Payal Agarwal
February 5, 2026
8 min read
303Table of Contents
On February 1, 2026, Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27. This was a significant milestone, as it was her ninth budget in a row and the first one delivered from the newly opened Kartavya Bhawan. While the speech laid out the country’s financial roadmap, it also pointed to a bigger change: India is moving from an emerging economy into a global powerhouse, guided by a “duty-bound” vision for a Viksit Bharat.
With a record-breaking capital expenditure of ₹12.2 lakh crore and a total overhaul of the tax code through the New Income Tax Act, 2025, this Budget is a major push for productivity, digital sovereignty, and the empowerment of India’s working and aspiring population. Whether you are a startup founder, a tech professional, or a student dreaming of a global education, the “Three Kartavyas” (Duties) outlined in this budget are designed to provide a strong foundation for future growth.
The Three “Kartavyas” (Duties)
The government has structured its vision around three fundamental responsibilities:
- Accelerate and Sustain Growth: Boosting productivity to withstand global economic volatility.
- Fulfill Aspirations: Building the capacity of citizens to be active partners in prosperity.
- Inclusive Development: Ensuring “Sabka Sath, Sabka Vikas” reaches every sector and region.
A Massive Infrastructure and Connectivity Push
Infrastructure is the engine of this budget. The government has increased capital spending to a record ₹12.2 lakh crore to ensure India stays ahead of the curve.
High-Speed Rail and National Waterways
Seven new high-speed rail corridors have been announced to link Tier-2 and Tier-3 cities with economic hubs:
- Mumbai to Pune
- Pune to Hyderabad
- Hyderabad to Bengaluru
- Hyderabad to Chennai
- Chennai to Bengaluru
- Delhi to Varanasi
- Varanasi to Siliguri
The government is also set to operationalize 20 new National Waterways over the next five years. The priority is NW-5 in Odisha, which is getting a ₹12,204 crore push to link the mining hubs of Talcher and Angul directly to the ports at Paradip and Dhamra. By moving heavy cargo like coal and iron ore via rivers instead of roads, the plan is to cut down logistics costs and take the pressure off the country’s highway networks.
Revolutionizing the MSME and Tech Landscape
The budget recognizes MSMEs as the engine of the economy, providing them with dedicated funds and regulatory relief.
- SME Growth Fund: A ₹10,000 crore fund to help small businesses scale into global champions.
- Liquidity Boost: ₹2,000 crore in targeted support for micro-enterprises.
- India Semiconductor Mission 2.0: A massive focus on advanced research and workforce training to make India a chip-making powerhouse. The Budget expands the Electronics Components Manufacturing Scheme (ECMS) / semiconductor push with an increased outlay reported around ₹40,000 crore (boosting component and semiconductor manufacturing, equipment, R&D and talent efforts).
Also read: Section 80D of Income Tax Act
Healthcare Reforms
The 2026 Budget marks a shift toward a more comprehensive health strategy, leaning heavily into domestic manufacturing, mental health resources, and making life-saving treatments more affordable.
Boosting Biopharma via SHAKTI
The government is betting big on India’s ability to produce its own biologics and biosimilars. Through the Biopharma SHAKTI initiative, ₹10,000 crore has been earmarked over the next five years. This isn’t just about funding; it’s a full-scale push to upgrade research labs, expand manufacturing plants, and train a specialized workforce to bring down the cost of high-end medicine.
Integrated Regional Hubs
In a move to decentralize quality care, the Finance Minister announced plans for five Regional Medical Hubs. Built as public-private partnerships, these hubs will act as “all-in-one” campuses where medical research and diagnostics sit right alongside post-operative care and AYUSH-based holistic treatments.
A Focus on Mental Wellness
Mental health is finally getting the institutional backing it needs. The government plans to establish NIMHANS-2 in North India while modernizing existing facilities in Ranchi and Tezpur, a clear sign that mental wellness is moving to the forefront of the national health agenda.
Easing the Financial Burden
For families battling chronic illness, the budget offers direct relief through customs duty exemptions. By removing duties on 17 different cancer drugs and several medications for rare diseases, the government is effectively slashing the steep out-of-pocket costs that often devastate household finances.
The Rise of Medical Tourism
India is doubling down on its reputation as a global medical destination. By investing in world-class diagnostic infrastructure and standardized post-care, the country is aiming to attract more international patients. The ripple effect here is better, more consistent quality of care for domestic patients as well.
Healthcare Budget: Key Allocation Highlights
The Union Budget 2026-27 increased the Ministry of Health & Family Welfare allocation to ₹1,06,530.42 crore for FY 2026-27 (an increase of nearly 10% over RE FY 2025-26). PM-ABHIM and PMSSY allocations were also increased to support new AIIMS and upgrades.
Also read: Section 37 of Income Tax Act
Major Tax Reforms: The New Income Tax Act, 2025
The most significant headline for every Indian taxpayer is the New Income Tax Act, 2025, which officially comes into effect on April 1, 2026.
Key Relief for Individuals:
- Foreign Travel and Education: TCS on overseas tour packages is slashed to a flat 2% (down from 5% and 20%). TCS for foreign education and medical treatment is also reduced to 2%.
- Staggered ITR Filing: The due date for individuals filing ITR-1 and ITR-2 is July 31, while non-audit businesses have a deadline of August 31.
- Revision Window: You can now revise your returns until March 31 with a nominal fee.
- TDS on Manpower: Payments for manpower services will now attract a lower TDS of 1% or 2%, ending years of ambiguity for businesses.
- Foreign Asset Amnesty: A one-time, 6-month window is provided for students, tech employees, and relocated NRIs to disclose foreign assets (below a specific threshold) without facing heavy prosecution.
- Education & Health Abroad: Under the Liberalized Remittance Scheme (LRS), TCS for education and medical treatment abroad is slashed to 2% (from 5%).
Income-tax slabs (unchanged in Budget 2026)
| Taxable Income Range | Tax Rate |
| Up to ₹4,00,000 | NIL |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
No change in slab rates was announced; the following are the prevailing rates that continue for FY 2026-27.
Suggested read: Next-Gen GST Reforms: 0% GST On Individual Life and Health Insurance
Education, Skill Development, and “Yuva Shakti”
The budget builds a bridge from the classroom to the boardroom:
- Education to Employment Committee: The government is establishing a High-Level Committee specifically to bridge the gap between academic degrees and industry requirements. This committee will focus on aligning higher education with the needs of the services sector, export markets, and emerging technologies, ensuring that the youth are not just educated, but employable.
- STEM Support: One girls’ hostel will be built in every district to support women in science and tech.
- AVGC Sector: 15,000 schools and 500 colleges will get Content Creator Labs for the Animation and Gaming industry.
- Khelo India Mission: A decade-long plan to transform India’s sports culture and infrastructure.
Agriculture and Purvodaya
Bharat-VISTAAR: The government is launching a multilingual, AI-powered tool to give farmers real-time, personalized advice. It links with AgriStack and ICAR data to help farmers make better calls on weather, pests, and soil, basically acting as a digital advisor to help boost their harvests.
Purvodaya Initiative: This is a big push to develop Eastern India and the North-East. The plan includes setting up new industrial corridors (like the one at Durgapur), building up tourism spots (including new Buddhist circuits), and fixing regional transport links to make the area an economic powerhouse.
Financial and Corporate Reforms
- Buybacks: Share buybacks will now be taxed as capital gains for shareholders.
- STT Increase: Securities Transaction Tax on futures has been raised to 0.05% to curb excessive speculation.
- Data Centers: Foreign cloud service providers offering services to global customers using Indian data centers will be eligible for a tax holiday until 2047, subject to prescribed conditions.
- MAT Reform: The Minimum Alternate Tax (MAT) rate has been reduced to 14% and will be treated as a final tax, with transitional provisions to allow the utilization of accumulated MAT credit.
Quick read: Government-Sponsored Health Insurance Schemes in India
Conclusion: Building a Resilient & Healthy Workforce
The Union Budget 2026-27 is a “Growth-First” roadmap. By simplifying taxes and pumping record capital into infrastructure and healthcare, the government is putting more power into the hands of the citizens.
At Onsurity, we believe this budget provides the perfect ecosystem for businesses to prioritize their people. While the government builds the physical infrastructure like Regional Medical Hubs and trauma centers, we act as the enablers of the healthcare revolution. We bridge the gap by providing businesses with a platform for comprehensive wellness, from mental health webinars and teleconsultations to discounted medicines and fitness tracking. We ensure that your team stays healthy and productive, aligning with the nation’s vision of a Viksit Bharat.
FAQs
1. How does Budget 2026 affect salaried employees?
For those of us on a salary, there are no changes to the tax slabs or the standard deduction this year. You still get the usual ₹75,000 standard deduction. If you are under the New Tax Regime, you effectively pay zero tax on income up to ₹12 lakh because the Section 87A rebate still applies, keeping your tax liability nil within that bracket.
2. When does the New Income Tax Act, 2025 come into effect?
It officially kicks in from April 1, 2026. The main goal of this new act is to simplify the entire tax experience. The government is expected to release much simpler rules and redesigned forms very soon, giving everyone enough time to get familiar with the new system before it goes live.
3. How does the budget help MSMEs with cash flow?
Small businesses are getting a lot of support to manage their daily finances. There is a new ₹10,000 crore SME Growth Fund to help promising firms scale up, plus ₹2,000 crore in extra liquidity support. They are also making the TReDS (Trade Receivables Discounting System) platform mandatory for certain transactions, which helps businesses get their invoices paid much faster and improves their working capital.
4. Are there any changes to the duty on personal imports?
Yes, and it is a big relief for personal shoppers. The customs duty on goods you buy or bring in for personal use has been cut in half, dropping from 20% down to 10%. This makes it much cheaper to bring in taxable items from abroad, whether through travel or international shipping.
5. What is the Purvodaya initiative?
Think of it as a “Rise of the East” plan. It is a targeted development program for Eastern and North-Eastern states. The plan involves building new industrial corridors, creating major tourism hubs, and rolling out 4,000 new electric buses to make travel between these states much easier and cleaner.
6. What is the fiscal deficit target in Budget 2026-27?
The government has set a fiscal deficit target of 4.3% of GDP for the 2026-27 financial year. This shows they are trying to keep the country’s finances in balance by reducing debt while still spending a massive ₹12.2 lakh crore on infrastructure to keep the economy growing.
Senior Executive – Content
Payal specializes in the healthcare, wellness, and insurtech space, with a strong focus on educating businesses about insurance and employee wellbeing. She is passionate about simplifying an industry that is often misunderstood and filled with complex jargon, translating it into clear and practical insights that organizations can easily understand and act on. Through her work, she aims to make the insurance ecosystem more transparent and accessible, helping businesses recognize that prioritizing employee wellbeing is not just a benefit but a responsibility.
