Union Budget 2026: Finance Minister Nirmala Sitharaman presented her ninth consecutive budget and the third full budget of the Narendra Modi government on February 1, outlining a total expenditure estimated at Rs 53.5 lakh crore for the 2026-27 fiscal year.
In last year’s budget, the central government had made income up to Rs 12 lakh tax-free, with the exemption increased to Rs 12.75 lakh for salaried individuals. However, Budget 2026 did not bring any income tax relief as tax slabs remain unchanged.
Did tax-free earnings impact income tax revenue?
According to revenue receipts, the government earned Rs 13.12 lakh crore in income tax revenue in FY 2025-26, against the projected figure of Rs 14.38 lakh crore in Budget 2025-26. The revised estimate in the budget document shows that the government earned approximately 9 percent lower revenue income tax than it had projected.
Notably, income tax is the second-largest contributor to government’s total revenue, accounting for 22%, which means for 22 paise of every rupee earned by the state comes from tax levied on income of citizens.
How much is govt projected to earn in 2026-27?
In Budget 2026-27, the government is projected to earn Rs 14.66 lakh crore from income tax, approximately 12 percent more than the revised estimate for 2025-26.
Rs 12.31 crore is expected to come from corporation tax, excise duty will generate around Rs 3.89 lakh crore, while customs duty will earn Rs 2.71 lakh crore for the government, according to the budget document.
Meanwhile, the government lower GST revenue in the 2026-27 fiscal due to the sweeping changes made in GST slabs in September last year, when four GST slabs were simplified to two, under which 5% and 18% GST is levied.
The government expects to earn Rs 10.19 lakh crore from GST collection in 2026-27, which is 13% lower than the budget estimate for 2025-26.
