E-Paper
Budget 2026-27: Statement of pragmatism and farsightedness
This article is authored by Vikas Garg, chairman, EBIX Group and Vikas Group.
Finance minister Nirmala Sitharaman’s presentation of the Union Budget on February 1, 2026 rejected populism for consolidation. In a global economy currently hit by various headwinds, this is a show of pragmatism and farsightedness. For those operating at the intersection of finance, healthcare, travel and technology, the budget signals a decisive maturity by moving toward a modern, compliant, and trust-led economic ecosystem.
Public discourse in the immediate aftermath is dominated by the hike in Securities Transaction Tax (STT) and the status quo on personal income tax slabs. However, viewed beyond short-term relief, the budget’s real impact lies in the structural reforms that have now moved decisively from intent to implementation—most notably, the operationalisation of the new Income Tax Act and the decriminalisation of minor compliance defaults. Together, they mark a clear departure from adversarial taxation towards a rules-based, predictable framework.
The centrepiece of this strategy is the overhaul of the tax framework. The transition to a unified tax year, from assessment year, is a subtle but profound alignment with global norms. But for those in the SaaS and digital ecosystem, the headline act is the revision of safe harbour thresholds. Jumping the limit from ₹300 crore to ₹2,000 crore isn't just a number change but a shield against litigation. It frees up mid-sized firms to spend their energy on product innovation rather than tax tribunals. Similarly, the tax holiday for foreign cloud providers until 2047 is a clear invitation to global tech giants to set shop in India.
In the financial services, allowing 100% Foreign Direct Investment in insurance is the moment the industry has been waiting for. It will drive capital infusion, product innovation and industry consolidation. When you pair this with the Biopharma Shakti scheme and the push for parametric insurance covers, we are finally seeing financial resilience and health care security being treated as critical infrastructure.
Health care, in particular, receives a nuanced and forward-looking treatment. By prioritising biologics and biosimilars, the government is positioning India as a global research and manufacturing hub for next-generation therapies. At the same time, exemptions on customs duties for critical cancer drugs demonstrate a careful balance between fiscal discipline and social responsibility.
Meanwhile, the central government’s narrative on travel is pragmatic. Slicing the TCS on overseas packages down to 2% corrects a policy that was hindering the aspirational middle class and the outbound tourism industry. Conversely, the domestic push, through new high-speed rail corridors and eastern tourism hubs, is a sound strategy to leverage travel as a local economic multiplier.
That said, the government isn’t simply handing out blank cheques to India Inc. The shift in buyback taxation, treating it as capital gains, closes a popular arbitrage window. This will lead to boardrooms rethinking their distribution strategies, and aligning buybacks with dividend taxation, thus levelling the playing field. It fits into the broader theme of transparency, something the government is keen to implement.
Ultimately, the latest budget balances fiscal prudence with practicality. By adhering to the fiscal deficit glide path, and also funding a ₹10,000 crore SME Growth Fund, the centre is betting on the resilience and entrepreneurial capacity of the Indian economy.
While the government has walked the talk by simplifying rules, and easing norms for doing business, it’s now India Inc’s turn to help push the economy towards our ambitious vision of Vikshit Bharat by 2047.
This article is authored by Vikas Garg, chairman, EBIX Group and Vikas Group.
