Union Budget 2026: Key Highlights
Live Updates: What's Cheaper and What's Costlier?
Finance Minister Nirmala Sitharaman made history today, February 1, 2026, by presenting her ninth consecutive Union Budget. The Union Budget 2026-27 focuses on a dual-pronged strategy: empowering the middle class and supercharging domestic manufacturing under the 'Viksit Bharat' vision.
Healthcare & Daily Essentials: What Gets Cheaper
In a significant relief for families, the government has slashed duties on essential healthcare and consumer electronics. The focus remains on making life-saving treatments and clean energy more accessible.
- Cancer & Rare Diseases: Basic customs duty (BCD) has been fully exempted on 17 life-saving drugs for cancer and diabetes. Medicines for seven rare diseases are also now duty-free.
- Electronics: Expect a price drop in mobile phones and tablets as the government provides duty relief on key components. Parts for microwave ovens and solar panels have also seen BCD exemptions.
- Electric Vehicles (EVs): Lithium-ion cells used for EV batteries will be cheaper due to duty exemptions, furthering the green energy push.
- Travel & Education: The Tax Collected at Source (TCS) for overseas education and medical treatment has been reduced to 2%. Foreign tour packages also benefit from this reduction.
- Personal Imports: Customs tariffs on goods imported for personal use have been halved from 20% to 10%.
Luxury & Sin Goods: What Becomes Costlier
To mobilize revenue and discourage speculative trading, several items and activities will now attract higher taxes.
- Tobacco & Pan Masala: Cigarettes and other tobacco products will see a price hike following an increase in excise duty and the introduction of a new cess.
- Trading & Finance: Futures & Options (F&O) trading is now more expensive as the Securities Transaction Tax (STT) has been hiked.
- Alcohol & Luxury: Imported alcohol and luxury items like high-end watches will attract higher duties.
- Coffee: Your morning brew might cost more as exemptions on coffee roasting and vending machines have been removed.
- Imported Machines: Exemptions were removed for certain industrial machinery where domestic production is now deemed sufficient.
Income Tax Slabs: AY 2026-27
The New Income Tax Act, 2025 officially comes into effect from April 1, 2026. While the tax slabs remain largely consistent with the previous year's reforms to ensure stability, the focus is on simplified compliance and faster processing.
| Income Slab | Tax Rate (New Regime) |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| Above ₹24,00,000 | 30% |
Note: Salaried individuals continue to benefit from a standard deduction, meaning those with a gross salary up to ₹12.75 lakh may pay zero tax under the new regime after rebates.
Sectoral Impact: MSMEs and Infrastructure
The fiscal deficit is projected at 4.3%, showing the government's commitment to fiscal discipline. A massive ₹12.2 lakh crore has been allocated for capital expenditure (Capex), focusing on:
- Rare Earth Corridors: Set up in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.
- SME Growth Fund: A ₹10,000 crore fund for MSMEs in the auto component sector.
- High-Speed Rail: Seven new sustainable passenger corridors planned.
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