We will begin with honesty here. We aren't economists, we are just a couple of citizens who will be affected by Nirmala Sitharaman's Budget like you. Also, the Budget and economy needn't be drab. So, we will be trying to make sense of terms and jargons before explaining them here. We will share jokes and memes with you on this blog too. So, let's Budget in some fun.
Finance Minister Nirmala Sitharaman did not announce any revisions to the tax slabs or rates under either the new tax regime (default) or the old tax regime. The slabs remain exactly as introduced in Budget 2025 (effective from FY 2025-26 onward), with no further adjustments this year.
This year's Budget focused on simplification, such as, the new Income Tax Act 2025 effective April 1, 2026, reducing sections and easing compliance, TCS and TDS rate cuts (like on overseas education/medical to 2%), and other procedural reliefs for small taxpayers, rather than slab tweaks.
Income Tax return corrections have now been made easier, with taxpayers getting time until March 31 to rectify errors in their filings.
Last year's Budget (2025-26) delivered the major slab restructuring and rebate hike for middle-class relief, so 2026 maintains the status quo on core rates.
The New Tax Regime Slabs (unchanged from FY 2025-26) are as follows:
Up to Rs 4 lakh: 0% (Nil)
Rs 4 lakh – Rs 8 lakh: 5%
Rs 8 lakh – Rs 12 lakh: 10%
Rs 12 lakh – Rs 16 lakh: 15%
Rs 16 lakh – Rs 20 lakh: 20%
Rs 20 lakh – Rs 24 lakh: 25%
Above Rs 24 lakh: 30%
The rebate under Section 87A continues at up to Rs 60,000, making income up to Rs 12 lakh effectively tax-free (or up to Rs 12.75 lakh for salaried individuals with the Rs 75,000 standard deduction).
The Old Tax Regime Slabs (also unchanged from FY 2025-26) are as follows:
Up to Rs 2.5 lakh: 0%
Rs 2.5 lakh – Rs 5 lakh: 5%
Rs 5 lakh – Rs 10 lakh: 20%
Above Rs 10 lakh: 30%
For taxpayers holding securities in multiple companies, the FM proposed to enable depositories to accept Form 15G or Form 15H from the investor and provide it directly to various relevant companies. For example, if a senior citizen has fixed deposits and bonds in three different companies, they currently have to submit Form 15H separately to each company to avoid TDS. Under the new proposal, they can submit Form 15H just once to their depository, which will then share it with all three companies, saving time and paperwork.
Form 15G (for non-senior citizens) and 15H (for senior citizens) are used to tell banks and companies not to deduct TDS if your income is below the taxable limit.
Earlier, if you held shares, bonds, or deposits in multiple companies, you had to submit these forms separately to each company. That was confusing and easy to forget.
Now, depositories like National Securities Depository Ltd or Central Depository Services Ltd, can collect Form 15G/15H once and share it with all relevant companies.
This will mainly benefit small investors and senior citizens, making tax compliance simpler and reducing unnecessary TDS deductions.
Many Indians — students, young professionals, tech workers, or relocated NRIs — end up with foreign bank accounts, shares, or assets and accidentally fail to disclose them in tax returns. This can lead to serious penalties under strict laws.
To fix this, the FM has proposed a one-time, six-month Foreign Asset Disclosure Scheme (FADS) for small taxpayers.
Under this, there are two categories. In Category A, there are those who neither disclosed foreign income nor assets.
For them, the limit of income/assets is up to Rs 1 crore. They must pay: 30% tax + 30% extra tax (instead of penalty).
Then there is Category B, under which there are those who paid tax on income but forgot to declare the asset.
For this category, the limit is up to Rs 5 crore. They must pay Rs 1 lakh only.
This is basically a second chance to come clean without fear.
There is a change in TDS on property sales by non-residents.
When a non-resident Indian (NRI) sells property in India, the buyer must deduct TDS before paying the seller. Earlier, buyers had to get a TAN (Tax Deduction Account Number) to deposit this TDS — a process that confused many homebuyers and caused delays.
Now, the Centre has proposed that resident buyers can deduct and deposit this TDS using their PAN-based challan, without needing a TAN. This makes the process simpler and faster, especially for first-time buyers.
This means: Less paperwork, no extra registration, and easier compliance for normal buyers. This change mainly helps individuals buying property from NRIs, not big companies.
The government, after issuing repeated warnings, has acted on the risky futures and options (F&O) segment by doubling the Securities Transaction Tax (STT). This has been done to curb speculative activity in the derivatives market, in which inexperienced and young investors were getting involved.
Several long-term investors and experts hailed the Budget 2026 move to raise the STT on derivatives, liking its addiction to "cocaine-like" and "gambling-like".
Over one crore retail traders lost Rs 1.81 lakh crore in the F&O segment between FY22 and FY24, according to a report by markets regulator Sebi.
Experts say that F&O trading is attracting millions of Indians, especially younger investors, who are betting big on the segment despite lacking awareness. They say it is a gambling-like behaviour where people keep investing despite losing money, in the hope of making a profit.
In Budget 2026, Finance Minister Nirmala Sitharaman has raised the STT on futures from 0.02% to 0.05%, and on options from 0.1% to 0.15%.
There is justification for increase in rates to curb purely speculative activity in options and futures.
Watching the Budget can be overwhelming when Nimala Ji is giving figures in thousands of crores and lakh crores, and you're having an internal debate over one samosa or two for lunch. Relax. That's exactly why we're here — breaking the Budget down, without jargon or Excel sheets.
The Finance Minister proposed a scheme for small taxpayers, wherein a rule-based automated process will enable obtaining a lower or nil deduction certificate, instead of filing an application with the assessing officer.
To put it in simple words, let's follow this example: Sometimes, tax gets deducted from your income even when your actual tax liability is low or zero. To stop this, people currently have to apply to a tax officer for a lower or nil TDS certificate — which is a slow, paperwork-heavy process.
With a rule-based, automated system, you won't need to meet or write to an assessing officer anymore. The system will automatically check your past income and tax records and decide whether less tax — or no tax — should be deducted.
This means less running around, and less waiting, especially for senior citizens, freelancers, and small earners.
When companies would hire workforce services through agencies — like security staff, housekeeping, drivers, or other temporary workers — there was confusion about how much TDS (Tax Deducted at Source) should be applied on these payments.
Now, the government has clearly said that supply of "manpower services" will be treated like contractor services. This means TDS will be deducted at a lower rate of 1% or 2%, instead of higher or disputed rates.
This would remove confusion for businesses and service providers, reduce disputes with tax authorities, and ensure smoother payments. In simple words, companies now know exactly how much tax to cut, and manpower agencies face fewer surprises.
India's defence budget for the current financial year (2026-27) stands at Rs 7.85 lakh crore, which is a substantial increase of nearly 15% from last year's (2025-26) allocation of Rs 6.81 lakh crore.
The most striking difference in previous year's and this year's budget is in the capital expenditure in defence sector, which funds modernisation, acquisitions, and domestic manufacturing.
This has surged by 28% to Rs 2.19 lakh crore from Rs 1.8 lakh crore in 2025-26. This rise prioritises advanced weapon systems, aircraft, naval assets, and self-reliance under the Atmanirbhar Bharat initiative.
In contrast, the previous year's hike was more modest at around 9.5%, with a capital outlay focused on similar goals but at a lower scale.
Overall, while absolute spending has grown steadily over the decade, this year's budget reflects a more aggressive push for capability enhancement, though defence as a share of GDP remains around 1.9%.
Finance Minister Nirmala Sitharaman arrived at Kartavya Bhawan draped in a handwoven maroon Kanjeevaram saree.
Kanjeevaram sarees are a traditional weave from the Finance Minister's home state, Tamil Nadu.
Sitharaman's choice comes months ahead of the Tamil Nadu Assembly elections, set to be held around April-May this year. The gesture shows the Centre's subtle focus on the poll-bound state, as was also visible in the Budget.
For the BJP, which is seeking to expand its footprint in Tamil Nadu, such moves are seemingly an attempt to connect with local sentiment.
Under the Liberalised Remittance Scheme (LRS), Indians can send money abroad for education, medical treatment, travel, or investments. Earlier, money sent abroad for education or medical reasons attracted 5% TCS, which was quite heavy for families already under stress.
Now, the Centre has proposed reducing this TCS to 2%. This means families sending money for a child's foreign education or medical treatment abroad will have to pay less extra money upfront.
The TCS is adjustable later, but lowering it helps with immediate cash flow, especially during emergencies or admission deadlines. In simple terms, this makes education and healthcare abroad slightly more affordable and less stressful.
Finance Minister Nirmala Sitharaman has doubled the tax holiday for businesses in the GIFT City in Gandhinagar, Gujarat, according to Reuters. A tax holiday is the period for which businesses are exempt from paying taxes.
GIFT City stands for Gujarat International Finance Tec-City. It is planned as a smart city that attracts local and global firms.
After the tax holiday ends, which is after 20 years, the business establishments there will be taxed at a flat rate of 15%, according to the report.
Earlier, the businesses in GIFT City offered 100% exemption from corporate income tax for 10 years.
This incentive of doubling the tax holiday in Gujarat's GIFT City will help the state attract big businesses.
West Bengal Chief Minister Mamata Banerjee launched a sharp attack on the Centre over the Union Budget, alleging that it has done nothing for the education sector and has "destroyed democracy".
She accused the Centre of deliberately ignoring West Bengal in its allocations, claiming the state was sidelined because the BJP expects to lose the upcoming Assembly elections.
Samajwadi Party chief Akhilesh Yadav said that the government designed its budgets for a small elite.
"What can one expect from a government from which there is no hope? This budget is made for five per cent of the people. Did the government live up to the promises it made in its manifesto?" he said.
The Centre raised India's defence budget to a record Rs 7.85 lakh crore, a nearly 15% jump from last year. This comes amid the government's focus on military preparedness amid ongoing security challenges from Pakistan and China.
The key highlight is the 28% surge in defence capital expenditure to Rs 2.31 lakh crore. This signals a push towards acquiring advanced weapon systems and accelerating domestic defence manufacturing. The higher outlay reflects a strategic choice to prioritise modernisation, self-reliance and long-term deterrence.
The Finance Minister also proposed to reduce TCS rate on the sale of overseas tour programme packages, from the current 5% and 20% to 2% without any stipulation of amount.
So, what is TCS?
TCS stands for Tax Collected at Source. It works opposite to TDS.
In TCS, the seller collects tax from the buyer at the time of sale and deposits it with the government. For example, if you buy something expensive or spend money abroad, the seller or bank may collect a small percentage as tax.
This tax is not an extra cost in the long run. It gets adjusted when you file your income tax return. The government uses TCS mainly to track high-value spending and ensure people report their income properly.
FM Sitharaman proposed that any interest awarded by the Motor Accidents Claims Tribunal to a natural person would be exempt from Income Tax, and any TDS on this account would be done away with.
So, when someone is injured or killed in a road accident, the Motor Accidents Claims Tribunal (MACT) orders compensation. Often, this compensation includes interest for the delay in payment. Earlier, this interest was treated like income and could be taxed, with TDS (Tax Deducted at Source) cut before payment.
Now, the Finance Minister, Nirmala Sitharaman has proposed that any interest awarded by MACT to a natural person will be fully exempt from income tax. This means the accident victim or their family will get the entire interest amount, without any tax deduction. Also, no TDS will be deducted on this interest.
Simply put: accident victims will no longer lose part of their compensation to taxes.
Congress MP Jairam Ramesh said that the Budget speech was "non-transparent since it gave no idea whatsoever of budgetary allocations for key programmes and schemes".
"While the documents need to be studied in detail, it is clear after 90 mins that Budget 2026-27 falls woefully short of the hype that was generated about it. It was totally lacklustre," Ramesh said on X.
Finance Minister Nirmala Sitharaman announced a waiver of basic customs duty on raw materials imported to manufacture aircraft parts for maintenance, repair and operational needs of defence units.
"It is proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair or overall requirements by units in the defence sector," Union FM Nirmala Sitharaman said.