NEW DELHI – Finance Minister Nirmala Sitharaman delivered her ninth consecutive Union Budget today, February 1, 2026, centering her speech on the theme of "Strategic Indispensability." While the budget introduced sweeping structural reforms and targeted tax relief, the markets reacted with a sharp "sell-on-news" correction, as the benchmark Sensex tumbled over 1900 points by midday.

The budget is anchored by a ₹12.2 lakh crore capital expenditure outlay (a 9% increase) and a fiscal deficit target of 4.3% of GDP for FY27.

Tax Reforms: The "New Income Tax Act 2025"

A historic announcement was made regarding the complete overhaul of India's direct tax system. The Income Tax Act 2025 will officially replace the 1961 Act starting April 1, 2026.

Personal Income Tax (New Tax Regime)

The new slabs have been designed to push the zero-tax limit higher for the middle class:

• Standard Deduction: Increased to ₹1,00,000 (from ₹75,000) for salaried employees.
• Tax-Free Income: Effectively, income up to ₹12.75 Lakh (after deductions) will attract zero tax.

New Slabs (FY 2026-27):

• ₹0 – ₹4 Lakh: Nil
• ₹4 – ₹8 Lakh: 5%
• ₹8 – ₹12 Lakh: 10%
• ₹12 – ₹16 Lakh: 15%
• ₹16 – ₹20 Lakh: 20%
• ₹20 – ₹24 Lakh: 25%
• Above ₹24 Lakh: 30%

Capital Gains & STT (The Market Catalyst)

The primary driver of the 1900-point market crash was the hike in transaction taxes:

• STT on Futures: Increased from 0.02% to 0.05%.
• STT on Options: Increased from 0.1% to 0.15%.
• LTCG Exemption: Raised to ₹2 Lakh (from ₹1.25 Lakh).

Strategic Missions: BioPharma & Semiconductors

The government doubled down on high-tech manufacturing with two major flagship programs:

• Bio Pharma Shakti: A ₹10,000 crore allocation over five years to make India a global hub for Biologics and Biosimilars. This includes establishing 1,000 accredited clinical trial sites and upgrading NIPERs.
• Semiconductor Mission 2.0: A shift from purely incentive-based manufacturing to industry-led research, aimed at building a self-reliant chip ecosystem.
• Electronic Manufacturing: The outlay has been raised to ₹40,000 crore to cement India's position in the global supply chain.

Infrastructure & Connectivity

The Budget unveiled a massive expansion of transport corridors:

• 7 High-Speed Rail Corridors: Including Mumbai-Pune, Hyderabad-Bengaluru, and Delhi-Varanasi.
• 20 New National Waterways: A major focus on Odisha, connecting the mineral-rich Talcher-Angul regions to Paradip Port.
• Temple City Infrastructure: A dedicated ₹5,000 crore fund for cities with prominent religious heritage.