₹12 Lakhs is tax-free 

Did Budget 2026 announce any customs duty exemptions for medicines?

Yes. The Budget documents list customs duty exemptions on 17 cancer drugs. 

About the author

Mehul Jagwani

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Mehul is a seasoned content writer with a passion for simplifying complex accounting and GST topics. With a keen interest in entrepreneurship and business management, he specializes in creating informative and engaging content for themunim.com. His goal is to help businesses understand and implement accounting and GST software solutions effectively. When he's not crafting content, Mehul enjoys exploring new places and spending time with his Golden Retriever.