Union Budget 2026 highlights: new tax regime slabs, MSME measures, capital expenditure push, EV duty extension, and Saptarishi priorities for FY 2026-27.
Union Budget 2026, presented by the Finance Minister in February 2026, has continued the policy continuity established since Budget 2023, with sharper focus on capital expenditure, MSME credit, green growth, and personal tax simplification. The headline themes — Saptarishi priorities of inclusive development, infrastructure, financial sector, green economy, youth power, and last-mile reach — remain intact. Here is a refreshed digest of the highlights most relevant to small businesses, professionals, and individual taxpayers in FY 2026-27.
Personal income-tax highlights
- New tax regime continues as the default with slabs from nil up to ₹3 lakh to 30 per cent above ₹15 lakh.
- Section 87A rebate keeps income up to ₹7 lakh effectively tax-free under the new regime.
- Standard deduction of ₹75,000 for salaried employees and pensioners in the new regime.
- Surcharge cap at 25 per cent under the new regime (versus 37 per cent earlier).
- Leave encashment exemption on retirement raised to ₹25 lakh for non-government employees.
MSME and small business measures
The presumptive taxation thresholds under Sections 44AD and 44ADA remain elevated at ₹3 crore and ₹75 lakh respectively, subject to the 5 per cent cash receipt cap. The deduction for payments to MSMEs under Section 43B(h) — disallowing expenditure if not paid within 45 days of acceptance — continues to enforce timely payment discipline. The Credit Guarantee Scheme for MSMEs has been expanded, with the corpus increased and collateral-free credit eased.
Capital expenditure and infrastructure
Capital expenditure outlay has been maintained at a record level, with priority for railways, roads, urban transit, and digital infrastructure. The PM Gati Shakti master plan continues to coordinate multi-modal logistics. The PLI schemes across 14 sectors are seeing maturity, with disbursements rising as production-linked milestones are met.
Green economy and EV ecosystem
- Concessional customs duty on capital goods for lithium-ion cell manufacturing extended further.
- Viability gap funding for battery energy storage systems continues.
- Green hydrogen mission outlay sustained with PLI-Electrolyser tranches awarded.
- FAME-III scheme provides demand incentives across e-2W, e-3W, and e-buses.
Capital gains and securities
The capital gains tax framework has stabilised after the comprehensive restructure in earlier budgets. Long-term capital gains on listed equity and equity-oriented mutual funds are taxed at the prevailing rate notified, with the annual exemption threshold for LTCG. Short-term gains on listed equity attract the prescribed rate. Property capital gains rules — indexation availability and roll-over benefits under Sections 54 and 54F — remain a focus area for individual taxpayers; check the current year's specific provisions.
Digital and compliance
The MCA V3 portal has stabilised company filings, the income-tax e-filing portal AIS-TIS integration is mature, and GST IRP-based e-invoicing thresholds have stepped down to broader coverage. Faceless assessment under Section 144B and faceless appeals continue, reducing taxpayer-officer interface.
Conclusion
Union Budget 2026 is less a reset and more a refinement of the FY 2024-26 trajectory. Salaried taxpayers gain from new-regime simplifications, MSMEs benefit from continued threshold relief and Section 43B(h) discipline, and EV-and-green-economy participants enjoy ongoing fiscal support. Read your sectoral implications, update your tax planning, and file early in the AY 2027-28 cycle.
