The Union Budget 2026-27 projects GST revenues at Rs10.19 lakh crore for 2026-27, a decline from Rs10.46 lakh crore in revised estimates for the current financial year. This comes after the government enacted the GST rate rationalisation in September with an intent to boost consumption.
The overhaul simplified India’s tax structure by collapsing the earlier four-tier system of 5 percent, 12 percent, 18 percent, and 28 percent into two primary slabs of 5 percent and 18 percent, with a new 40 percent rate introduced for luxury and sin goods.
However, direct taxes are expected to increase. Income tax collections are budgeted at Rs14.66 lakh crore for 2026-27, an 11.7 percent rise over the revised estimates of Rs13.12 lakh crore for the current fiscal. This growth follows substantial middle-class tax relief introduced in the previous Union Budget. Under the new income tax regime, no tax is payable on total income up to Rs12 lakh per annum, while salaried individuals earning up to Rs12.75 lakh will pay nil tax owing to a standard deduction of Rs75,000. The number of tax slabs were reduced from six to five, and the basic exemption limit was raised from Rs 3 lakh to Rs 4 lakh.
Corporate tax, meanwhile, is pegged at Rs12.31 lakh crore, up 11 percent from Rs11.09 lakh crore in 2025-26 revised estimates, signalling improving corporate profitability.
In numbers: Budget 2026: Complete snapshot at your fingertips
The GST rate rationalisation, which came into effect in September, is expected to result in an annual net revenue loss of around Rs48,000 crore for the government. According to SBI Research, the rate rejig was expected to provide a Rs1.98 lakh crore consumption boost and an average loss of Rs85,000 crore a year.
Read Forbes India's complete Budget 2026-27 coverage here
First Published: Feb 01, 2026, 18:34
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