The Union Budget 2026, the 9th consecutive budget presented by Finance Minister Nirmala Sitharaman, is being hailed as a “policy-focused” blueprint rather than a collection of short-term fiscal tinkering. With a total expenditure pegged at ₹53.5 lakh crore—a 7.7% increase—the government has prioritised manufacturing excellence, digital sovereignty, and fiscal stability. This budget sets a 10% Nominal GDP growth target for FY27, signalling a confident approach to national growth.
- Fiscal Discipline: The 4.3% Anchor
- Infrastructure & Urban Growth: Focus on Tier 2 and Tier 3 Cities
- Capital Markets
- The Digital Frontier: “Cloud Vault” and IT Reforms
- Personal Finance: Relief, Health, and Compliance
- What’s Cheaper vs. Costlier?
- Sectoral Outlook: Winners and Watchlists
- The Winners
- The Watchlist (Negative to Neutral)
- Conclusion: A Vision for Quality of Life
Fiscal Discipline: The 4.3% Anchor
The government has stayed committed to its path of fiscal consolidation. By lowering the Fiscal Deficit target to 4.3% for FY 2026-27 (down from 4.4% in the previous year), the FM signalled to global markets that India’s macro-stability remains a priority. This discipline is paired with a massive Capital Expenditure (Capex) outlay of ₹12.2 Lakh Crore, intended to drive infrastructure momentum.
Key Economic Terms
Fiscal Consolidation: A policy aimed at reducing government deficits and debt accumulation. Think of it as a household deciding to borrow less to ensure future financial health.
Nominal GDP: The total value of all goods and services produced, calculated at current market prices. It is the “sticker price” of the economy’s output.
Infrastructure & Urban Growth: Focus on Tier 2 and Tier 3 Cities
Continuing the infrastructure push, the budget focuses on developing cities with populations over 5 lakh as new growth centres. PMAY-Urban received a significant allocation of over ₹18,000 crore, representing a 150% growth to support housing in expanding urban areas. Additionally, the introduction of 6 new high-speed rail corridors aims to enhance connectivity across the nation.
Capital Markets
The FM has significantly hiked the Securities Transaction Tax (STT) on derivatives.
- Futures: STT raised from 0.02% to 0.05%.
- Options Premium: Increased from 0.10% to 0.15%.
- Exercise of Options: Aligned at 0.15%.
Additionally, Share Buybacks will now be taxed in the hands of the shareholder as Capital Gains, ending the previous “tax arbitrage” where companies used buybacks as a tax-efficient way to return cash to promoters.
Taxation & Market Terms
STT (Securities Transaction Tax): A small tax paid on every purchase and sale of securities, such as shares or F&O contracts, listed on the stock exchange.
Tax Arbitrage: Taking advantage of differences in tax rates between two financial instruments or methods of payment to reduce your total tax liability.
The Digital Frontier: “Cloud Vault” and IT Reforms
The budget introduces a bold “Cloud Tax Holiday” till 2047 for foreign companies providing global services using Indian Data Centres, aiming to turn India into a global data capital. For the IT services sector, rules have been simplified:
- A unified 15.5% margin now applies to all IT services, including Software, KPO, and R&D.
- The eligibility threshold for this “Safe Harbour” was raised from ₹300 Crore to ₹2,000 Crore, reducing litigation for major Global Capability Centres (GCCs).
Tax & Corporate Terms
Safe Harbour Margin: A pre-defined tax rate or profit margin that tax authorities agree to accept without further audit, provided certain conditions are met.
Global Capability Centres (GCCs): Units established by multinational corporations in India to provide specialised services like IT, finance, and research to their global operations.
Personal Finance: Relief, Health, and Compliance
While direct tax slabs remained stable, middle-income earners under the New Tax Regime see continued benefits, with an effective tax-free threshold of ₹12.75 Lakh (including the revised ₹75,000 Standard Deduction).
- Global Travel: TCS on foreign tour packages and education has been slashed from 5% to 2%.
- Healthcare: Customs duty is now exempt for 17 life-saving cancer drugs and rare disease medicines.
- Compliance: The budget introduces a 100% penalty for income tax misreporting and new penalties for non-disclosure of movable assets.
Tax Relief & Collection Terms
Standard Deduction: A flat amount subtracted from your total salary before tax is calculated, providing “free” tax relief.
TCS (Tax Collected at Source): An upfront tax collected by a seller at the time of a transaction, which can later be claimed back during tax filing.
What’s Cheaper vs. Costlier?
| Cheaper (Duty Cut / Exempted) | Costlier (Hiked / Taxed) |
|---|---|
| 17 Cancer Drugs & Rare Disease medicines. | Cigarettes & Tobacco (Hike in Health Cess). |
| Mobile Phones & Tablets (Duty cut to 15%). | Imported Telecom Gear (Carrier-grade switches). |
| Personal Imports (Duty halved to 10%) & Foreign Travel (Lower TCS). | F&O Trading (Higher STT). |
| Nuclear Power equipment & Li-ion Cells. | Petroleum Products (No GST move). |
| Affordable Housing (150% boost to PMAY-U). | Inaccurate Tax Reporting (100% penalty). |
Sectoral Outlook: Winners and Watchlists
The Winners
- Semiconductor: CG Power, Syrma SGS, Amber.
- Power & Infra: L&T, BEL, NTPC, JSW Energy.
- Railways: RVNL, Titagarh Rail Systems, IRFC.
- Healthcare & Bio Pharma: Biocon, Dr. Reddy’s, Narayana Hrudayalaya, Max Healthcare.
- Data Centres: Anant Raj, JSW Energy, Tata Power.
The Watchlist (Negative to Neutral)
- Exchanges and broking companies (impacted by higher STT).
- PSU Banks, Metals, and FMCG.
- Real Estate and Building materials.
Conclusion: A Vision for Quality of Life
Budget 2026 is less about “populism” and more about “precision”. By focusing on higher farm income, expanding education infrastructure, and lowering the costs of critical healthcare and global travel, the government is steering India toward a high-tech, healthy, and connected future. For investors, the strategy is clear: look past the daily noise and invest in the long-term pillars of the new Indian economy.
Disclaimer: Investment in the securities market is subject to market risks. Read all the related documents carefully before investing. This content is purely for information purpose only and in no way is to be considered as an advice or recommendation. The securities are quoted as an example and not as a recommendation. Investors are requested to do their own due diligence before investing.
SEBI Reg No.: Broking – INZ000240532, Research Analyst – INH000020086, Depository Participant – IN-DP-416-2019, Depository Participant Number: CDSL – 12088800, NSE (90165), BSE (6707), MCX (57525), NCDEX (1315), MSEI (85300).
Registered Office: 136, 1st Floor, Devika Tower, Nehru Place, Delhi – 110019.
For complete Terms & Conditions and Disclaimers, visit https://www.paytmmoney.com.
