Union Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26 in Parliament on Sunday. This marks Sitharaman’s ninth consecutive budget. However, the stock market reacted negatively to this budget speech, with heavy losses recorded in share markets by the time the Finance Minister concluded her address. The Sensex plunged nearly 2000 points at one stage. Experts believe this reaction came due to the announcement of an increase in Securities Transaction Tax (STT) on futures trading in the stock market. It is noteworthy that it is quite rare for stock markets to be open on Sunday, but the market remained operational due to the budget presentation.
Beginning her speech, the Finance Minister stated that the government’s focus is on accelerating industrial development and over 350 economic reforms have been implemented since August 15 last year.
She emphasized strengthening manufacturing, MSME, infrastructure, security and stability to accelerate economic growth. In this budget, the Union Finance Minister announced a special corridor for rare earth minerals along with the creation of seven railway corridors. Important announcements were also made concerning health and medicines, education, and women. But one announcement soured the mood of stock markets.
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The Finance Minister said she proposes to increase STT in Futures and Options from 0.02 percent to 0.05 percent. Following this, heavy selling was witnessed in stock markets.
What is STT?
The full name of STT is “Securities Transaction Tax”. It is levied on buying and selling of shares. The Finance Minister said there is a proposal to increase Securities Transaction Tax in Futures and Options by more than double. Till now, STT on F&O was 0.02 percent, which is now proposed to be increased to 0.05 percent. STT is actually different from other taxes.
This tax is imposed on share transactions to increase revenue and enhance stability in financial markets. It is entirely value-based, meaning the higher the value of shares bought and sold, the higher the STT will be. This applies regardless of whether a person made profit or loss on that share transaction.
Income Tax
While presenting the Union Budget 2026-27, Finance Minister Nirmala Sitharaman stated that the new Income Tax law will come into effect from April 1, 2026. Changes have also been made in the deadline and rules related to filing Income Tax Return (ITR). Those filing ITR-1 and ITR-2 will now be able to file their returns by July 31.
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However, no changes have been made to income tax slabs this time. Actually, under the new tax regime introduced last year, there is no income tax on annual earnings up to 12 lakh rupees. The standard deduction for the salaried class is 75 thousand rupees, so in this regard, income up to 12 lakh 75 thousand rupees will be tax-free for the salaried class.
Orange Economy
The Finance Minister said, “India’s Animation, Visual Effects, Gaming and Comics (AVGC) sector is a growing industry that will require 20 lakh professionals by 2030.” The Finance Minister proposed helping the Indian Institute of Creative Technologies, Mumbai to establish AVGC content creator labs in 15 thousand secondary schools and 500 colleges.
Orange Economy or Creative Economy refers to sectors based on individual creativity, skills and intellectual property, which include art, design, fashion, film, music and digital content.
Health
The Finance Minister made several important announcements in the health and medicines sector and proposed reducing duties on many drugs related to cancer and rare diseases. She proposed an investment of 10 thousand crore rupees in biopharma over the next 5 years in the budget. In her budget speech, she also announced the establishment of three All India Institutes of Ayurveda and an Ayurveda Research Center in Jamnagar.
Rare Earth
- Special corridor for rare earth in Odisha, Kerala, Andhra Pradesh and Tamil Nadu
- This corridor will be named Rare Earth Magnet Corridor
- Proposal of 40 thousand crore rupees for electronics components manufacturing
Manufacturing
- Proposal of 10 thousand crore rupees for container manufacturing
- Growth fund of 10 thousand crore rupees for SME sector
- 2 thousand crore rupees will be provided for micro enterprises
- 100 new water-ways in the next 5 years
- Proposal to establish several centers for youth training
- Proposal to build 7 high-speed rail corridors