Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 before Parliament on 1 February 2026, proposing a total expenditure of ₹53.47 lakh crore — a 7.7 per cent increase over the revised estimates for the preceding fiscal year. The Budget allocates ₹12.2 lakh crore towards capital expenditure and introduces several significant legislative measures.
Background
The Union Budget carries particular significance for the legal profession this year owing to two major structural reforms embedded within the Finance Bill 2026. First, the new Income-tax Act 2025, which received Presidential assent in 2025, is set to take effect from 1 April 2026, replacing the Income-tax Act 1961 that has governed direct taxation in India for over six decades. Second, the Corporate Laws (Amendment) Bill 2026, tabled alongside the Budget, has been referred to a Joint Parliamentary Committee for detailed scrutiny before enactment.
The overall fiscal strategy maintains the government's emphasis on infrastructure-led growth while signalling a new phase of legislative modernisation in the domains of taxation and corporate governance.
Key Provisions
The Union Budget 2026-27 introduces the following noteworthy measures:
New Income-tax Act 2025 operationalised: The Act, which consolidates and simplifies the direct tax framework, will come into force on 1 April 2026. It replaces the Income-tax Act 1961, which had accumulated extensive amendments over six decades and was widely regarded as requiring comprehensive overhaul.
Capital expenditure of ₹12.2 lakh crore: The allocation towards capital spending reflects a sustained commitment to infrastructure development, with implications for infrastructure-related dispute resolution and contract law practice.
Total expenditure at ₹53.47 lakh crore: The 7.7 per cent increase over revised estimates for FY 2025-26 indicates expansionary fiscal policy within the stated fiscal consolidation glide path.
Corporate Laws (Amendment) Bill 2026: The Bill, tabled in Lok Sabha alongside the Finance Bill, proposes amendments to the corporate governance framework. It has been referred to a Joint Parliamentary Committee, signalling that substantive changes are under consideration and stakeholder consultations will follow.
Finance Bill 2026: The Bill contains the specific tax proposals for FY 2026-27, including amendments to customs duties, excise provisions, and the transition provisions for migration from the 1961 Act to the 2025 Act.
Implications for Practitioners
The operationalisation of the Income-tax Act 2025 from April represents the most consequential development for tax practitioners. Firms and in-house tax teams will need to map existing compliance frameworks, pending assessments, and ongoing litigation under the 1961 Act to the corresponding provisions of the new statute. Transitional provisions in the Finance Bill 2026 will govern how pending proceedings, advance rulings, and appellate matters are carried forward — practitioners should examine these provisions closely once the Finance Bill receives assent.
The referral of the Corporate Laws (Amendment) Bill 2026 to a JPC creates an opportunity for corporate law practitioners and industry bodies to submit representations during the committee stage. The scope of proposed amendments and the JPC's terms of reference will determine the timeline and nature of changes to the Companies Act 2013 and allied corporate statutes.
On the fiscal side, the ₹12.2 lakh crore capital expenditure allocation is expected to generate significant transactional and advisory work in infrastructure finance, public-private partnerships, and government contracting.