Union Budget 2026: What Changed, What Didn't, and What It Means for Your Portfolio

Finance Minister Nirmala Sitharaman presented her 9th consecutive Union Budget on February 1. No tax cuts. No headline announcements. Nothing that made markets jump. And that's exactly why you should pay attention. This budget rewards the investor you already are, patient, focused on fundamentals, building wealth through compounding, not trading tricks or tax arbitrage.

Your capital gains rates? Unchanged. Infrastructure spending? Still driving growth. Fiscal discipline? Maintained without cutting capex. Where the government did intervene, derivatives, gold bonds, buybacks, they went after speculation and inefficiencies, not long-term equity investors. Here's what actually changed, what it means for your portfolio, and why stability might be the most valuable thing your money got this year.

The Tax Verdict: Status Quo

1. Capital Gains: Equity LTCG stays at 12.5% (with a ₹1.25 lakh annual exemption) and STCG remains at 20%, a clear signal that last year’s tax overhaul is being allowed to settle.

2. Income Tax: No changes. Both new & old regime slabs remain identical to last year.

3. Why this matters: Tax policy stability removes uncertainty for you, so you can stay focused on fundamentals, not tax arbitrage. Your portfolio strategy, built on last year’s framework of holding periods, asset allocation, and disciplined rebalancing, remains valid and intact.

What Actually Changed

1. STT Just Got Costlier for Traders: Taxes on futures & options have been increased to curb excessive F&O activity. If you invest for the long term, equity delivery STT remains unchanged.

2. Sovereign Gold Bonds Gain no longer tax-free: The capital gains exemption at maturity now applies only to original RBI subscribers. If you bought SGBs from the secondary market, maturity gains will attract 12.5% LTCG.

3. Share Buybacks: Buyback gains are no longer taxed like dividends. They’re now treated as capital gains, meaning long-term minority shareholders pay 12.5% LTCG instead of up to 30%. Promoters, however, will face higher taxes (around 22-30%).

4. Dividend income, now easier for senior citizens: Earlier, seniors had to submit Form 15H to each company paying dividends. Now, one single submission to NSDL/CDSL applies across all investments. This reduces paperwork & helps avoid unnecessary TDS on dividend income.

If You're an NRI: What Just Got Easier

1. TCS Reduction: TCS on overseas education and medical expenses has been cut from 5% to 2%, & foreign tour packages now attract a flat 2% (earlier 5% / 20%). This means less money blocked upfront and more cash in your hands today for education, healthcare, and travel abroad.

2. Direct equity investing for NRIs: NRIs can now invest directly in Indian equities up to 10% of a company’s paid-up capital, instead of being limited to portfolio investment schemes, making equity participation simpler, more flexible, and more transparent.

3. Property Transactions Simplified: From October 1st, residents buying property from NRIs no longer need a Tax Deduction Account Number (TAN), reducing procedural friction and making property transactions faster and easier.

4. One-time compliance window for foreign assets: A 6-month disclosure window has been provided for students, tech professionals, & relocated NRIs to regularise undisclosed foreign income and assets. Foreign income or assets up to ₹1 crore can be regularised by paying 30% tax + 30% penalty, while foreign assets up to ₹5 crore can be disclosed by paying a ₹1 lakh fee, with immunity from prosecution.

What This Budget Means for India’s Growth and Your Investments

Here are the fundamentals the government stayed focused on:

1. A tighter fiscal grip: The deficit narrows to 4.3% (from 4.4%), signalling discipline without austerity, supporting growth while strengthening macro credibility.

2. Capex stays front and centre: ₹12.22 lakh crore allocated (9% YoY rise), keeping infrastructure, roads, railways, defence, urban development, as the backbone of India’s multi-year growth engine.

3. Nominal GDP growth: Projected at 10% (realistic, not optimistic).

4. GST collections: Expected at ₹10.19 L Cr, signalling continued economic formalisation.

5. Gross market borrowings: ₹17.21 lakh crore (marginally higher), but directed toward asset creation, not revenue spending.

6. What this means: Stable macro environment, predictable policy framework. No stimulus-driven rally triggers, but a solid foundation for sustained, compounding growth.

Budget Sectoral Focus Areas

1. Defence: Capital outlay up 18% to ₹2.19 lakh crore. Modernization and domestic manufacturing priority.

2. Infrastructure: 7 high-speed rail corridors, 20 new national waterways, dedicated freight corridors. ₹20,000 crore for carbon capture over 5 years.

3. Electronics/Semiconductors: Investment commitment doubled to ₹40,000 crore. India Semiconductor Mission 2.0 announced. Tax holiday till 2047 for foreign companies using Indian data centers.

4. Tourism: Significant push with guide training programs, heritage site development, eco-tourism trails, medical tourism hubs.

5. Pharma: ₹10,000 crore Biopharma SHAKTI fund for biologics and biosimilars.

6. MSMEs: ₹10,000 crore SME Growth Fund, expanded TReDS-based liquidity.

7. Textiles: Integrated program with mega textile parks to drive exports and employment.

What This Means for Your Portfolio

1. Capex-linked holdings remain well supported: Sectors like railways, roads, defence, urban infrastructure, and power should continue to see strong order visibility.

2. Electronics and manufacturing gain long-term backing: Continued policy support creates a multi-year opportunity. Select exposure here remains relevant within a diversified portfolio.

3. Tourism & hospitality see emerging tailwinds: A more coordinated policy push improves medium-term prospects. This is still an evolving opportunity rather than a crowded trade.

4. Higher STT affects trading-led models: The increase in STT impacts derivatives-heavy brokerages. It has no bearing on long-term equity investing.

5. Quality remains the anchor: Strong balance sheets, consistent returns on capital, and credible management matter more than ever. This is where portfolios compound steadily.

What This Means for You

Your portfolio is already positioned to benefit from this trajectory. The Budget doesn't demand changes, it validates the strategy we've been executing.

1. What stays core: You're invested in high-quality businesses with pricing power, companies benefiting from the structural capex cycle (infrastructure, consumption), and sectors with clear policy support and multi-year visibility. They confirm the sectors driving your returns have 3-5 year runway, not just quarterly momentum.

2. What doesn't need to change: The businesses you own, the holding periods you've committed to, the rebalancing discipline you follow. Fiscal discipline at 4.3%, realistic growth projections, no policy surprises, the compounding environment remains intact.

3. The takeaway: This Budget does exactly what you needed, it removes uncertainty and reinforces the conditions for long-term compounding. The businesses you've invested in, the strategy you're following, the patience you've committed to, all of it just received policy validation. The fundamentals driving your returns remain intact, and the policy framework supporting them just got stronger. If anything material shifts in this trajectory, you'll hear from us, and we'll reassess together. For now, the course you're on has clarity.