Parliament Gives Final Nod to Finance Bill 2026, Sealing Budget for Upcoming Fiscal Year
In a significant legislative move, Parliament on Friday approved the Finance Bill 2026, with the Rajya Sabha returning it to the Lok Sabha through a voice vote. This action marks the completion of the budgetary process for the financial year commencing on April 1, 2026, setting the stage for the implementation of new tax and fiscal policies.
Budgetary Highlights and Fiscal Projections
The Lok Sabha had initially passed the Bill on March 25, incorporating 32 amendments. Following a brief discussion and a reply from Finance Minister Nirmala Sitharaman to members' queries, the Rajya Sabha cleared the legislation. The Union Budget for 2026-27 outlines a total expenditure of Rs 53.47 lakh crore, reflecting a 7.7% increase over the current fiscal year ending March 31, 2026.
Key fiscal metrics include a proposed capital expenditure of Rs 12.2 lakh crore for the next financial year, aimed at boosting infrastructure and economic growth. The government has estimated gross tax revenue at Rs 44.04 lakh crore and gross borrowing at Rs 17.2 lakh crore. Notably, the fiscal deficit for FY27 is projected at 4.3% of GDP, a slight improvement from the 4.4% deficit in the ongoing fiscal period.
Tax and Financial Reforms
A Finance Bill provides the legal foundation for tax and fiscal proposals announced in the Budget. Once enacted, it will bring into effect changes in income tax rates, duties, and other levies, directly impacting individuals and businesses across the nation. During the Lok Sabha debate, Sitharaman emphasized that the Finance Bill 2026-27 is built on five clear principles, focusing on trust-based tax administration and enhancing ease of living for citizens and ease of doing business for enterprises.
Addressing the West Asia crisis, she assured that the government would remain vigilant and manage its fiscal stance with caution to navigate global uncertainties.
Key Proposals and Sectoral Allocations
Income Tax and Capital Markets: The government did not announce any changes to the income tax system. However, it proposed extending the due date for filing income tax returns for non-audit businesses by one month to August 31. In capital markets, significant adjustments include an increase in Securities Transaction Tax (STT) on futures to 0.05% from 0.02%, and on options premium to 0.15% from 0.10%. No modifications were made to short-term or long-term capital gains taxes.
Infrastructure Development: The Budget proposes seven high-speed corridors: Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi, and Varanasi-Siliguri, along with one dedicated freight corridor. A new freight corridor in Dankuni, West Bengal, has also been announced to enhance logistics efficiency.
Foreign Investment and Property Sales: New measures include the deduction of TDS on the sale of immovable property by Non-Resident Indians (NRIs) and the introduction of a foreign investment disclosure scheme. Additionally, investments in equity instruments of listed Indian companies through the Portfolio Investment Scheme have been permitted.
Industrial and Sectoral Policies:
- Electronics and Semiconductors: Rs 40,000 crore each has been allocated for electronics manufacturing and semiconductor development under ISM 2.0.
- Bio-Pharma Sector: Rs 10,000 crore has been earmarked to support growth and innovation.
- MSME Support: A Rs 10,000 crore SME Growth Fund and a Rs 2,000 crore top-up to the Self-Reliant India Fund aim to improve credit access and scale up enterprises.
- Defence and Healthcare: The defence sector receives about Rs 5.95 lakh crore to boost military capabilities and domestic manufacturing. Healthcare spending is pegged at around Rs 1.05 lakh crore, with duty relief on critical medicines and pharmaceutical inputs.
- Energy Transition: Rs 20,000 crore has been set aside for carbon reduction programs and support for clean energy supply chains and renewable energy initiatives.
Logistics and Coastal Development: The Coastal Cargo Promotion Scheme aims to double modal share by 2047, as part of broader efforts to strengthen logistics efficiency and promote sustainable transport.
This comprehensive approval underscores the government's commitment to fiscal prudence and strategic investments, paving the way for economic resilience and growth in the coming year.
