The Union Budget left income tax slabs alone, raised the securities transaction tax on futures and options, set the fiscal deficit at 4.3% of GDP and put ₹12.2 lakh crore into capital spending.
For most salaried Indians, the Union Budget presented on February 1 changed nothing on their tax return. Tax slabs under both regimes stayed where they were, after last year’s Budget made income up to ₹12 lakh effectively tax-free under the new regime. For anyone trading futures and options, though, it changed the cost of every single trade. That contrast tells you a lot about what the government wants to encourage and what it wants to cool down.
The STT hike
The securities transaction tax on futures rises from 0.02% to 0.05% of the traded value, and on options to 0.15%. For a casual reader those look like tiny numbers. For a frequent trader who buys and sells many times a day, transaction costs are the difference between a small profit and a loss. After SEBI found that nine in ten individual F&O traders lose money, the government chose to make speculation more expensive rather than ban it.
The fiscal numbers
The fiscal deficit for 2026-27 is targeted at 4.3% of GDP, slightly lower than the revised 4.4% for the year ending in March. The government has shifted its main anchor from the deficit to the debt-to-GDP ratio, which it expects at about 55.6% next year. Capital expenditure, the money spent building roads, railways and other long-lasting assets, is set at ₹12.2 lakh crore.
A Budget is a statement of priorities written in rupees. This one prioritised building over handing out.
Smaller items with long tails
- A ₹10,000 crore SME Growth Fund to help promising small businesses scale up.
- The Electronics Components Manufacturing Scheme raised to ₹40,000 crore, aimed at making more phone and laptop parts in India.
- A tax holiday until 2047 for foreign companies that serve global cloud customers from Indian data centres.
- The new Income Tax Act, 2025, which replaces the 1961 law from April 1, 2026.
No Budget pleases everyone, and this one was deliberately unflashy. The message for households was continuity. The message for markets was that the government would rather people invest in Indian companies than bet on short-term swings in their share prices.
Sources: Union Budget 2026-27 speech; PRS Legislative Research budget analysis.
- Income tax slabs are unchanged. The new Income Tax Act takes effect from April 2026.
- STT on futures rises from 0.02% to 0.05%, and on options to 0.15%.
- The fiscal deficit target for 2026-27 is 4.3% of GDP, down from 4.4%.
- Capital spending is set at ₹12.2 lakh crore, focused on infrastructure and manufacturing.
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