On 1 February 2026, Finance Minister Nirmala Sitharaman delivered her record ninth consecutive Union Budget, introducing the “Income Tax Act 2025” and a strategic “Three-Kartavya” framework for economic growth.

The budget, notably presented on a Sunday, focuses on “Yuva Shakti” and “Nari Shakti” while providing a major 40,000 crore rupee boost to electronics and semiconductor manufacturing.

While tax slabs for salaried individuals remained unchanged, the budget offers relief through reduced Tax Collected at Source (TCS) on foreign travel and a 10,000 crore rupee SME Growth Fund.

Industry stakeholders have welcomed the move toward “trust-based compliance,” although retail investors face higher costs due to a significant hike in Securities Transaction Tax (STT) on derivatives.

Union Budget 2026

The Union Budget 2026-27 is the first to be prepared in the newly named “Kartavya Bhawan,” signalling a shift from traditional policy-making to a duty-based governance model. It follows the Economic Survey’s projection of 7.4% GDP growth, highlighting India’s maturing economy.

The primary objective this year was to simplify the 1961 tax code, which has been replaced by the streamlined Income Tax Act 2025. This overhaul aims to reduce litigation by removing over 1,200 provisos and 900 complex explanations, making the law more accessible to common taxpayers and small businesses.

The government also introduced the “Orange Economy” push, establishing 15,000 AVGC (Animation, Visual Effects, Gaming, and Comics) labs to tap into the creative potential of India’s youth.

Key Highlights for MSMEs

For the startup and MSME sectors, the budget introduces the “SME Growth Fund” with an outlay of 10,000 crore rupees to scale micro-units into global “Champions.” Finance Minister Nirmala Sitharaman stated, “The Reform Express is well on its way and will maintain its momentum to help us fulfill our kartavya.”

To ease cash flows for travelers and students, the TCS on overseas tour packages and education has been slashed to 2%.

However, the budget includes a stern measure for the financial markets, increasing STT on futures from 0.02% to 0.05% and on options to 0.15%.

Prime Minister Narendra Modi hailed the budget as a “Yuva Shakti-driven” roadmap, while tech leaders lauded the tax holiday offered to foreign cloud service providers using Indian data centres until 2047.

Salaried Professionals

The headline for salaried employees is the rollout of the Income Tax Act 2025, effective April 1, 2026. While income tax slabs and the ₹75,000 standard deduction remain unchanged from the previous year, keeping income up to ₹12.75 lakh tax-free, the procedural relief is substantial.

The deadline for revising returns has been extended to March 31, and taxpayers can now claim TDS refunds even after the filing deadline.

Furthermore, Tax Collected at Source (TCS) on overseas tour packages and remittances for education and medical purposes has been reduced to 2%, easing the financial burden on global travelers and students.

Tech Sector

The tech industry sees a major boost with the launch of India Semiconductor Mission (ISM) 2.0, backed by a ₹1,000 crore initial provision to develop indigenous equipment and full-stack Indian IP.

The Electronics Components Manufacturing Scheme (ECMS) also received a significant top-up, with its outlay increased to ₹40,000 crore to capitalize on manufacturing momentum.

For the burgeoning “Orange Economy,” the budget proposes 15,000 AVGC (Animation, Visual Effects, Gaming, and Comics) Content Creator Labs across schools and colleges. A high-powered committee will also be established to assess AI’s impact on employment, ensuring the workforce remains future-ready.

The Logical Indian’s Perspective

At The Logical Indian, we believe the 2026 Budget reflects a government that is finally listening to the demand for a simpler regulatory environment.

The “Corporate Mitra” initiative and the mandatory integration of assessment proceedings are welcome steps toward ending the “tax terrorism” often feared by small entrepreneurs. However, the decision to leave income tax slabs untouched despite rising inflation may feel like a missed opportunity for the middle class.

We advocate for a system where the “Kartavya” (duty) of the citizen is met with an equal “Kartavya” of the state to ensure that tax simplification translates into actual savings and a higher quality of life for all.