By CA Verendra Kalra
Union Finance Minister Nirmala Sitharaman presented her record ninth Union Budget 2026 on 1 February 2026, in an articulate 83-minute address that outlined a visionary path for accelerating economic growth, social inclusivity, and resilience amid global uncertainties.
Anchored on three core “kartavyas”—accelerating growth through productivity and competitiveness, fulfilling people’s aspirations via capacity-building, and ensuring “Sabka Saath, Sabka Vikas” for equitable development—the budget reassuringly projects a robust fiscal framework featuring a targeted fiscal deficit of 4.3% of GDP, a massive INR 12.2 lakh crore (INR 12.2 trillion) capital expenditure allocation, and numerous reforms across manufacturing, MSMEs, services, and infrastructure. This budget builds further on over a decade of transformative reforms—such as GST implementation, labor code modernization, and Atmanirbhar Bharat initiatives—that have sustained India’s 7% GDP growth trajectory while successfully lifting 25 crore people out of multidimensional poverty, fostering a resilient economy poised for Viksit Bharat by 2047.
First Kartavya: Igniting Growth Engines
The first kartavya zeroes in on six high-impact growth engines designed to propel India as a global manufacturing powerhouse: scaling strategic sectors like biopharma, semiconductors, electronics, rare earths, chemicals, capital goods, and textiles; rejuvenating 200 legacy industrial clusters; elevating “Champion MSMEs” through dedicated funding; a monumental infrastructure push; bolstering energy security; and developing City Economic Regions (CERs) with INR 5,000 crore (INR 50 billion) outlays per region over five years. Capex allocation surges from INR 11.2 lakh crore (INR 11.2 trillion) to INR 12.2 lakh crore (INR 12.2 trillion), powering transformative projects such as seven high-speed rail corridors (including Mumbai-Pune and Delhi-Varanasi), new freight corridors, 20 inland waterways, seaplane incentives, and Carbon Capture Utilization and Storage (CCUS) with INR 20,000 crore (INR 200 billion) dedicated funding, all underpinned by innovative private risk guarantees and monetization via CPSE REITs.
Second and Third Kartavyas: Aspirations and Inclusion
Prioritizing India’s services sector to capture 10% of the global share by 2047, the second kartavya launches ambitious skilling programs, including training 100,000 allied health professionals, 1.5 lakh caregivers, establishing five Regional Medical Hubs, upgrading AYUSH infrastructure with 3 AIAs, new veterinary colleges, AVGC-XR labs in 15,000 schools, a National Institute of Design in the East, 5 University Townships, girls’ hostels, tourism skilling for 10,000 guides and transformation of sports sector under the Khelo India Mission.
Complementing this, the third kartavya drives inclusive measures targeting farmers through Bharat-VISTAAR AI tools, high-value crops like coconut, cashew, and sandalwood, fisheries development, and reservoir enhancements; support for Divyangjan via Kaushal and Sahara Yojanas; mental health initiatives like NIMHANS-2; and Purvodaya with a Durgapur Corridor node featuring 4,000 e-buses and Buddhist circuits—all backed by INR 1.4 lakh crore (INR 1.4 trillion) in Finance Commission grants to states.
MSME Empowerment and Fiscal Backbone
Ease of compliance and liquidity to MSMe’s receives a major flip through mandatory TReDS adoption for CPSEs with turnover exceeding INR 500 crore (INR 5 billion), credit guarantees up to INR 100 crore (INR 1 billion) per MSME, a INR 10,000 crore (INR 100 billion) SME Growth Fund, INR 2,000 crore (INR 20 billion) Self-Reliant India Fund top-up, and “Corporate Mitras” partnerships via ICAI, ICSI, and ICMAI for handholding smaller enterprises.
Fiscal discipline shines through a declining debt-to-GDP ratio from 55.6% to a targeted 50±1% by 2030-31. 100% FDI in insurance (with riders), banking recapitalization committees, NBFC restructuring, and elevated PROI investment limits, ensure seamless credit flow for capex-intensive projects.
Direct Tax Reforms: Easing Burden for Ease of Doing Business
Direct tax proposals underscore taxpayer-centric reforms, headlined by the new Income Tax Bill effective April 1, 2026, promising a simplified regime with redesigned forms and extended ITR filing windows up to four years to minimize penalties and litigation. TDS thresholds are rationalized to alleviate cash flow pressures: interest income exemption for seniors rises from INR 50,000 to INR 1 lakh (INR 0.1 million); rent TDS from INR 2.4 lakh (INR 0.24 million) to INR 6 lakh (INR 0.6 million) annually, aiding landlords and NRIs; TCS on overseas tours, education, and medical treatments drops to a flat 2% (from 5-20%), with LRS for education/medical similarly at 2% (from 5%). Manpower services TDS clarified at 1-2%.
Additional measures include motor accident compensation interest being exempt; and startups gaining broader angel tax exemptions with flexible carried-forward losses. ICDS additional compliance has been done away through IND AS changes.
STT hikes to fund infra—futures from 0.02% to 0.05%, options premium 0.1% to 0.15%, exercise 0.125%, were taken with a pinch of salt by the bourses on the budget day.
Indirect Tax Overhaul: Export-Led Competitiveness
Changes to indirect taxes have been made in customs tariffs to enhance export led competitiveness: TReDS invoices have been classified as financial securities for seamless discounting and input tax credit; courier exports cap eliminated beyond INR 10 lakh (INR 1 million), empowering MSME shippers; GST rate inversions resolved for textiles, footwear, and diamonds to plug evasion gaps and boost competitiveness; IGST place-of-supply for intermediaries/e-commerce operators shifts to recipient location by deleting Section 13(8)(b), aligning with OECD global norms, eliminating cross-border disputes, and simplifying B2B exports. Minimum changes to GST ensure certainty for tax payers. E-invoicing threshold raised to INR 10 crore turnover; provisional refunds mandated for inverted duty structures; post-sale discounts fully creditable without conditions; RoDTEP scheme accelerated with digital tracking for faster export rebates; and scrap recycling incentives under green GST norms.
Customs duties were recalibrated for growth: personal imports duty reduced from 20% to 10% for consumer affordability; 17 oncology drugs plus 7 rare disease treatments made fully duty-free to enhance healthcare access; lithium-ion batteries, EV components, and TV open-cells attract reduced or nil rates to accelerate green mobility and electronics self-reliance; bonded warehouses gain safe harbour norms for non-residents; deferred duty payments for trusted manufacturers (AEO-compliant); 5-year toll exemptions for non-resident cargo vehicles.
The Budget’s tax proposals signal a clear attempt to redirect India’s tax framework towards predictability and voluntary compliance, rather than populist rate tinkering. The most striking feature of the Budget is the continued articulation of the “trust first, scrutinise later” philosophy, which has increasingly become a hallmark of this Government.
Union Budget 2026 equips businesses with fiscal firepower, tax predictability, and inclusive growth levers to navigate global headwinds confidently, seamlessly intertwining fiscal prudence, inclusive growth, and taxpayer empowerment to cement India’s global economic stature.
Rightly so, these reforms transcend incremental tweaks, forging a resilient fiscal architecture that balances growth aspirations with “Sabka Vikas,” while positioning India to aim for capturing services/manufacturing leadership in times of increasing global volatility, and thereby ensuring that the promise of a Viksit Bharat by 2047 remains well on course.
(The author is a practicing Chartered Accountant and the Convener of the Panel on Start Ups, Education & Skills, CII Uttarakhand State Council.)
