Budget 2026: New Income Tax Act 2025, STT Hike & Healthcare Boost

FM Nirmala Sitharaman unveils Budget 2026! 🚀 New Income Tax Act, massive STT hike on F&O, and ₹1.06L Cr for healthcare. See how it affects your pocket today.

By Trending News Fox Editorial Team Published: February 2, 2026 | 9:30 AM IST

Budget 2026: Manufacturing, Healthcare, and Modern Tax Reforms Take Center Stage

In a historic first, Union Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 on a Sunday. This marks her record ninth consecutive budget. With a total outlay of ₹53.5 lakh crore, the budget serves as a strategic blueprint for a Viksit Bharat (Developed India) by 2047. The focus is clear: aggressive capital expenditure is prioritized. There is a massive push for domestic manufacturing. A major overhaul of the healthcare system is planned. All this is happening while maintaining a steady hand on fiscal discipline.

The budget comes on the heels of an optimistic Economic Survey, which projected a real GDP growth of 6.8% to 7.2% for the upcoming fiscal year.

1. Direct Tax: The New Income Tax Act, 2025

The middle class have hoped for a change in tax slabs. Nevertheless, the Finance Minister focused on systemic reform instead. The headline announcement was the implementation of the New Income Tax Act, 2025, effective from April 1, 2026.

Key Tax Highlights:

• No Slab Changes: Income tax slabs under the New Tax Regime stay unchanged from the prior year.
• Revised Filing Timelines: The deadline to file revised ITRs has been extended from December 31 to March 31. This extension provides more breathing room for taxpayers.
• Ease of Compliance: Small taxpayers can now obtain nil or lower deduction certificates through an automated, rule-based process. This eliminates the need to visit an assessing officer.
• One-Time Disclosure Scheme: A six-month window is now open. Small taxpayers can reveal earlier undeclared foreign assets. These assets can be up to ₹1 crore for income or ₹5 crore for assets. They will have immunity from prosecution.

2. Manufacturing and “ISM 2.0”

The government is doubling down on making India a global manufacturing powerhouse. The Indian Semiconductor Mission (ISM 2.0) was launched to fortify the local semiconductor supply chain.

• Electronics Boost: The outlay for the Electronics Components Manufacturing Scheme has been hiked to ₹40,000 crore.
• Rare Earth Corridors: Dedicated corridors will be developed in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These are aimed at securing minerals essential for high-tech manufacturing.
• Chemical Parks: A cluster-based “plug-and-play” model will be used to set up chemical parks across various states.

3. Healthcare: Crossing the ₹1 Lakh Crore Mark

For the first time, the healthcare budget has surpassed the 1-lakh-crore milestone, with an allocation of ₹1,06,530 crore.

Critical Healthcare Announcements:

• NIMHANS 2.0: A new national institute for mental health will be established in North India.
• Cancer Relief: Basic Customs Duty has been fully exempted for 17 life-saving cancer drugs, significantly reducing treatment costs.
• Emergency Infrastructure: The government plans to set up Emergency and Trauma Care Centers in every district hospital across the country.
• Ayurveda Expansion: Three new All India Institutes of Ayurveda will be established. This expansion aims to meet the rising global demand for traditional medicine.

4. Infrastructure and Connectivity

Infrastructure remains the engine of growth, with the capital expenditure (Capex) target raised to ₹12.2 lakh crore—a significant jump from last year’s ₹11.2 lakh crore.

• Rail Corridors: Seven new environmentally sustainable passenger rail corridors and a dedicated east-west freight corridor were announced.
• Coastal Cargo: A new Coastal Cargo Promotion Scheme has been introduced. Its goal is to double the share of inland waterways in India’s transport mix by 2047.
• University Townships: Five university townships will be developed near major industrial and logistics corridors. This aims to bridge the gap between education and industry.

5. Market Impact: The STT Shock

The stock market reacted with volatility after the announcement of a hike in Securities Deal Tax (STT). The increase aims to curb excessive speculation in the derivatives segment.

Additionally, share buybacks will now be taxed as Capital Gains in the hands of shareholders. This change shifts the tax burden from the company to the investor.

Summary for the Common Man

Conclusion: Continuity Over Disruption

The Union Budget 2026-27 is a “reform-heavy” document that prioritizes long-term capacity building over short-term populist giveaways. The government is focusing on semiconductors, healthcare infrastructure, and a modernized tax code. It is signaling its intent to keep a 7% growth trajectory despite global uncertainties.

Also, read Saheb Bagan 2026: Why This Kolkata Suburb is the Top Real Estate Trend

📋 Union Budget 2026: Frequently Asked Questions (FAQs)

Budget 2026: General & Economy

Q1: What is the total size of the Union Budget 2026-27?

The total expenditure for the fiscal year 2026-27 is estimated at ₹53.5 lakh crore, with a record capital expenditure (Capex) outlay of ₹12.2 lakh crore to drive infrastructure and manufacturing.

Q2: What is the projected Fiscal Deficit for 2026-27?

The government has set a fiscal deficit target of 4.3% of GDP for FY27, down from the 4.4% projected in the earlier year, signaling a commitment to fiscal consolidation.

Budget 2026: Income Tax & Savings

Q3: Are there any changes to the Income Tax slabs in Budget 2026?

No, there are no changes to the income tax slabs under the New Tax Regime for this year. The New Income Tax Act, 2025 will officially come into effect from April 1, 2026. It aims to simplify rules. It also seeks to redesign tax forms for easier compliance.

Q4: What is the new deadline for filing a revised Income Tax Return (ITR)?

The deadline for filing revised or late ITRs has been extended from December 31 to March 31. This provides taxpayers with an extra three months. They can rectify errors during this time.

Q5: How has the tax on share buybacks changed?

In a significant shift, income from share buybacks will now be taxed as Capital Gains. This tax will be in the hands of the shareholders. The company will not pay a buyback tax. This aligns buyback taxation with dividend taxation.

Budget 2026: Stock Market & Investments

Q6: Why did the stock market react negatively to the Budget?

The primary “shock” for investors was the hike in Securities Transaction Tax (STT) on derivatives.

• Futures: Increased from 0.02% to 0.05%.
• Options Premium: Increased from 0.1% to 0.15%.This move is intended to curb “hyper-speculation” in the retail F&O (Futures and Options) segment.

Budget 2026: Healthcare & Lifestyle

Q7: Which medicines will become cheaper after Budget 2026?

The government has fully exempted 17 life-saving cancer drugs (including Ribociclib, Abemaciclib, and Venetoclax) from Basic Customs Duty. Additionally, duty exemptions were extended to medicines for seven more rare diseases.

Q8: Will international travel and education abroad become cheaper?

Yes. The TCS (Tax Collected at Source) on overseas tour packages has been reduced to a flat 2% (down from 5%/20%). Similarly, remittances for education and medical treatment under the Liberalised Remittance Scheme (LRS) now attract a lower TCS of 2%.

Q9: Is there any relief for personal imports?

The tariff rate on dutiable goods imported for personal use (via courier or post) has been cut in half. It has decreased from 20% to 10%. Nonetheless, this excludes luxury items like alcohol and tobacco.

Budget 2026: Industry & Manufacturing

Q10: What is ISM 2.0?

The Indian Semiconductor Mission (ISM) 2.0 is an expanded scheme to support the domestic manufacturing of semiconductor equipment and materials. It focuses on creating “Indian IP” (Intellectual Property).

Q11: What is the ‘Biopharma SHAKTI’ initiative?

It is a new ₹10,000 crore scheme. It aims to turn India into a global hub for biopharmaceutical manufacturing. This includes the setup of three new National Institutes of Pharmaceutical Education and Research (NIPER).

Union Budget 2026: Direct Tax & Custom Duty Reliefs

This video offers an expert breakdown. It covers the specific healthcare allocations. Additionally, it discusses customs duty exemptions for life-saving drugs announced in the 2026 Budget.

Also, read Mastering News: Your 2026 Guide to Media Literacy & Trends